The Petitioner, who is arrayed as the accused in CC.No.176/2006 on the file of the learned Judicial Magistrate I, Pollachi, Coimbatore, has filed this Criminal Original Petition to quash the said proceedings.
2. The brief facts, which are essential for the disposal of this Criminal Original Petition, are as follows:-
The Petitioner had borrowed a loan of Rs.2,90,000/- from the Respondent on 2.9.2003 and he is said to have executed a promissory note, promising to repay the loan amount with interest at 18% p.a. Since he failed to repay the amount, the Respondent is said to have approached him for repayment and it is stated that towards discharge of the loan amount, the Petitioner had issued a cheque bearing No.383534 for a sum of Rs.3,12,500/- drawn on Syndicate Bank.
3. When the said cheque was presented for encashment with the Respondent Bankers namely Karur Vysya Bank on 10.2.2004, the same was returned with an endorsement "funds insufficient" on the same day. The Respondent is said to have approached the Petitioner and demanded the Petitioner to pay the cheque amount on several occasions, but he did not pay the cheque amount and hence, the Respondent had issued a statutory notice on 11.2.2004 through his lawyer, intimating the Petitioner that the cheque had been returned with an endorsement "funds insufficient". It is alleged in the complaint that notice had been returned as refused on 19.2.2004. Thereafter, the Respondent has filed the private complaint under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate, Udumalpet and the same had been transferred at the instance of the Respondent to the Judicial Magistrate I, Pollachi.
4. Mr.Ramalinga Gounder, the learned counsel for the Petitioner would contend that the notice of demand made under Section 138 of the Negotiable Instruments Act has not been served on the Petitioner and in fact on the alleged date of refusal of the legal notice i.e. on 19.2.2004, the accused was under the judicial custody in respect of another police case. He would submit that no cause of action had arisen for prosecution of the Petitioner for the dishonour of the cheque in question under Section 138 of the Negotiable Instruments Act. He would further contend that there is absolutely no prima face case for issuance of summons by the learned Magistrate as mandatory provision of law has been violated and if the criminal proceedings are allowed to continue, then it would only amount to abuse of process of court.
5. The learned counsel for the Petitioner drew the attention of this court to the certified copy of the sworn statement filed in the typed set of papers, wherein it is stated that the notice demanding payment has been returned on 19.2.2004 as refused to receive by the accused. It is the categorical case of the Petitioner that he was not residing at Door No.881, Narasingapuram, Krishnapuram Post, Udumalpet and was residing only at KNK.Stone Crusher Site in S.No.516/1B, Myvadi Village in Udumalpet Taluk. The notice sent by the complainant has been issued only to the address at Door No.881, Narasingapuram, Krishnapuram Post, Udumalpet and the same has been returned with a postal endorsement "no such addressee" and therefore, it is returned to the sender on 19.2.2004. The certified copy of the postal endorsement had also been filed in the typed set of papers. Again when the notice had been sent from the court of the Judicial Magistrate to the same address, it was returned with the same endorsement, but the learned Judicial Magistrate without verifying as to whether the address given in the complaint is correct or not, has taken the case on his file.
6. According to the Petitioner, there is no material to show that he ever resided at Door No.881, Narasingapuram, Krishnapuram Post, Udumalpet at any point of time and suppressing the said fact, the Respondent has given a false information as if the notice has been returned by the addressee as refused. The learned counsel for the Petitioner would submit that the Petitioner was arrested on 17.2.2004 and was remanded to judicial custody for 15 days and was released on conditional bail only on 26.2.2004 by the very same Judicial Magistrate, Udumalept and therefore, there is no possibility for him to return the notice as refused, as he was detained in Sub Jail, Udumalpet. The learned counsel would further contend that since there was no service of notice as contemplated under
Section 138(c) of the Negotiable Instruments Act, there is no cause of action for the complaint and the proceedings have to be quashed.
7. On the other hand, Mr.M.N.Balakrishnan, the learned counsel for the Respondent would submit that when notice of demand of payment had been despatched to the accused, there would be a presumption regarding service of notice and it is open to the complainant to prove during the trial that the addressee had knowledge of the notice and the drawer can also establish by letting in evidence that the said endorsement is false. Therefore, he would contend that on the said ground, the proceedings cannot be quashed.
8. He relied on the decision of the Honourable Supreme Court rendered in the case D.Vinod Shivappa Vs. Nanda Belliappa [2006-Cri.LJ-2897], wherein it is held thus:-
"The question is whether in a case where the postal endorsement shows that the notice could not be served on account of the non availability of the addressee, a cause of action may still arise for prosecution of the drawer of the cheque on the basis of deemed service of notice under cl.(c) of proviso to Section 138 of the Act. This question has to be answered by reference to the facts of each case and no rule of universal application can be laid down that in all cases where notice is not served on account of non availability of the addressee, the Court must presume service of notice. It is well settled that in interpreting a statute the Court must adopt that construction which suppresses the mischief and advances the remedy."
The facts are distinguishable from the said case cited supra, as in the said case the notice sent by Registered Post to the correct address of the accused (emphasis supplied) had been returned with an endorsement "party not in station, arrival not known" and when it was contended by the accused that the complainant himself had admitted in the complaint that notice had not been served within the meaning of Section 138 of the Negotiable Instruments Act, the Honourable Supreme Court refused to agree with the said contention on the ground that the complainant had only stated in the complaint that notice may be deemed to have been served and the reasons for deeming service had been stated in the earlier paragraphs of the complaint. On the said fats and circumstances, the Honourable Supreme Court has held that where the postal endorsement showed that the notice could not be served on account of the non availability of the addressee, a cause of action may still arise for prosecution of the drawer of the cheque on the basis of deemed service of notice under clause (c) of proviso to Section 138 of the Negotiable Instruments Act. It further held that the question of service of notice has to be answered by a reference to the facts of each case.
9. In the case of M/s.Harman Electronics (P) Limited and another Vs. M/s.National Panasonic India Limited [AIR-2009-SC-1168], the Honourable Supreme Court has held thus:-
"Presumption raised in support of service of notice would depend upon the facts and circumstances of each. Its application is on the question of law or the fact obtaining. Presumption has to be raised not on the hypothesis or surmises but if the foundational facts are laid down therefor. Only because presumption of service of notice is possible to be raised at the trial, the same by itself may not be a ground to hold that the distinction between giving of notice and service of notice ceases to exist."
10. In yet another decision rendered by the Honourable Supreme Court in the case of C.C.Alavi Haji Vs. Palapetty Muhammed and another [2007-AIR-SCW-3578], it was held that pre-requirement of giving notice to the drawer of the cheque is mandatory and the object of such requirement is to avoid unnecessary hardship to an honest drawer. It is held thus:-
"6. As noted hereinbefore, Section 138 of the Act was enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to aver unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act, extracted above. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted clause (b) and its aftermath in Clause (C) being a pre condition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is mandatory requirement."
11. In the instant case, admittedly the Petitioner was under the judicial custody on the alleged date of the service of notice i.e. on 19.2.2004 and the statement made by the complainant that the notice had been returned with a postal endorsement as refused is not a correct statement and the same has been deliberately made both in the complaint and in the sworn statement only to defeat the process of law.
12. The learned counsel for the Respondent contended that the prosecution witness has been examined and therefore, the proper course at this stage is to allow the proceedings to go on and the question as to whether there was any proper service of notice or not and whether there was any suppression of fact can be considered at the time of trial. To support his contention, he drew the attention of this court to the decision of the Honourable Supreme Court rendered in the case of Amar Chand Agarwala Vs. Shanti Bose and another [AIR-1973-SC-79].
13. In the case of M/s.Harman Electronics (P) Limited and another Vs. M/s.National Panasonic India Limited [AIR-2009-SC-1168] referred above, the Honourable Supreme Court has laid down that all statutes deserve their strict application and the court derives jurisdiction only when the cause of action arises. As the mandatory requirement under proviso to Clause (c) of Section 138 of the Negotiable Instruments Act has not been complied with, no cause of action had arisen in this case. The Honourable Supreme Court has held thus:-
"24. Indisputably, all statutes deserve their strict application, but while doing so the cardinal principles therefor cannot be lost sight of. A court derives a jurisdiction only when the cause of action arose within his jurisdiction. The same cannot be conferred by any act of omission or commission on the part of the accused. A distinction must also be borne in mind between the ingredient of an offence and commission of a part of the offence. While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative. Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an offence completes. Giving of notice, therefore, cannot have any precedent over the service. It is only from that view of the matter in Dalmia Cement (Bharat) Limited Vs. Galaxy Traders and Agencies Limited [2001-6-SCC-463] emphasis has been laid on service of notice."
14. Section 138 of the Negotiable Instruments Act provides for a penal provision. Such a penal provision enacted in terms of the legal fiction drawn would be attracted and when a cheque is returned by the Bank unpaid. Before a proceeding thereunder is initiated, all the legal requirements therefor must be complied with. The court before whom a private complaint is filed has to be satisfied with all the ingredients of the commission of offence under the provisions have bee complied with. But, in this case, as the mandatory requirement is not complied with, no cause of action would arise for the Respondent to sustain the complaint. In such view of the matter, the proceedings cannot be allowed to be continued.
15. In view of the reasons stated above, the impugned proceedings in CC.No.176/2006 is quashed and this Criminal Revision Petition is allowed accordingly. Consequently, the connected MP is closed.
Srcm To:
The Public Prosecutor, High Court, Madras