1999 Supreme(SC) 1131

1999(8) Supreme 608
Supreme Court of India
(From Kerala High Court)
K.T. Thomas and M.B. Shah, JJ.
K. Bhaskaran -Appellant
versus
Sankaran Vaidhyan Balan & Anr. -Respondents
Criminal Appeal No. 1015 of 1999
(Arising out of SLP (Crl.) No. 146 of 1999)
Decided on 29-9-1999
Counsel for the Parties :
For the Appellant : E.M.S. Anam, Advocate.
For the Respondent No. 1 : C.N. Sree Kumar, Advocate.
For the Respondent No. 2 : G. Prakash, Advocate.

Very Important points
1. Concatenation of five acts viz, drawing of cheque, presentation of cheque to bank, returning of cheque, giving notice in writing and failure of drawer to make payment, is a sine qua non for completion of offence of dishonour of cheque. Complainant can choose any one of those Courts having jurisdiction over any one of the local areas within territorial limits of which any one of those five acts was done.
2. Return of demand notice as unclaimed would amount to receipt of notice by sendee within meaning of Section 138 of Negotiable Instru­ments Act and reckoning of 15 days period would start from day of return of notice.

Headnote:(i) Negotiable Instrument Act, 1881-Section 138-Dishonour of cheque-Territorial jurisdiction of trial Court-Offence attains completion only with failure of drawer to pay cheque amount-Fixing up particular locality or place of failure difficult-Place of failure depend upon variety of factors-Concatenation of five acts viz. drawing of cheque, presentation of cheque to bank, returning of cheque, giving notice in writing and failure of drawer to make payment is sine qua non for completion of offence-Complainant can choose any one of those Courts having jurisdiction over any one of local areas within territo­rial limits of which anyone of those five acts was done.

       Held : The locality where the bank (which dishonoured the cheque) is situated cannot be regarded as the sole criteria to determine the place of offence. It must be remem­bered that offence under Section 138 would not be completed with the dishonour of the cheque. It attains completion only with the failure of the drawer of the cheque to pay the cheque amount within the expiry of 15 days mentioned in clause (c) of the proviso to Sec­tion 138 of the Act. It is normally difficult to fix up a particular locality as the place of failure to pay the amount covered by the cheque. A place, for that purpose, would depend upon a variety of factors. It can either be at the place where the drawer resides or at the place where the payee resides or at the place where either of them carries on business. Hence, the difficulty to fix up any particular locality as the place of occurrence for the offence under Section 138 of the Act. (Para 11)

       Even otherwise the rule that every offence shall be tried by a court within whose jurisdiction it was committed is not an unexcep­tional or unchangeable principle. Section 177 itself has been framed by the legislature thoughtfully by using the precautionary word “ordinarily” to indicate that the rule is not invariable in all cases. Section 178 of the Code suggests that if there is uncertainty as to where, among different localities, the offence would have been commit­ted the trial can be had in a court having jurisdiction over any of those localities. The provision has further widened the scope by stating that in case where the offence was committed partly in one local area and partly in another local area the court in either of the localities can exercise jurisdiction to try the case. (Para 12)

       The offence under Section 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts which are components of the said offence : (1) Drawing of the cheque, (2) Presentation of the cheque to the bank, (3) Returning the cheque unpaid by the drawee bank, (4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount, (5) failure of the drawer to make payment within 15 days of the receipt of the no­tice. It is not necessary that all the above five acts should have been perpetrated at the same locality. It is possible that each of those five acts could be done at 5 different localities. But concatenation of all the above five is a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful. (Paras 14 & 15)

       If the five different acts were done in five different localities any one of the courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence under Section 138 of the Act. In other words, the complainant can choose any one of those courts having jurisdiction over any one of the local areas within the territorial limits of which any one of those five acts was done. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Act. (Para 16)

       (ii) Negotiable Instruments Act, 1881-Section 138 read with Sections 118 and 139-Dishonour of cheque-Presumption that drawer drawn cheque for consideration-Presumption that holder received cheque for discharge of debt or liability-Burden rebuttal-Burden is on drawer. (Para 9)

       (iii) Negotiable Instruments Act, 1881-Section 138-Dishonour of cheque - Notice of demand-‘Giving of notice’ and receipt of notice-Offence would complete within 15 days of receipt-When notice returned unclaimed by sendee it would amount to receipt of notice-In such a case reckoning of 15 days would start running from date of return of notice.

       Held : On the part of the payee he has to make a demand by “giving a notice” in writing. If that was the only requirement to complete the offence on the failure of the drawer to pay the cheque amount within 15 days from the date of such “giving,” the travails of the prosecu­tion would have been very much lessened. But the legislature says that failure on the part of the drawer to pay the amount should be within 15 days “of the receipt” of the said notice. It is, therefore, clear that “giving notice” in the context is not the same as receipt of notice. Giving is a process of which receipt is the accomplishment. It is for the payee to perform the former process by sending the notice to the drawer in the correct address. (Para 18)

       If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start run­ning no matter that the payee sent the notice in the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legis­lative measure. (Para 20)

       The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in clause (b) of the proviso to Section 138 of the Act show that payee has the statutory obligation to “make a demand” by giving notice. The thrust in the clause is on the need to “make a demand”. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is despatched his part is over and the next depends on what the sendee does. (Para 21)

       No doubt Section 133 of the Act does not require that the notice should be given only by “post”. Nonetheless the principle incorporated in Section 27 of the General Clauses Act can profitably be imported in a case where the sender has despatched the notice by post with the correct address written on it. Then it can be deemed to have been served on the sendee unless he proves that it was not really served and that he was not responsible for such non-service. Any other interpretation can lead to a very tenuous position as the drawer of the cheque who is liable to pay the amount would resort to the strate­gy of subterfuge by successfully avoiding the notice. (Para 24)

       Thus, when a notice is returned by the sendee as unclaimed such date would be the commencing date in reckoning the period of 15 days contemplated in clause (d) to the proviso of Section 138 of the Act. Of course such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address. (Para 25)

       (iv) Negotiable Instrument Act, 1881-Section 138 r/w Sections 386 and 357(3) of Code of Criminal Procedure Code, 1973-Magistrate Courts juris­diction to impose fine-Magistrate Court cannot impose a fine exceed­ing Rs. 5000/- in view of Section 386 Cr.P.C.-High Court while convict­ing accused in same case cannot impose fine exceeding said limit-Magistrate can making resort to Section 357(3), Cr.P.C. allevi­ate grievance of complainant.

       In the instant case the Magistrate imposed a sentence of imprisonment for six months and a fine of Rs. One Lakh. The Supreme Court held : the court cannot obviate the jurisdictional limit prescribed in Section 386 of the Code. Though the said provision confers power on the court of appeal to reverse an order of acquittal and find the accused guilty and pass sentence on him according to law, even the High Court when it is the court of appeal has to conform to the second proviso to Section 386 of the Code. In this context a reference to Section 29(2) of the Code is neces­sary as it contains a limitation for the magistrate of first class in the matter of imposing fine as a sentence or as a part of the sen­tence. It is true, if a judicial magistrate of first class were to order compensation to be paid to the complainant from out of the fine rea­lised the complainant will be the loser when the cheque amount exceed­ed the said limit. In such a case a complainant would get only the maximum amount of Rupees five thousand. However, the magistrate in such cases can alleviate the grievance of the complainant by making resort to Section 357(3) of the Code. It is well to remember that this Court has emphasized the need for making liberal use of that provision. No limit is mentioned in the sub-section and therefore, a magistrate can award any sum as compensation. Of course while fixing the quantum of such compensation the Magistrate has to consider what would be the reasonable amount of compensation payable to the complainant. Thus, even if the trial was before a court of magistrate of first class in respect of a cheque which covers an amount exceeding Rs. 5,000/- the court has power to award compensation to be paid to the complainant. (Paras 27 to 31).

       While upholding conviction, the sentence award was set aside enabling the trial Court to pass orders on question of sentence and compensa­tion.