TaxTMI 
TaxTMI 
2020 (5) TMI 314
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.... (Om Construction Vs. M/s. Komal Construction), under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "N.I. Act"), Police Station-Obra, District-Sonbhadra, pending in the Court of . 4. The facts, as borne out from the complaint made by opposite party no.2 against the applicant on 13th August, 2014 under Section 138 N.I. Act in the Court of Additional Chief Judicial Magistrate, Sonebhadra, are as follows: The company of applicant, in the name and style of "M/s. Komal Construction, under various work orders and tenders of Railaway and other departmnts, extensively undertakes various types of constructions such as pool construction, brick works etc. on huge basis and all the works and other arrangements are done by the applicant. Since the company got two work orders from M/s. Kalendi Raiwaly Construction (Engineering Ltd.) and for completion of the said work on time and on speed, which requires a lot of labor, resources, machines, etc. to speed up the work to complete on an adjusted basis. To fulfill all those works, the applicant needed to assign work to another person or firm and pay their expenses according to labor under which the applicant m....
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.... the applicant has given some cheques to opposite party no.2 and he has also assured the opposite party no.2 to refund all the money on different dates in future. When Cheque no. 002107 dated 15th June, 2014 for a sum of Rs. 12,00,000/-, Cheque no. 002108 dated 15th June, 2014 for a sum of Rs. 12,00,000/- and Cheque no. 002109 dated 15th June, 2014 for a sum of Rs. 12,00,000/- (i.e. total Rs. 36,00,000/-), which were given by the applicant, has been presented on 3rd July, 2014 by opposite party no.2 for encashment in Allahabad Bank, Branch-Obera, where account of opposite party no. 2 bearing Account No. 5018365077 is maintained, on the same day the same has been returned as dishonoured with a return memo showing "insufficient balance". 5. The said complaint supported by an affidavit has been registered as Complaint Case No. 1546 of 2014 (Om Construction Vs. M/s. Komal Construction), under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "N.I. Act"), Police Station-Obra, District-Sonbhadra. After recording statement of the complainant under Section 200 Cr.P.C, the court below has passed an order dated 16th September, 2014 and when the applicant co....
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....er in due course of the cheque, makes a demand for the payment of the said amount of money by giving a legal notice in writing, to the drawer of the cheque within 15 days of the receipt of the information received by him by the Bank qua the return of the cheque as unpaid. In the complaint, opposite party no.2. has only mentioned the date on which he has received information from the Bank and it has nowhere been mentioned as how he made a demand for the payment of the said amount of money. In absence of necessary and essential ingredients of the alleged offence, the complaint itself becomes void and the proceedings initiated on such a complaint is not at all maintainable. As such the same are liable to be quashed by this Court. Learned counsel for the applicant further submits that even the statement of opposite party no.2 which has been given on an affidavit, does not depict the allegations of sending notice or making a demand from the applicant. The statement like the complaint is absolutely silent about the factum of sending legal notice and failure on the part of the applicant to repay the amount, which is necessary ingredient for constituting an offence under Section 138 N.I. A....
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..... Jugesh Sehgal Vs. Shamsher Singh Gogi, reported in (2009) 14 SCC 683; ii. Yogendra Pratap Singh Vs. Savitri Pandey & Another reported in (2014) 14 SCC 812; iii. N. Harihara Krishnan Vs. J. Thomas reported in (2018) 13 SCC 663. 8. Learned counsel for the applicants, therefore, submitted that the present criminal proceedings initiated against the applicant are an abuse of the process of the Court and law. On the cumulative strength of the aforesaid submissions, it is submitted by learned counsel for the applicants that the proceedings of the above mentioned complaint case are liable to be quashed by this Court. 9. Per contra, Mr. Prashant Kumar, learned A.G.A. for the State and Mr. Anand Priya Singh, learned counsel for opposite party no.2 have opposed the submissions made by the learned counsel for the applicant by contending that there is no illegality or infirmity in the order of summoning of the applicant passed by the concerned Magistrate. Learned counsel for the State and the learned counsel for opposite party no.2, therefore, submits that the present application is liable to be dismissed. 10. I have considered the submissions made by the learned counsel for the applic....
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.... (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: [Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.] (c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138." 12. From the above, it is manifestly clear that a dishonour would constitute an offence only if the cheque is returned by the bank 'unpaid' either because the amount of money standing to the credit of the drawer's account is insufficient to honour the cheque or that the amount exceeds the amount arranged to be paid from that account by an agreement with that bank. Now, for an offence under Section 138 NI Act, it is essential that the cheque must have been issued in....
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....bility is returned by the bank unpaid, because the amount standing to the credit of that account is insufficient to honour the cheque, the said person is deemed to have committed an offence. This is subject to proviso to Section 138 which provides that the cheque should have been presented to the bank within the period of six months from the date of which it is drawn or within the period of its validity, whichever is earlier. The payee must also make a demand for the payment of the said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of the information by him from the bank regarding the return of the cheque unpaid. If despite this demand, the drawer fails to make the payment within fifteen days of the receipt of the notice, a cause of action arises for prosecuting him for the offence punishable under Section 138 of the Act. Section 142 provides that the court shall take cognizance of an offence punishable under Section 138 of the Act upon receipt of a complaint in writing made by the payee or, as the case may be, the holder in due course of the cheque. Such complaint must be made within one month of the date on which the cause of actio....
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....ake 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. 16. If a notice is issued and served upon the drawer of the cheque, no controversy arises. Similarly if the notice is refused by the addressee, it may be presumed to have been served. This is also not disputed. This leaves us with the third 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. 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. There is good authority to support the proposition that once the complainant, the payee of ....
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....ainant cannot be permitted to present the very same complaint at any later stage. His remedy is only to file a fresh complaint; and if the same could not be filed within the time prescribed under Section 142(b), his recourse is to seek the benefit of the proviso, satisfying the Court of sufficient cause. 18. In Jugesh Sehgal (Supra), which has been relied upon by the learned counsel for the applicant, the Apex Court in paragraph-21 has observed as follows: "21. Bearing in mind the above legal position, we are of the opinion that it was a fit case where the High Court, in exercise of its (2008) 3 SCC 574 jurisdiction under Section 482 of the Code, should have quashed the complaint under Section 138 of the Act." 19. In Yogendra Pratap Singh (Supra), which has also been relied upon by the learned counsel for the applicant, in paragraph nos. 36 to 41, the Apex Court has observed as follows: "36. A complaint filed before expiry of 15 days from the date on which notice has been served on drawer/accused cannot be said to disclose the cause of action in terms of clause (c) of the proviso to Section 138 and upon such complaint which does not disclose the cause of action the Court is n....
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....use the drawer/accused cannot be said to have committed any offence until then. We approve the decision of this Court in Sarav Investment & Financial Consultancy and also the judgments of the High Courts which have taken the view following this judgment that the complaint under Section 138 of the NI Act filed before the expiry of 15 days of service of notice could not be treated as a complaint in the eye of law and criminal proceedings initiated on such complaint are liable to be quashed. 39. Our answer to question (i) is, therefore, in the negative. 40. The other question is that if the answer to question (i) is in the negative, can the complainant be permitted to present the complaint again notwithstanding the fact that the period of one month stipulated under Section 142(b) for the filing of such a complaint has expired. 41. Section 142 of the NI Act prescribes the mode and so also the time within which a complaint for an offence under Section 138 of the NI Act can be filed. A complaint made under Section 138 by the payee or the holder in due course of the cheque has to be in writing and needs to be made within one month from the date on which the cause of action has arise....
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....months from the date it was drawn or within the period of its validity whichever is earlier; (4) that the payee demanded in writing from the drawer of the cheque the payment of the amount of money due under the cheque to payee; and (5) such a notice of payment is made within a period of 30 days from the date of the receipt of the information by the payee from the bank regarding the return of the cheque as unpaid. It is obvious from the scheme of Section 138 that each one of the ingredients flows from a document which evidences the existence of such an ingredient. The only other ingredient which is required to be proved to establish the commission of an offence under Section 138 is that inspite of the demand notice referred to above, the drawer of the cheque failed to make the payment within a period of 15 days from the date of the receipt of the demand. A fact which the complainant can only assert but not prove, the burden would essentially be on the drawer of the cheque to prove that he had in fact made the payment pursuant to the demand. 27. By the nature of the offence under Section 138 of the Act, the first ingredient constituting the offence is the fact that a person drew a ....
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.... 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 pre- mature 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....
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....uestion "Will there be any significant difference between the two so far as the presumption of service is concerned?" Their Lordships referred to Section 27 of the General Clauses Act and observed that the principle incorporated therein could profitably be imported in a case where the sender had 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. This Court dismissed the appeal preferred by the drawer holding that where the notice is returned by the addressee as unclaimed such date of return to the sender would be the commencing date in reckoning the period of 15 days contemplated in clause (c) to the proviso of Section 138 of the Act. This 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. Since the appellant did not attempt to discharge the burden to rebut the aforesaid presumption, the appeal was dismissed by this Court. The aforesaid decision is significant for two reasons. Firstly it was held that the principle ....