It is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" i.e. cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement. Where in addition to "said amount" there is also a claim by way of interest cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving up break up of the claim the cheque amount, interest damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice, if however, in the notice omnibus demand is made without specifying what was due under the dishonoured cheque, notice
might well fail to meet the legal requirement and may be regarded as bad.
12. Turning to the facts of the instant case, the date of the cheque and number of the cheque were given in the notice, but without mentioning the amount covered by the cheque. The notice has sufficiently answered the legal requirement enjoined under clause (b) of the proviso to Section 138 of the Act. In my considered view, if the number and the date of the cheque were given the same would give sufficient information to the drawer, when he was called upon to pay the amount covered by that cheque while informing that the said cheque was bounced. Admittedly, when the accused was drawer of the cheque, it cannot be said that he did not know the amount covered by the said cheque nor it can be legitimately said that when he was called upon to pay the amount covered by the cheque he could not know the amount covered by it.
Criminal Appeal No. 557 of 2006
Decided On: 27.03.2012
Yugalkishore Maniklal Bhattad Vs. Shrikrishna Gupta
Hon'ble Judges/Coram:
A.P. Bhangale, J.
Citation; 2012 (4)Crimes 684 (bom)
Judgment
1. The appeal is directed against the judgment and order dated 6.7.2006 passed by the Judicial Magistrate, FC, Nagpur (Special Court 2 Cri. Appeal 557/06
under Section 138 of the Negotiable Instruments Act) in Summary Criminal Case No. 2543 of 2005 whereby the complaint was dismissed.
2. Briefly stated the facts are -
Complaint was filed on 29.11.2005 by the appellant against the respondent/accused complaining of an offence punishable under Section 138 of the Negotiable Instruments Act. The complainant had advanced a sum of Rs. 50,000/- to the accused on account of acquaintance with him. The accused had issued Cheque bearing No. 349135 dated 22.10.2005 drawn on the Nagpur Nagarik Sahakari bank Limited, Itwari Branch, Nagpur for Rs. 50,000/- which was admittedly signed by him. This cheque was presented by complainant to the UCO Bank, Sitabuldi Branch, Nagpur, but was returned back on 22.10.2005 with the remarks "account closed". Legal notice dated 27.10.2005 had been issued to the respondent herein by registered post A/D calling upon the accused to make payment within fifteen days. After the expiry of the statutory period, payment having not been received, complaint under Section 138 of the Negotiable Instruments Act came to be filed.
3. I have perused the complaint. It specifically states that the accused had issued the cheque in discharge of his liability towards loan taken by him from the complainant. This cheque had been returned 3 Cri. Appeal 557/06
unpaid on 22.10.2005 under a memorandum with the remarks "account closed". The cheque had been admittedly issued from an account which was maintained by the accused; cheque had been returned unpaid for the reason that the account stood closed and it is not the case of respondent that this account was not his account.
4. Learned counsel for the respondent-accused submitted that in the ruling in Suman Sethi vs. Ajay Churiwal reported in 2000 All MR (Cri) 645, it is laid down that the notice has to be read as a whole. It depends upon the facts and circumstances. If omnibus demand is made without specifying exactly what was due under the dishonoured cheque, notice might well fail to meet the legal requirement.
5. It cannot be disputed that the notice has to be read in its entirety and the demand has to be made for the amount due upon the cheque. The object of notice is to give an opportunity to the noticee- accused to make amends for his omission to pay the cheque amount before the stipulated statutory period expires and before the complaint is lodged. Legal liability under Section 138 of the Act can be discharged if cheque amount is paid. In the proceedings under Section 138 of the Negotiable Instruments Act, a hyper technical approach should be avoided. For making out case under Section 138 of the Act, what is required to be 4 Cri. Appeal 557/06
considered mainly is, whether the cheque is issued by the accused which has been signed by him and whether such cheque has been dishonoured or not. The accused is supposed to know his liability when he issues a cheque. He cannot be allowed to put forward a lame excuse later on while facing the prosecution that the bank account was closed when the cheque was issued. There is statutory presumption under Section 139 of the Act that holder of the cheque received the cheque in discharge of a debt or other liability, unless specific evidence is led to rebut the presumption.
6. In the present case, it is not in dispute that the reason for dishonour of the cheque in question was closure of account. The question arises, as to whether it is a valid ground for dishonour of the cheque to claim exemption from penal liability. Learned counsel for the appellant has made reference to ruling in Shivendra Sansguiri v. M/s Adineo & anr reported in 1996 Cri. L.J. 1816. In that case, the cheque was bounced with remarks "account closed". This Court (T.K. Chandrashekhara Das, J, as he then was) observed that there could be so many circumstances both anticipated or unanticipated by the Legislature under which a Banker dishonours a cheque and the Legislature intends to cover all such eventualities that emanate from the present day commercial practices by implication. The Legislature certainly did not want to limit the operation of the said Section to a particular circumstances. As such circumstances 5 Cri. Appeal 557/06
will be manifold in the commercial world under which a cheque could be dishonoured. Legislature wanted in its wisdom to rope in all such circumstances that may originate in future also and that is why it used the word "etc." in the sub-title of the Section. Insufficiency of funds is only one of the contingencies that can happen in the commercial transaction which results in dishonouring of a cheque. This Court further observed that it is equally fallacious that in order to come under the ambit of Section 138 there must be a bank account alive at the time of presentation of a cheque in the bank. In fact, in order to come under the mischief of Section 138, two events alone need be established. First, that cheque drawn on a Bank should be dishonoured by the Banker on its presentation. Mere dishonouring of a cheque cannot implicate the drawer of the cheque for offence under Section 138. Secondly, the holder of the cheque should bring to the notice of the drawer of cheque the event of dishonour within 30 days from the date of receipt of intimation as to dishonour and in case the drawer of the cheque did not pay the amount covered by the cheque within 15 days thereafter, then penal liability under Section 138 will attract. Therefore, the ground under which the cheque was dishonoured is not very material. The fact that the cheque was dishonoured by itself is not very much material as indicated in the Objects and Reasons of the amendment of Negotiable Instruments Act bringing Section 138 in the statute book. The penal liability under Section 138 arises only where a 6 Cri. Appeal 557/06
drawer refuses to correct or rectify his mistakes. In other words, once the cheque is issued, law takes care to see that it is honoured, failing which an erring drawer will be penalised. Mistake by oversight or any other reason could be cured within 15 days. If a debtor with an ulterior motive issues a cheque in discharge of his debt and closes the account before or after the issuance of cheque to avoid payment, debtor/drawer is doing so at his own risk. Cheque facility is provided by a Bank to its customer only when a customer opens an account in a Bank with funds. This is part of its banking activity.
7. This Court has also observed in Rajendra Khode v. Laxmikant and anr reported in 2000 Cri.L.J. 1195 that Section 138 of the Act is attracted even if drawer has closed his account.
8. The Apex Court in NEPC Micon v. Magma Leasing reported in 1999 Cri. LJ 2883 has settled the law on the point. The Supreme Court has observed that Section 138 of the Negotiable Instruments Act is to be interpreted taking into consideration the legislative intent and purpose so as to suppress the mischief and advance the remedy and therefore, when the cheque is returned by a bank with an endorsement "account closed" it would attract Section 138 of the Negotiable Instruments Act. The relevant observations of the Supreme Court are as under :
7 Cri. Appeal 557/06
"In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the Court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, Section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial world of contractual transactions; cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above "brush away the cobweb varnish and show the transactions in their tube light" (Wilmot, C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so constructed as to defeat all attempts to do, or avoid doing to an indirect or circuitous manner that it has prohibited". Hence, when the cheque is returned by a bank with an endorsement "account closed", it would amount to returning the cheque unpaid because the amount of money standing to the credit of that account is insufficient to honour the cheque as envisaged in Section 138 of the Act."
9. It is also contended by learned counsel for respondent that the demand notice did not mention the cheque amount specifically and, 8 Cri. Appeal 557/06
therefore, learned trial Magistrate has rightly acquitted the respondent/accused. This contention is refuted on behalf of the appellant on the ground that such contention was never raised by the accused in the trial Court. It is, therefore, contended that the accused was not at all prejudiced by non-mention of the amount. It is submitted that demand notice had given sufficient particulars calling upon the accused to make payment due under the cheque which had bounced due to closure of account. The accused cannot feign ignorance of facts of which he is well aware while issuing the cheque.
10. Contention raised by learned counsel for respondent-accused that merely because the demand notice did not mention the debt, claim of the complainant should be discarded has to be negatived. Firstly, because the accused did not raise that objection before the learned Magistrate. Secondly, the Court should lean in favour of an interpretation which serves the object of the statute. In Gopal Plast v. Chico Ursula and anr reported in 2003 (Cri) 603, the Apex Court has held that Chapter XVII containing Sections 138 to 142 was introduced in the Act by the Act 66 of 1988 with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions. The said provisions were intended to discourage people from not honouring their commitments by way of payment through cheques. The court should 9 Cri. Appeal 557/06
lean in favour of an interpretation which serves the object of the statute. A post-dated cheque will lose its credibility and acceptability if its payment can be stopped routinely for no just reason. The purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that the drawer of the cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of a post-dated cheque.
11. Similarly, in Suman Sethi v. Ajay Churiwal and anr reported in 2000 Cri.L.J. 1391, the Apex Court has held in paragraph 8 as under :
8. It is well settled principle of law that the notice has to be read as a whole. In the notice, demand has to be made for the "said amount" i.e. cheque amount. If no such demand is made the notice no doubt would fall short of its legal requirement. Where in addition to "said amount" there is also a claim by way of interest cost etc. whether the notice is bad would depend on the language of the notice. If in a notice while giving up break up of the claim the cheque amount, interest damages etc. are separately specified, other such claims for interest, cost etc. would be superfluous and these additional claims would be severable and will not invalidate the notice, if however, in the notice omnibus demand is made without specifying what was due under the dishonoured cheque, notice 10 Cri. Appeal 557/06
might well fail to meet the legal requirement and may be regarded as bad.
12. Turning to the facts of the instant case, the date of the cheque and number of the cheque were given in the notice, but without mentioning the amount covered by the cheque. The notice has sufficiently answered the legal requirement enjoined under clause (b) of the proviso to Section 138 of the Act. In my considered view, if the number and the date of the cheque were given the same would give sufficient information to the drawer, when he was called upon to pay the amount covered by that cheque while informing that the said cheque was bounced. Admittedly, when the accused was drawer of the cheque, it cannot be said that he did not know the amount covered by the said cheque nor it can be legitimately said that when he was called upon to pay the amount covered by the cheque he could not know the amount covered by it.
13. In the light of above discussion, impugned judgment and order cannot be maintained. Appellant-complainant has duly proved that respondent-accused had issued cheque for Rs. 50,000/- for discharge of legally enforceable debt or liability. It is further established on record that inspite of service of statutory notice, respondent-accused failed to make payment of cheque within 15 days and thereby committed an offence 11 Cri. Appeal 557/06
punishable under Section 138 of the Negotiable Instruments Act. Hence, appeal will have to be allowed.
14. I am aware that this appeal is against acquittal and the High Court would not ordinarily set aside judgment of acquittal when two views are possible and although the view of the appellate court is more probable. However, in my opinion, this Court is free to consider the entire evidence on record so as to arrive at a finding as to whether view of the trial Magistrate was perverse or otherwise unsustainable. This Court is entitled to consider whether the trial Magistrate had failed to take into consideration admissible evidence and took into consideration evidence which was brought on record contrary to law, wrong placing of burden of proof may also form subject-matter of scrutiny of the appellate court. Thus, there is no embargo on the appellate court to review the evidence upon which an order of acquittal was based. It has to be ensured that miscarriage of justice must be prevented. If admissible evidence was ignored and if impugned judgment is clearly unreasonable and the trial Magistrate considered irrelevant factors while in reaching to the conclusion which is palpably wrong in the facts of the case, the appellate Court can certainly overturn the judgment of acquittal, in the interest of justice.
15. In the result, impugned judgment and order of acquittal is set 12 Cri. Appeal 557/06
aside. Respondent-accused is held guilty of the offence punishable under Section 138 of the Negotiable Instruments Act and he is directed to suffer simple imprisonment till rising of the Court and to pay a fine in the sum of Rs. 60,000/- (Rupees Sixty thousand only), in default, to suffer rigorous imprisonment for three months. On request made by learned counsel for the respondent, respondent is granted four weeks' time from today to pay the amount of fine. If the amount of fine is recovered, the same shall be paid to the complainant as compensation in view of provisions of Section 357 of the Code of Criminal Procedure.
A. P. BHANGALE, J
joshi
13 Cri. Appeal 557/06
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