Ramanna Vs. T. Jayaprakash - Court Judgment

Excerpt:
banking - dishonour of cheque - sections 138 and 142 negotiable instruments act, 1881 - whether serving of demand notice under section 138 compulsory before magistrate takes cognizance of offence of dishonour of cheque - under section 138 and 142 (b) cause of action arises on service of notice to accused by complainant and on expiry of fifteen days from service of notice - complainant to show that he had duly served demand notice to accused - magistrate to take cognizance only when valid cause of action arises - cognizance of offence by magistrate without any material as to service of demand notice without jurisdiction. - employees state insurance act, 1948 [c.a. no. 34/1948] -- section 39: [k. ramanna, j]default in making remittance of the amount collected towards e.s.i. held, interest payable on each days delay. interest cannot be waived on the ground that the department had filed an appeal. - despite the said demand notice when the accused failed to pay the said amount, the complainant had to file his complaint before the learned magistrate on 15-12-1994 alleging commission of offence under section 138 of the act. (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138; (c) .a combined reading of section 138(c) and section 142(b) clearly brings this legal position to the fore that it is the date of actual service of the complainant's (payee's or of the holder in due course of the cheque) demand notice on the accused (drawer of the cheque) which gives rise for cause of action under clause (c) of the proviso to section 138 for the former to lodge the complaint for an offence under section 138 of the act against the latter and that this cause of action arises on the date when the said notice is shown to have been duly served on the accused, and also that if within fifteen days of receipt of the notice if the drawer accused pays up the dishonoured cheque amount to the payee complainant or the holder in due course of the cheque the cause of action for the said purpose would cease to exist.order1. the argument of learned counsel for petitioner sri ramachandra reddy was heard. the argument of respondent's learned counsel could not be heard as he did not choose to be present when the matter was taken up for hearing.2. the petitioner who is the accused in cri. case no. 16209 of 1995 on the complaint of respondent made before the learned magistrate on15-12-1994 alleging commission of an offence under section 138 of the negotiable instruments act, 1881 ('the act' for short) has filed this petition under section 482 of the cr. p.c. praying to quash criminal proceeding against him before the learned magistrate on the ground that the cognizance of the offence taken by him by his order dated 1-3-1995 was illegal and without jurisdiction in the absence of proof of the date on which the complainant's demand notice under section 138(c) of the act was stated to have been issued by complainant's advocate.3. the certified copy of the order sheet of the court below in the said c.c. no. 16209 of 1995 (pcr 568 of 1994) is produced along with the petition. similarly the xerox copies and the certified copies of the said complaint dated 15-12-1994 as also the bank's endorsement is produced along with the petition. in addition xerox copies of the certified copies of the sworn statement of the complainant recorded by the learned magistrate together with the xerox copies of the certified copy of ex. p. 2, ex. p. 4 xerox copy of the certified copy of both sides of postal cover and ex. p. 5 xerox copy of certificate of posting are produced.4. the case of the complainant against the petitioner-accused is that at the request of the latter the former had advanced a loan of rs. 15,000/- in cash and towards repayment thereof the accused had passed the cheque bearing no. 898721, dated 19-10-1994 in complainant's favour which was drawn on syndicate bank, ganganagar, bangalore. when the said cheque was presented to the said bank by the complainant on 9-11-1994 the same was returned dishonoured by the bank with its share 'funds insufficient' dated 10-11-1994. then the complainant got issued the legal notice dated 21-11-1994 at ex. p. 3 both by registered post and by postal certificate to the accused informing him of the dishonour of the said cheque and demanding of him the payment of the said cheque amount within 15 days from the date of receipt of that notice. both the said notices were so sent to the accused on his official address and they were returned unserved on him with the postal endorsement 'no such person in that address'. then the same notice was sent by the complainant to the accused to his residential address under ex. p. 5 the postal certificate. despite the said demand notice when the accused failed to pay the said amount, the complainant had to file his complaint before the learned magistrate on 15-12-1994 alleging commission of offence under section 138 of the act. on that complaint learned magistrate took cognizance of the offence and proceeded to record the sworn statement of the complainant on 25-2-1995 who spoke to the contents of his complaint and produced documents ex. p. 1 to p. 5. on the strength of that statement the learned magistrate passed an order dated 1-3-1995 holding that a prima facie case was made out by the accused and hence he directed issue of summons for the offence under section 138 of the act.5. the maintainability of the prosecution proceedings before the learned magistrate stands challenged by the petitioner mainly on the ground that the material so placed on record by the complainant does not disclose the actual date of service of the said demand notice ex. p. 2on the accused so as to give rise to cause of action for the complainant to initiate criminal prosecution against the former. the learned counsel for petitioner argued that under section 138(c) of the act, it was imperative requirement for the complainant to place sufficient material establishing the actual date of demand notice contemplated thereunder. in the absence of that date, it was not possible for the learned magistrate to assume that any cause of action had arisen for the complainant for his complaint. it was the further contention of mr. ramachandra reddy, learned counsel for petitioner, that mere production of ex. p. 5 postal certificate, dated 21-11-1994 cannot be taken as prima facie proof of the actual date of service thereof on the accused for the purpose of section 138 of the act. in support of this contention reliance was sought to be placed by him on a decision of this court in chandrappa v k. subramanya and another as also on the observation of the supreme court at para 11 of its judgment in k. narasimhiah v h.c. singri gowda and others .the material provision section 138(c) reads: '138. dishonour of cheque for insufficiency, etc., of funds in the account.--where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or both: provided that nothing contained in this section shall apply unless.- (a) ..... (b) ..... (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice'. the material portion of relevant section 142 which relates to 'cognizance of offences' reads:'142. cognizance of offences.--notwithstanding anything contained in the code of criminal procedure, 1973 (2 of 1974).- (a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque; (b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138; (c) ..... a combined reading of section 138(c) and section 142(b) clearly brings this legal position to the fore that it is the date of actual service of the complainant's (payee's or of the holder in due course of the cheque) demand notice on the accused (drawer of the cheque) which gives rise for cause of action under clause (c) of the proviso to section 138 for the former to lodge the complaint for an offence under section 138 of the act against the latter and that this cause of action arises on the date when the said notice is shown to have been duly served on the accused, and also that if within fifteen days of receipt of the notice if the drawer accused pays up the dishonoured cheque amount to the payee complainant or the holder in due course of the cheque the cause of action for the said purpose would cease to exist. the learned magistrate gets the jurisdiction to entertain the complaint under section 142 and take cognizance of the offence under section 138 of the act only when a valid cause of action therefor exists.6. therefore, the crucial point that was required to be considered by the magistrate in the instant case was whether the complainant had placed sufficient material on record disclosing the actual date of service of ex. p. 2 demand notice on the accused so as to make out whether the cause of action for the former had arisen to present the complaint against the latter. there is no statement made in the complaint that the notice under ex. p. 5 postal certificate, said to have been issued by him to the accused was served on the latter on any particular date. nor was it so stated by him in his sworn statement recorded by the learned magistrate. all that he has produced is ex. p. 5 postal certificate disclosing the postal despatch of the said notice to the accused on 25-11-1994.7. this court relying on its earlier decisions in bashettiyavar brothers v iv i.t.o., hubli and others and d.v. haridev v b. narayanamurthy (dead) by l.rs and another , has held in the case of chandrappa,supra:'certificate of posting merely evidences the fact of posting of a postal article, but it does not evidence the fact of delivery of postal article to the addressee even though the address given on the postal article is correct'. the supreme court in k. narasimhiah's case, supra, has observed: ' 'giving' or anything as ordinal understood in the english language is not complete unless it has reached the hands of the person to whom it has to be given. in the eye of law however 'giving' is complete in many matters where it has been offered to a person but not accepted by him. tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses to accept it. we can find however no authority or principle for the proposition that as soon as the person with a legal duty to give the notice despatches the notice to the address of the person to whom it has to be given, the giving is complete'. 8. as has been held by this court in chandrappa's case, supra, no inference of service of notice on the addressee muchless of any definite date of the service thereof could be drawn or presumed merely on the basis of the relevant 'certificate of posting'. the posting of a postal article on a particular date cannot and is not proof of the fact of its actual delivery to the addressee and of the particular date on which it was received by him even though the address given on that article is correct. therefore, in the case on hand, i find, as rightly maintained by mr. ramachandra reddy, that there being total lack of material on record disclosing the actual date of service of ex. p. 3 demand notice on the accused, the cause of action in respect of said cheque transaction between the parties had not yet arisen and it was not available to the complainant to maintain his complaint before the learned magistrate alleging commission of offence under section 138 of the act by the accused, and in that view of the legal position, the learned magistrate had no jurisdiction to entertain the complaint and proceed to take cognizance of the alleged offence for the purpose of trial of the accused. therefore, the criminal proceeding against the petitioner in the said c.c. no. 16209 of 1995 on the file of the learned magistrate is liable to be quashed.9. hence, the petition is allowed. the prosecution of the petitioner-accused in c.c. no. 16209 of 1995 and the proceeding therein against him is quashed.

Judgment:
ORDER

1. The argument of learned Counsel for petitioner Sri Ramachandra Reddy was heard. The argument of respondent's learned Counsel could not be heard as he did not choose to be present when the matter was taken up for hearing.

2. The petitioner who is the accused in Cri. Case No. 16209 of 1995 on the complaint of respondent made before the learned Magistrate on15-12-1994 alleging commission of an offence under Section 138 of the Negotiable Instruments Act, 1881 ('the Act' for short) has filed this petition under Section 482 of the Cr. P.C. praying to quash criminal proceeding against him before the learned Magistrate on the ground that the cognizance of the offence taken by him by his order dated 1-3-1995 was illegal and without jurisdiction in the absence of proof of the date on which the complainant's demand notice under Section 138(c) of the Act was stated to have been issued by complainant's Advocate.

3. The certified copy of the order sheet of the Court below in the said C.C. No. 16209 of 1995 (PCR 568 of 1994) is produced along with the petition. Similarly the xerox copies and the certified copies of the said complaint dated 15-12-1994 as also the bank's endorsement is produced along with the petition. In addition xerox copies of the certified copies of the sworn statement of the complainant recorded by the learned Magistrate together with the xerox copies of the certified copy of Ex. P. 2, Ex. P. 4 xerox copy of the certified copy of both sides of postal cover and Ex. P. 5 xerox copy of certificate of posting are produced.

4. The case of the complainant against the petitioner-accused is that at the request of the latter the former had advanced a loan of Rs. 15,000/- in cash and towards repayment thereof the accused had passed the cheque bearing No. 898721, dated 19-10-1994 in complainant's favour which was drawn on Syndicate Bank, Ganganagar, Bangalore. When the said cheque was presented to the said bank by the complainant on 9-11-1994 the same was returned dishonoured by the bank with its share 'funds insufficient' dated 10-11-1994. Then the complainant got issued the legal notice dated 21-11-1994 at Ex. P. 3 both by registered post and by postal certificate to the accused informing him of the dishonour of the said cheque and demanding of him the payment of the said cheque amount within 15 days from the date of receipt of that notice. Both the said notices were so sent to the accused on his official address and they were returned unserved on him with the postal endorsement 'no such person in that address'. Then the same notice was sent by the complainant to the accused to his residential address under Ex. P. 5 the postal certificate. Despite the said demand notice when the accused failed to pay the said amount, the complainant had to file his complaint before the learned Magistrate on 15-12-1994 alleging commission of offence under Section 138 of the Act. On that complaint learned Magistrate took cognizance of the offence and proceeded to record the sworn statement of the complainant on 25-2-1995 who spoke to the contents of his complaint and produced documents Ex. P. 1 to P. 5. On the strength of that statement the learned Magistrate passed an order dated 1-3-1995 holding that a prima facie case was made out by the accused and hence he directed issue of summons for the offence under Section 138 of the Act.

5. The maintainability of the prosecution proceedings before the learned Magistrate stands challenged by the petitioner mainly on the ground that the material so placed on record by the complainant does not disclose the actual date of service of the said demand notice Ex. P. 2on the accused so as to give rise to cause of action for the complainant to initiate criminal prosecution against the former. The learned Counsel for petitioner argued that under Section 138(c) of the Act, it was imperative requirement for the complainant to place sufficient material establishing the actual date of demand notice contemplated thereunder. In the absence of that date, it was not possible for the learned Magistrate to assume that any cause of action had arisen for the complainant for his complaint. It was the further contention of Mr. Ramachandra Reddy, learned Counsel for petitioner, that mere production of Ex. P. 5 postal certificate, dated 21-11-1994 cannot be taken as prima facie proof of the actual date of service thereof on the accused for the purpose of Section 138 of the Act. In support of this contention reliance was sought to be placed by him on a decision of this Court in Chandrappa v K. Subramanya and Another as also on the observation of the Supreme Court at para 11 of its judgment in K. Narasimhiah v H.C. Singri Gowda and Others .

The material provision Section 138(c) reads:

'138. Dishonour of cheque for insufficiency, etc., of funds in the account.--Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or both:

Provided that nothing contained in this section shall apply unless.-

(a) .....

(b) .....

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice'.

The material portion of relevant Section 142 which relates to 'cognizance of offences' reads:

'142. Cognizance of offences.--Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974).-

(a) no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138;

(c) .....

A combined reading of Section 138(c) and Section 142(b) clearly brings this legal position to the fore that it is the date of actual service of the complainant's (payee's or of the holder in due course of the cheque) demand notice on the accused (drawer of the cheque) which gives rise for cause of action under clause (c) of the proviso to Section 138 for the former to lodge the complaint for an offence under Section 138 of the Act against the latter and that this cause of action arises on the date when the said notice is shown to have been duly served on the accused, and also that if within fifteen days of receipt of the notice if the drawer accused pays up the dishonoured cheque amount to the payee complainant or the holder in due course of the cheque the cause of action for the said purpose would cease to exist. The learned Magistrate gets the jurisdiction to entertain the complaint under Section 142 and take cognizance of the offence under Section 138 of the Act only when a valid cause of action therefor exists.

6. Therefore, the crucial point that was required to be considered by the Magistrate in the instant case was whether the complainant had placed sufficient material on record disclosing the actual date of service of Ex. P. 2 demand notice on the accused so as to make out whether the cause of action for the former had arisen to present the complaint against the latter. There is no statement made in the complaint that the notice under Ex. P. 5 postal certificate, said to have been issued by him to the accused was served on the latter on any particular date. Nor was it so stated by him in his sworn statement recorded by the learned Magistrate. All that he has produced is Ex. P. 5 postal certificate disclosing the postal despatch of the said notice to the accused on 25-11-1994.

7. This Court relying on its earlier decisions in Bashettiyavar Brothers v IV I.T.O., Hubli and Others and D.V. Haridev v B. Narayanamurthy (dead) by L.Rs and Another , has held in the case of Chandrappa,supra:

'Certificate of posting merely evidences the fact of posting of a postal article, but it does not evidence the fact of delivery of postal article to the addressee even though the address given on the postal article is correct'.

The Supreme Court in K. Narasimhiah's case, supra, has observed:

' 'Giving' or anything as ordinal understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law however 'giving' is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses to accept it. We can find however no authority or principle for the proposition that as soon as the person with a legal duty to give the notice despatches the notice to the address of the person to whom it has to be given, the giving is complete'.

8. As has been held by this Court in Chandrappa's case, supra, no inference of service of notice on the addressee muchless of any definite date of the service thereof could be drawn or presumed merely on the basis of the relevant 'certificate of posting'. The posting of a postal article on a particular date cannot and is not proof of the fact of its actual delivery to the addressee and of the particular date on which it was received by him even though the address given on that article is correct. Therefore, in the case on hand, I find, as rightly maintained by Mr. Ramachandra Reddy, that there being total lack of material on record disclosing the actual date of service of Ex. P. 3 demand notice on the accused, the cause of action in respect of said cheque transaction between the parties had not yet arisen and it was not available to the complainant to maintain his complaint before the learned Magistrate alleging commission of offence under Section 138 of the Act by the accused, and in that view of the legal position, the learned Magistrate had no jurisdiction to entertain the complaint and proceed to take cognizance of the alleged offence for the purpose of trial of the accused. Therefore, the criminal proceeding against the petitioner in the said C.C. No. 16209 of 1995 on the file of the learned Magistrate is liable to be quashed.

9. Hence, the petition is allowed. The prosecution of the petitioner-accused in C.C. No. 16209 of 1995 and the proceeding therein against him is quashed.