Premature Cheque Bounce Complaint Invalid Under Section 138 NI Act: MP High Court

Vishal Gupta Vs Kishan Batham (Madhya Pradesh High Court)

Summary: The Madhya Pradesh High Court, Gwalior Bench, dismissed the appeal filed by Vishal Gupta against the acquittal of the accused in a cheque dishonour case under Section 138 of the Negotiable Instruments Act, 1881. The dispute arose from an advance payment of Rs. 4,00,000 made by the complainant to the accused for purchasing an old luxury vehicle. When the accused failed to supply the vehicle, the complainant demanded repayment. The accused issued Cheque No. 169910 dated 06.05.2014, drawn on Syndicate Bank, Jayendraganj Branch, Gwalior, towards discharge of the liability. However, the cheque was dishonoured due to insufficient funds. Despite issuance of a legal demand notice, payment was not made, prompting the complainant to institute criminal proceedings. The Judicial Magistrate First Class, Gwalior, acquitted the accused on 27.09.2022, holding that the complaint was premature. Aggrieved by the acquittal, the complainant sought leave to appeal under Section 378(4) of the Code of Criminal Procedure.

The High Court examined the statutory requirements governing service of demand notices and accrual of the cause of action under Section 138 of the Negotiable Instruments Act. The Trial Court had found that the cheque was issued towards a legally recoverable debt and was dishonoured for insufficient funds. However, the complainant failed to establish the actual date of service of the demand notice dated 10.06.2014. Neither postal acknowledgment nor tracking evidence was produced, and the complainant’s testimony did not establish the delivery date. Applying Section 27 of the General Clauses Act, 1897, and relying on the Supreme Court decision in Subodh S. Salaskar v. Jayprakash M. Shah, AIR 2008 SC 3086, the Trial Court presumed service on 10.07.2014, being the thirtieth day after dispatch. Consequently, the complaint filed on 14.07.2014 was premature because the statutory period of fifteen days available to the drawer for making payment had not expired. The High Court further relied on Yogendra Pratap Singh v. Savitri Pandey, (2014) 10 SCC 713, which established that a complaint instituted before expiry of the prescribed fifteen-day period does not disclose a valid cause of action and cannot be entertained merely because the period expires before cognizance is taken.

The High Court also considered the settled principles governing appellate interference with acquittal, referring to Chandrappa v. State of Karnataka, (2007) 4 SCC 415 and other Supreme Court precedents. It reiterated that although an appellate court possesses the power to reassess evidence and reconsider factual and legal conclusions, an acquittal should not ordinarily be disturbed where the Trial Court’s findings represent a reasonably possible view supported by the record. Interference is justified where findings are perverse, patently illegal, unreasonable or contrary to the evidence, resulting in miscarriage of justice. In the present case, the Trial Court had evaluated the material evidence and correctly applied the statutory requirements concerning deemed service of notice and the mandatory waiting period. The High Court found no perversity, illegality or compelling reason to interfere with the acquittal. Accordingly, the application seeking leave to appeal was rejected, and the criminal appeal was dismissed.

Cases Discussed

• Yogendra Pratap Singh v. Savitri Pandey, (2014) 10 SCC 713 (Supreme Court) — Premature Section 138 complaints cannot establish a cause of action before the statutory 15-day period expires.
• Murugesan v. State through Inspector of Police, AIR 2013 SC 274 (Supreme Court) — Scope of appellate interference with acquittal.
• Mookkiah v. State, Rep. by the Inspector of Police, Tamil Nadu, AIR 2013 SC 321 (Supreme Court) — Principles governing review of acquittals.
• Habib v. State of Uttar Pradesh, AIR 2013 SC 1764 (Supreme Court) — Principles concerning appeals against acquittal.
• State of Madhya Pradesh v. Dal Singh, AIR 2013 SC 2059 (Supreme Court) — Review of trial court findings in an acquittal appeal.
• State of U.P. v. Gobardhan, AIR 2013 SC 3033 (Supreme Court) — Appellate scrutiny of an acquittal.
• Subodh S. Salaskar v. Jayprakash M. Shah & Anr., AIR 2008 SC 3086 (Supreme Court) — Presumed service of statutory demand notice.
• C.C. Alavi Haji v. Palapetty Muhammed, (2007) 6 SCC 555 (Supreme Court) — Statutory presumption of notice service.
• Chandrappa v. State of Karnataka, (2007) 4 SCC 415 (Supreme Court) — An acquittal strengthens the presumption of innocence.
• Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund, (2007) 14 SCC 753 (Supreme Court) — Service of notice and expiry of payment period are essential to the cause of action.
• Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745 (Supreme Court) — Essential ingredients of a Section 138 offence.
• Narsingh Das Tapadia v. Goverdhan Das Partani, (2000) 7 SCC 183 (Supreme Court) — Earlier view allowing a premature complaint to mature before cognizance was overruled.
• K. Bhaskaran v. Sankaran Vaidhyan Balan, (1999) 7 SCC 510 (Supreme Court) — Purpose and operation of notice requirement.

Five SEO Titles:

1. Premature Section 138 Complaint Cannot Sustain Acquittal Appeal: Madhya Pradesh HC
2. Cheque Bounce Complaint Filed Before Notice Period Invalid: Madhya Pradesh HC
3. Fifteen-Day Notice Period Mandatory Before Cheque Complaint: Madhya Pradesh HC
4. Deemed Notice Service Makes Early Section 138 Complaint Premature: Madhya Pradesh HC
5. No Interference With Acquittal on Premature Cheque Complaint: Madhya Pradesh HC

FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER

Heard on I.A. No.18384/2022, which is an application for leave to appeal under Section 378(4) of the Criminal Procedure Code against the judgment dated 27.09.2022 passed by Smt. Swati Nivesh Jaiswal, Judicial Magistrate First Class, Gwalior in Criminal Case No.9749/2014 (SC.N.I) Act whereby the respondent/accused was acquitted of the charge of offence punishable under Section 138 of Negotiable Instruments Act. The exposition of fact giving rise to present appeal and the application for leave to appeal is as under:-

(1) The respondent accused is engaged in business of sale and purchase of old vehicle. Complainant was in need of vehicle, therefore, he approached the accused for purchase of old luxury vehicle. He advanced Rs. 4,00,000/- to the accused towards purchase of an old car. The accused did not provide him old luxury car, therefore, complainant demanded return of advanced money.

(2) Accused in discharge of his liability given the Cheque No.169910 dated 06.05.2014 of Syndicate Bank, Branch Jayendraganj, Gwalior. The complainant presented the cheque for encashment but the same was dishonoured with the endorsement of insufficient fund in the account of accused. Despite service of legal demand notice, accused did not pay the amount of cheque, therefore, the complainant submitted complaint for offence punishable under Section 138 of NI Act. Learned Judicial Magistrate after trial passed the impugned judgment on 27.09.2022 and acquitted respondent Kishan Lal.

It is further submitted that impugned judgment of acquittal passed by learned Trial Court is illegal, arbitrary and against the evidence available on record. Complainant has proved his case beyond all reasonable doubts. Learned Trial Court committed grave error in acquitting the accused. The finding of Trial Court that the offence under Section 138 of NI Act was not made out on 14.07.2014 is illegal and perverse, therefore, impugned judgment deserves to be set aside and leave may be granted to appeal against the impugned judgment.

Learned counsel for the appellant contends that learned Trial Court has held that impugned cheque was given for discharge of legally recoverable debt and it was dishonoured due to insufficiency of funds in the account of accused. Learned Trial Court further held that demand notice shall be presumed to be served on accused on 10.07.2014. Despite holding all these issues in favour of complainant, learned Trial Court proceeded to acquit the accused, therefore, the impugned judgment of learned Trial Court is arbitrary and perverse.

Per contra, learned counsel for the respondent submits that the complaint was premature, therefore, learned Trial Court has committed no error in rejecting the complaint.

Heard both the parties and perused the record.

From study of judgments of Supreme Court on the question of scope of powers of the Court in an appeal against acquittal in the cases of Chandrappa Vs State of Karnataka, (2007) 4 SCC 415, Murugesan v. State through Inspector of Police, AIR 2013 SUPREME COURT 274, Mookkiah v. State, Rep. by the Inspector of Police, Tamil Nadu, AIR 2013 SUPREME COURT 321, Habib v. State of Uttar Pradesh, AIR 2013 SUPREME COURT 1764, State of Madhya Pradesh v. Dal Singh, AIR 2013 SUPREME COURT 2059 and State of U. P. v. Gobardhan, AIR 2013 SUPREME COURT 3033, following broad principles may be culled out:-

(1) The appellate Court has full power to review, re-appreciate and reconsider the evidence etc.

(2) The code of Criminal Procedure 1973 puts no limitation, restriction or condition on the exercise of such power and an appellate Court on the evidence before it may reach its own conclusion both on the questions of fact or of law.

(3) The reversal of the acquittal can be made only if the conclusions recorded by the learned trial Court do not reflect a possible view. “Possible view” denotes a conclusion which can reasonably be arrived at regardless of the fact whether it is agreed upon or not by the higher Court.

(4) The court should interfere only where it finds an absolute assurance of the guilt on the basis of the evidence on record and not merely because the High Court could take one more possible or a different view.

(5) In exceptional circumstances and for compelling reasons the appellate Court should not hesitate to reverse a judgment of acquittal passed by the lower Court, if the findings so recorded by lower Court are found to be perverse, i.e. if the conclusions arrived at by the Court are contrary to the evidence on record, or if the Courts entire approach with respect to dealing with the evidence is found to be patently illegal, leading to the miscarriage of justice, or if its judgment is unreasonable and is based on an erroneous understanding of the law and of the facts of the case.

(6) Subject to aforesaid, where the matter of the extent and depth of consideration of the appeal is concerned, no distinctions or differences in approach are envisaged in dealing with an appeal as such merely because one was against conviction or the other against an acquittal.

(7) The appellate Court must bear in mind that the presumption of innocence in favour of the accused has been bolstered by an acquittal by the lower Court.

In the backdrop of aforementioned legal position, the fact situation of present case is examined.

The learned Trial Court in Para 18 of the impugned judgment held that the complainant failed to show that demand notice dated 10.06.2014 which was dispatched through registered post was, in fact, delivered to the accused. The complaint lacks the averment with regard to the date of delivery of demand notice to the accused. No acknowledgment of accused is filed, therefore, learned Trial Court proceeded to raise presumption of service under Section 27 of the General Clauses Act, 1897. The record of Case No.9749/2014 shows that the complainant has not submitted postal acknowledgment of the accused or other evidence like parcel tracking slip from Postal Department. Vishal Gupta (PW-1) is also silent in this regard. Therefore, learned Trial Court committed no mistake in drawing presumption of service of the notice sent on the address of the accused through registered post.

Learned Trial Court in Para 20 of the impugned judgment relying on the judgment of the Supreme Court in the case of Subodh S. Salaskar vs Jayprakash M. Shah & Anr AIR 2008 SC 3086 held the the demand notice, in absence of proof of service, would be deemed to be served on the accused on 30th day of the dispatch of notice, therefore, it would be deemed that demand notice was served on 10.07.2014. Consequently, the complaint filed on 14.07.2014 was premature. The Supreme Court in the case of Subodh S. Salaskar (supra) observed as under:-

22. In terms of the provisions of the General Clauses Act, a notice must be deemed to have been served in the ordinary course subject to the fulfilment of the conditions laid down therein. Section 27 of the General Clauses Act reads as under:

“27.Meaning of service by post.—Where any Central Act or Regulation made after the commencement of this Act authorises or requires any document to be served by post, whether the expression ‘serve’ or either of the expression ‘give’ or ‘send’ or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”

23. Thirty days’ time ordinarily must be held to be sufficient for service of notice. In fact when the service of notice is sought to be effected by speed post, ordinarily the service takes place within a few days. Even under Order 5 Rule 9(5) of the Code of Civil Procedure, 1908, summons is presumed to be served if it does not come back within thirty days. In a situation of this nature, there was no occasion for the Court to hold that service of notice could not be effected within a period of thirty days.

24. Presumption of service, under the statute, would arise not only when it is sent by registered post in terms of Section 27 of the General Clauses Act but such a presumption may be raised also under Section 114 of the Evidence Act. Even when a notice is received back with an endorsement that the party has refused to accept, still then a presumption can be raised as regards the valid service of notice. Such a notice, as has been held by a three-Judge Bench of this Court in C.C. Alavi Haji v. Palapetty Muhammed [(2007) 6 SCC 555: (2007) 3 SCC (Cri) 236] should be construed liberally, stating: (SCC p. 565, para 17)

“17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of criminal law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the GC Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran case [ K. Bhaskaran v. SankaranVaidhyanBalan, (1999) 7 SCC 510: 1999 SCC (Cri) 1284] if the ‘giving of notice’ in the context of clause (b) of the proviso was the same as the ‘receipt of notice’ a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act.”

(emphasis supplied)

25. The complaint petition admittedly was filed on 20-4-2001. The notice having been sent on 17-1-2001, if the presumption of service of notice within a reasonable time is raised, it should be deemed to have been served at best within a period of thirty days from the date of issuance thereof i.e. 16-2-2001. The accused was required to make payment in terms of the said notice within fifteen days thereafter i.e. on or about 2-3-2001. The complaint petition, therefore, should have been filed by 2- 4-2001.

Thus, learned Trial Court committed no mistake in holding that in absence of any proof of service of notice on a particular day to the accused, it would be deemed to be served on 30th day of the dispatch of notice.

The three Judge Bench of Supreme Court in the case of Yogendra Pratap Singh Vs. Savitri Pandey, (2014) 10 SCC 713, on consideration of the law laid down in various judgments on the issue, held as under:-

“36. A complaint filed before the 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 not competent to take cognizance. A conjoint reading of Section 138, which defines as to when and under what circumstances an offence can be said to have been committed, with Section 142(b) of the NI Act, that reiterates the position of the point of time when the cause of action has arisen, leaves no manner of doubt that no offence can be said to have been committed unless and until the period of 15 days, as prescribed under clause (c) of the proviso to Section 138, has, in fact, elapsed. Therefore, a court is barred in law from taking cognizance of such complaint. It is not open to the court to take cognizance of such a complaint merely because on the date of consideration or taking cognizance thereof a period of 15 days from the date on which the notice has been served on the drawer/accused has elapsed. We have no doubt that all the five essential features of Section 138 of the NI Act, as noted in the judgment of this Court in Kusum Ingots & Alloys Ltd. [Kusum Ingots & Alloys Ltd. v. Pennar Peterson Securities Ltd., (2000) 2 SCC 745: 2000 SCC (Cri) 546: AIR 2000 SC 954] and which we have approved, must be satisfied for a complaint to be filed under Section 138. If the period prescribed in clause (c) of the proviso to Section 138 has not expired, there is no commission of an offence nor accrual of cause of action for filing of complaint under Section 138 of the NI Act.

37.We, therefore, do not approve the view taken by this Court in Narsingh Das Tapadia Narsingh Das Tapadia v. Goverdhan Das Partani, (2000) 7 SCC 183: 2000 SCC (Cri) 1326] and so also the judgments of various High Courts following Narsingh Das Tapadia [Narsingh Das Tapadia v. Goverdhan Das Partani, (2000) 7 SCC 183: 2000 SCC (Cri) 1326] that if the complaint under Section 138 is filed before the expiry of 15 days from the date on which notice has been served on the drawer/accused the same is premature and if on the date of taking cognizance a period of 15 days from the date of service of notice on the drawer/accused has expired, such complaint was legally maintainable and, hence, the same is overruled.

38. Rather, the view taken by this Court in Sarav Investment & Financial Consultancy [Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund, (2007) 14 SCC 753: (2009) 1 SCC (Cri) 935] wherein this Court held that service of notice in terms of Section 138 provision (b) of the NI Act was a part of the cause of action for lodging the complaint and communication to the accused about the fact of dishonouring of the cheque and calling upon to pay the amount within 15 days was imperative in character, commends itself to us. As noticed by us earlier, no complaint can be maintained against the drawer of the cheque before the expiry of 15 days from the date of receipt of notice because 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 [Sarav Investment & Financial Consultancy (P) Ltd. v. Llyods Register of Shipping Indian Office Staff Provident Fund, (2007) 14 SCC 753: (2009) 1 SCC (Cri) 935] 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 the law and criminal proceedings initiated on such complaint are liable to be quashed”.

In aforesaid circumstances, in the opinion of this Court, learned trial Court on consideration of material against accused on record and on reasonable appreciation of evidence, after assigning detailed and cogent reasons, has acquitted the accused/respondent. The findings of Trial Court cannot be said to be contrary to the evidence on record. The impugned judgment is not patently illegal or perverse, therefore, no case for interference in the finding of acquittal is made out. Accordingly, this application for leave to appeal against acquittal deserves to be and is hereby rejected.

Consequently, the appeal also stands dismissed.