Sunday, 10 April 2016

Whether case for dishonour of cheque is maintainable if notice is returned with remark 'Not claimed'?

 Since in Bhaskaran's case (supra), the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court posed the question: 'Will there be any significant difference between the two so far as the presumption of service is concerned?' It was observed that though Section 138 of the Act does not require that the notice should be given only by 'post', yet in a case where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short 'G.C. Act') could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sender unless he proves that it was not really served and that he was not responsible for such non-service.
Equivalent Citation: 2013(3)ABR860, 2014ALLMR(Cri)1836, 2013(2)BomCR(Cri)502, 2013CriLJ2415, 2013(2)Crimes576(Bom.), 2013(6)MhLj147
IN THE HIGH COURT OF BOMBAY
Criminal Revision Application No. 435 of 2011
Decided On: 03.04.2013
Appellants: Rekha Mahindra Shah
Vs.
Respondent: Gautam Umed Parmar and The State of Maharashtra
Hon'ble Judges/Coram:S.C. Dharmadhikari, J.


1. The Applicant/Accused has approached this Court in revisional jurisdiction challenging the Judgment and Order dated 5th September, 2011 delivered by the Additional Sessions Judge, Kolhapur in Criminal Appeal No. 19 of 2008. By this Judgment and Order, the learned Additional Sessions Judge has confirmed the Judgment and Order dated 12th December, 2007 of the learned Judicial Magistrate, First Class, 10th Court, Kolhapur in Summary Criminal Case No. 2252 of 2005. The learned Magistrate had convicted and sentenced the Applicant/Original Accused for an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, (for short "the N.I. Act"). It is common ground that the Original Complainant/Respondent No. 1 before me carries on business in the name and style M/s. Parmar Steel at Kolhapur. It is alleged by the Respondent No. 1/Original Complainant that the Applicant/Original Accused approached him in 2004-05 and purchased M.A. Structure goods on credit basis. Towards purchase of these materials, the Applicant/Original Accused issued three cheques drawn on the Karnataka Bank Limited, Shahupuri Branch at Kolhapur dated 12th April, 2005 of total amount of Rs. 5,00,000/-. These cheques were presented by the Respondent No. 1/Original Complainant through his Bank M/s. UTI Bank Limited, Kolhapur and the Bank forwarded the memo of dishonor of each cheque by the Applicant's Bank containing the remark "exceeds arrangement". The Respondent No. 1/Original Complainant, therefore, issued a notice dated 31st May, 2005 by Registered Post Acknowledgment Due demanding the sum under these three cheques. This notice was received by the Applicant/Original Accused on 1st June, 2005. The Applicant/Original Accused did not make payment, as demanded, within the time specified, and that is how the complaint alleging offence punishable under Section 138 of the N.I. Act came to be filed.
2. Upon the complaint being filed, a summons was issued and the charges were framed. The defence of the Applicant/Original Accused was of denial. That is how the case was tried and the evidence was recorded. Even the documents were exhibited. The statement of the Applicant/Original Accused under Section 313 of the Code of Criminal Procedure, 1973, was recorded.
3. On appraisal and appreciation of the oral and documentary evidence, the Trial Court convicted the Applicant/Original Accused of the offence punishable under Section 138 of the N.I. Act and sentenced her to undergo simple imprisonment for one month. The learned Judge also granted compensation of Rs. 6,00,000/- to be payable within one month from the date of the Judgment and Order, failing which the Applicant/Original Accused was to undergo simple imprisonment for three months.
4. It is this Judgment of the Trial Court, which has been confirmed by the lower Appellate Court, leading to the filing of this Criminal Revision Application.
5. Mrs. Badadare, learned Advocate appearing on behalf of the Applicant/Original Accused, has raised only one contention to challenge the conviction and sentence of the Applicant/Original Accused. She submits that before the Trial Court and, equally, before the lower Appellate Court, it was argued that the Applicant/Original Accused had denied receiving notice of demand (Exhibit-29). She submitted that this was her stand in the statement recorded under Section 313 of the Code of Criminal Procedure, 1973. The acknowledgment, that was allegedly produced, of receipt of the said notice was not signed by the Applicant/Original Accused, but it bears signature of her husband. In such circumstances and when the notice of demand itself was not received by the Applicant/Original Accused, she has not committed any offence under Section 138 of the N.I. Act. That notice of demand and refusal to comply therewith is an offence under this provision and, therefore, in the absence of any acknowledgment of receipt of the notice of demand, the offence has not been committed at all. Therefore, her conviction and sentence is completely vitiated.
6. Mrs. Badadare, in support of her above argument that notice of demand should be served on the person who has issued the cheque, relies upon the Judgment of the Hon'ble Supreme Court in the case of M.D. Thomas Vs. P.S. Jaleel & Anr., reported in MANU/SC/1047/2009 : (2009) 14 SCC 398.
7. On the other hand, Mr. Borkar, learned Counsel appearing on behalf of the Respondent No. 1/Original Complainant, submits that the argument canvassed before this Court is an afterthought. This argument was canvassed before the Courts below and it was rejected by holding that the notice of demand was issued. It was addressed to the Applicant/Original Accused. It was delivered at the address whereat the Applicant/Original Accused resides and carries on her business. It has been received at the said address. Merely because the acknowledgment card is signed by her husband does not mean that the Applicant/Original Accused was not served with or did not receive the demand notice. If the Applicant/Original Accused has received the demand notice and she has failed to comply therewith, then, she cannot complain that the law has been violated, or, that the conviction and sentence is illegal. If such defences are allowed, then, on technical and frivolous grounds, the conviction and sentence can be interfered with. In revisional jurisdiction, unless this Court is satisfied that there is failure of justice, it should not interfere. Therefore, this Criminal Revision Application be dismissed.
8. Mr. Borkar has relied upon the Judgment of the Hon'ble Supreme Court in the case of C.C. Alavi Haji Vs. Palapetty Muhammed & Anr., reported in MANU/SC/2263/2007 : 2007 (6) SCC 555.
9. While dealing with the above contentions, firstly, the factual background needs to be cleared. The demand notice was issued. The demand notice was addressed to the Applicant/Original Accused. The demand notice was delivered at the address of the Applicant/Original Accused. The demand notice together with the acknowledgment has been duly proved. Exhibit-29 is the demand notice and Exhibit-30 is the acknowledgment. The acknowledgment shows that the packet has been received by M/s. Paras Paints through its Proprietor. However, the Applicant/Original Accused urged that the acknowledgment card has been signed by her husband Mahendra Shah and the signature is of her husband. The Trial Court as also the lower Appellate Court have concurred in holding that the address mentioned of the Applicant/Original Accused in the complaint and in the demand notice so also the acknowledgment card is identical. Even the summons in the complaint was served on the same address. Therefore, the Trial Court and the lower Appellate Court held that the Applicant/Original Accused was served with and had received the notice. Therefore, she cannot complain that merely because the acknowledgment has been signed by her husband, that will not mean that either the demand notice is unserved or not received at all. Therefore, this defence was termed as "too technical" so as to be entertained.
10. Before the lower Appellate Court, reliance was placed on the Judgment of the Hon'ble Supreme Court in the case of M.D. Thomas Vs. P.S. Jaleel & Anr. (supra).
11. Before noting the facts in the above Judgment of the Hon'ble Supreme Court, it must be pointed out that, throughout, the view of the Hon'ble Supreme Court in such cases has been that there can be a presumption of receipt of a letter sent under postal certificate in view of the provisions of Section 114, Illustration (f), of the Evidence Act, 1872.
12. In the case of Greater Mohali Area Development Authority Vs. Manju Jain, reported in MANU/SC/0627/2010 : (2010) 9 SCC 157, the Hon'ble Supreme Court has observed as under:
16. The High Court failed to note that the appellants had taken a specific plea that the letter of allotment had been communicated to respondent No. 1 by Registered Post. The Privy Council in Harihar Banerjee v. Ramshashi Roy MANU/PR/0030/1918 : AIR 1918 PC 102, held that there can be a presumption of receipt of a letter sent under postal certificate in view of the provisions of Section 114 Illustration (f) of the Indian Evidence Act, 1872 (hereinafter the Evidence Act).
17. In L.M.S. Ummu Saleema v. B.B. Gujaral MANU/SC/0072/1981 : AIR 1981 SC 1191, this Court dealt with the issue of presumption of service of letter sent under postal cover, and observed: (SCC p. 322 para 6)
6...The certificate of posting might lead to a presumption that a letter addressed to the Assistant Collector of Customs was posted on 14-8-1980 and in due course reached the addressee. But it is only a permissible and not an inevitable presumption. Neither Section 16 nor Section 114 of the Evidence Act compels the Court to draw a presumption. The presumption may or may not be drawn. On the facts and circumstances of a case, the Court may refuse to draw the presumption. On the other hand, the presumption may be drawn initially but on a consideration of the evidence, the Court may hold the presumption rebutted....
18. In C.C. Alavi Haji v. Palapetty Muhammed MANU/SC/2263/2007 : (2007) 6 SCC 555, this Court reiterated a similar view that Section 27 of the General Clauses Act, 1897 and Section 114 Illustration (f) of the Evidence Act, give rise to a presumption that the service of a notice has been effected when it is sent to the correct address by registered post. This Court held as under: (SCC p. 564, para 14)
14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post...Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business.
19. This Court has reiterated a similar view in Gujarat Electricity Board v. Atmaram Sungomal Poshani MANU/SC/0200/1989 : AIR 1989 SC 1433; CIT v. V.K. Gururaj MANU/SC/1348/1996 : (1996) 7 SCC 275; Poonam Verma v. Delhi Development Authority MANU/SC/8225/2007 : (2007) 13 SCC 154; Sarav Investment & Financial Consultancy (P) Ltd. v. Lloyds Register of Shipping Indian Office Staff Provident Fund MANU/SC/8014/2007 : (2007) 14 SCC 753; Union of India v. S.P. Singh MANU/SC/7629/2008 : (2008) 5 SCC 438; Municipal Corporation, Ludhiana v. Inderjit Singh MANU/SC/4530/2008 : (2008) 13 SCC 506 and V.N. Bharat v. DDA AIR MANU/SC/8009/2008 : 2009 SC 1233.
13. Pertinently, the Hon'ble Supreme Court has referred to the very Judgment which was cited before me by the parties.
14. Even prior thereto, the view taken by the Hon'ble Supreme Court has been that once it is proved that a summons or notice was sent by Registered Post to a correct and given address, then, the Defendant's/Opponent's own conduct becomes important. Section 27 of the General Clauses Act, 1897 enacts a presumption. The presumption is rebuttable. It is always open for a party like the Applicant before me seeking to rebut the presumption to lead convincing and cogent evidence (See Basant Singh & Anr. Vs. Roman Catholic Mission MANU/SC/0855/2002 : (2002) 7 SCC 531).
15. Finally, in the later Judgment of the Hon'ble Supreme Court in the case of Parimal Vs. Veena alias Bharti, reported in MANU/SC/0105/2011 : 2011 (3) SCC 545, the Hon'ble Supreme Court has held that there is a presumption that the addressee has received the letter sent by the Registered Post. This presumption is rebuttable. (See paras 17 to 19 at page 552).
16. It is in this context that the Judgment in M.D. Thomas's case (supra) will have to be referred. Therein, the argument was that the Respondent P.S. Jaleel did not serve the notice as per the requirement of Clause (b) of Proviso to Section 138 of the N.I. Act upon the Appellant M.D. Thomas. That notice was not served on the said M.D. Thomas but his wife.
17. It is in this backdrop that the Hon'ble Supreme Court referred to Section 138 of the N.I. Act and its Proviso and held that the demand for payment has to be made by a notice in writing addressed to and served on the drawer of the cheque within 30 days of the receipt of information from the Bank regarding return of the cheque as unpaid. If the notice was not served at all on the Accused, but that service of such notice on the wife of the Accused was treated as sufficient compliance with the requirement under Section 138 of the N.I. Act by the High Court, then, the Hon'ble Supreme Court has reversed that view of the High Court and the Judgment convicting the Appellant before it. Thus, there was admittedly no presumption which can be raised in terms of Section 27 of the General Clauses Act, 1897 in favour of the Complainant in such cases. If the notice is not served at all, then, the conclusion can be in terms of the Hon'ble Supreme Court's decision.
18. However, as held by the Hon'ble Supreme Court in a Three Judges' Bench's decision in the case of C.C. Alavi Haji Vs. Palapetty Muhammed & Anr. (supra), that the requirement of giving notice to the drawer of the cheque is mandatory, but there is a presumption and which is equally available and applicable. In that context, the reliance placed on this Judgment by Mr. Borkar, learned Counsel for Respondent No. 1/Original Complainant, is appropriate.
19. Paras 7 to 11 and 14 to 16 of the said decision read as under:-
7. The issue with regard to interpretation of the expression 'giving of notice' used in Clause (b) of the proviso is no more res integra. In K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr., MANU/SC/0625/1999 : 1999 Cri.L.J. 4606, the said expression came up for interpretation. Considering the question with particular reference to scheme of Section 138 of the Act, it was held that failure on the part of the drawer to pay the amount should be within fifteen days 'of the receipt' of the said notice. '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 at the correct address and for the drawer to comply with Clause (c) of the proviso. Emphasizing that the provisions contained in Section 138 of the Act required to be construed liberally, it was observed thus: (SCC p. 519, paras 20-21)
20. 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 on 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.
21. In Maxwell's Interpretation of Statues the learned author has emphasized that "provisions relating to giving of notice often receive liberal interpretation," (vide page 99 of the 12th Edn.) 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 dispatched his part is over and the next depends on what the sendee does.
8. Since in Bhaskaran's case (supra), the notice issued in terms of Clause (b) had been returned unclaimed and not as refused, the Court posed the question: 'Will there be any significant difference between the two so far as the presumption of service is concerned?' It was observed that though Section 138 of the Act does not require that the notice should be given only by 'post', yet in a case where the sender has dispatched the notice by post with correct address written on it, the principle incorporated in Section 27 of the General Clauses Act, 1897 (for short 'G.C. Act') could profitably be imported in such a case. It was held that in this situation service of notice is deemed to have been effected on the sender unless he proves that it was not really served and that he was not responsible for such non-service.
9. All these aspects have been highlighted and reiterated by this Court recently in Vinod Shivappa's case (supra). Elaborately dealing with the situation where the notice could not be served on the addressee for one or the other reason, such as his non availability at the time of delivery, or premises remaining locked on account of his having gone elsewhere etc; it was observed that if in each such case, the law is understood to mean that there has been no service of notice, it would completely defeat the very purpose of the Act. It would then be very easy for an unscrupulous and dishonest drawer of a cheque to make himself scarce for sometime after issuing the cheque so that the requisite statutory notice can never be served upon him and consequently he can never be prosecuted. It was further observed that once the payee of the cheque issues notice to the drawer of the cheque, the cause of action to file a complaint arises on the expiry of the period prescribed for payment by the drawer of the cheque. If he does not file a complaint within one month of the date on which the cause of action arises under Clause (c) of the proviso to Section 138 of the Act, his complaint gets barred by time. Thus, a person who can dodge the postman for about a month or two, or a person who can get a fake endorsement made regarding his non availability, can successfully avoid his prosecution because the payee is bound to issue notice to him within a period of 30 days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. He is, therefore, bound to issue the notice, which may be returned with an endorsement that the addressee is not available on the given address. This Court held: (SCC p. 463, para 15)
15. We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, it would be premature at the stage of issuance of process, to move the High Court for quashing of the proceeding under Section 482 of the Code of Criminal Procedure. The question as to whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence. In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure.
10. It is, thus, trite to say that where the payee dispatches the notice by registered post with correct address of the drawer of the cheque, the principle incorporated in Section 27 of the G.C. Act would be attracted; the requirement of Clause (b) of proviso to Section 138 of the Act stands complied with and cause of action to file a complaint arises on the expiry of the period prescribed in Clause (c) of the said proviso for payment by the drawer of the cheque. Nevertheless, it would be without prejudice to the right of the drawer to show that he had no knowledge that the notice was brought to his address.
11. However, the Referring Bench was of the view that this Court in Vinod Shivappa's case (supra) did not take note of Section 114 of Evidence Act in its proper perspective. It felt that the presumption under Section 114 of the Evidence Act being a rebuttable presumption, the complaint should contain necessary averments to raise the presumption of service of notice; that it was not sufficient for a complainant to state that a notice was sent by registered post and that the notice was returned with the endorsement 'out of station'; and that there should be a further averment that the addressee-drawer had deliberately avoided receiving the notice or that the addressee had knowledge of the notice, for raising a presumption under Section 114 of Evidence Act.
14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post. In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement 'refused' or 'not available in the house' or 'house locked' or 'shop closed' or 'addressee not in station', due service has to be presumed. [Vide Jagdish Singh v. Natthu Singh, MANU/SC/0313/1992 : AIR 1992 SC 1604; State of M.P. v. Hiralal and Ors., MANU/SC/1388/1996 : [1996] 1 SCR 480 and V. Raja Kumari v. P. Subbarama Naidu and Anr., MANU/SC/0937/2004 : 2005 Cri.L.J. 127]. It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved.
15. Insofar as the question of disclosure of necessary particulars with regard to the issue of notice in terms of proviso (b) of Section 138 of the Act, in order to enable the Court to draw presumption or inference either under Section 27 of the G.C. Act or Section 114 of the Evidence Act, is concerned, there is no material difference between the two provisions. In our opinion, therefore, when the notice is sent by registered post by correctly addressing the drawer of the cheque, the mandatory requirement of issue of notice in terms of Clause (b) of proviso to Section 138 of the Act stands complied with. It is needless to emphasize that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. It is well settled that at the time of taking cognizance of the complaint under Section 138 of the Act, the Court is required to be prima facie satisfied that a case under the said Section is made out and the afore noted mandatory statutory procedural requirements have been complied with. It is then for the drawer to rebut the presumption about the service of notice and show that he had no knowledge that the notice was brought to his address or that the address mentioned on the cover was incorrect or that the letter was never tendered or that the report of the postman was incorrect. In our opinion, this interpretation of the provision would effectuate the object and purpose for which proviso to Section 138 was enacted, namely, to avoid unnecessary hardship to an honest drawer of a cheque and to provide him an opportunity to make amends.
16. As noticed above, the entire purpose of requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of Section 138. In Vinod Shivappa (supra), this Court observed:
One can also conceive of cases where a well intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. The law treats such lapses induced by inadvertence or negligence to be pardonable, provided the drawer after notice makes amends and pays the amount within the prescribed period. It is for this reason that Clause (c) of proviso to Section 138 provides that the section shall not apply unless the drawer of the cheque fails to make the payment within 15 days of the receipt of the said notice. To repeat, the proviso is meant to protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfill their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, it being a part of their modus operandi to cheat unsuspecting persons.
20. To my mind, once the Judgments of the Hon'ble Supreme Court are read in the backdrop of the factual materials before the Hon'ble Supreme Court, then, there is neither any confusion, nor any difference or divergence in the views and opinions. The requirement of service has to be complied with. The requirement to serve a notice demanding payment is held to be mandatory prerequisite, but the manner in which that notice is served and the receipt thereof are matters of presumption and once these two aspects are differentiated and noticed in the above terms, then, the question of differing Hon'ble Supreme Court's Judgments does not arise.
21. In the facts of the present case, there is no dispute about service of the notice in terms of Section 27 of the General Clauses Act, 1897 and Section 28 of the Bombay General Clauses Act, 1904. The notice was issued and served, but the Applicant did not receive it personally. It was her husband who received it. In these circumstances, both the Courts below did not commit any error in holding that the notice is duly served and received as well. Once it is duly served and received and there is no compliance with the requisitions contained therein, then, the offence is committed. Once the offence is committed, then, the conviction and sentence is valid, legal and proper. There is no evidence to rebut the presumption in favour of the Complainant of service of the notice and its receipt. The findings recorded by the lower Appellate Court in paras 18 and 19 of the impugned Judgment and Order, therefore, do not suffer from any error of law apparent on the face of record or perversity requiring interference in my revisional jurisdiction. This Criminal Revision Application is, therefore, devoid of any merits and is dismissed. At this stage, Mrs. Badadare, learned Counsel appearing on behalf of the Applicant, prays for stay of this order. I have upheld the conviction and sentence. The Criminal Revision Application is dismissed. There cannot be any stay of such an order.

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