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CHEQUE BOUNS CASE

Negotiable Instruments Act, 1881 : Sections 138(C)-Proviso and 142. Cheque-Dishonour-Notice for repayment served on 26.10.1994- Complaint under Section 138 filed on 8.11.1994-Complaint returned as defective-Complaint refiled and Court took cognizance on 17.11.1994- Conviction by trial court upheld by Appellate Court-High Court setting aside conviction on the ground that complaint was pre-mature-Appeal before Supreme Court-Held High Court erred in holding that complaint was liable to be dismissed as pre-mature- Accused having paid the entire amount sentence of imprisonment substituted with that of fine. Criminal trial-Court-Taking cognisance of offence-Meaning and scope of. The respondent borrowed a sum of Rs. 2, 30,000 from the appellant and issued a post dated cheque in his favour. When the cheque was presented for payment the same was dishonoured by the Bank due to insufficiency of funds. The notice demanding repayment served by the appellant and received by the respondent on 26th October, 1994 evoked no response. Consequently, the appellant filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 on 8.11.1994 but the same was returned as defective. When the complaint was refiled the trial court took cognizance on 17.11.1994. It convicted the respondent under Section 138 and sentenced him to simple imprisonment for six months. The Appellate Court confirmed the conviction and sentence passed by the trial court. On appeal the High Court set aside the conviction holding that the complaint filed against the respondent was pre-mature. The High Court also held that as the notice was served on the respondent on 26th October, 1994, the appellant could not file the complaint before the expiry of 15 days period. Against the decision of High Court appeal was preferred before this Court. Allowing the appeal, the Court HELD : 1. The impugned judgment is based upon wrong assumptions of law and facts. Consequently, it is set aside. [177-E] 2. The compliance of clause (c) of proviso to Section 138 of the Negotiable Instruments Act, 1881 enables the Court to entertain a complaint. Clause (b) of Section 142 prescribes a period within which the complaint can be filed from the date of the cause of action arising under clause (c) of the proviso to Section 138. No period is prescribed before which the complaint cannot be filed, and if filed not disclosing the cause of action in terms of clause (c) of the proviso to Section 138, the Court may not take cognizance till the time the cause of action arises to the complainant. “Taking cognizance of an offence” by the court has to be distinguished from the filing of the complaint by the complainant Taking cognizance would mean the action taken by the Court for initiating judicial proceedings against the offender in respect of the offence regarding which the complaint is filed. Before it can be said that any Magistrate or Court has taken cognizance of an offence it must be shown, that he has applied his mind to the facts for the purpose of proceeding further in the matter at the instance of the complaint. If the Magistrate or the Court is shown to have applied the mind not for the purpose of taking action upon the complaint but for taking some other kind of action contemplated under the Code of Criminal Procedure such as ordering investigation under Section 156 (3) or issuing a search warrant, he cannot be said to have taken cognizance of the offence. [175-B-F] Narayandas Bhagwandas Madhavdas v. State of West Bengal, AIR (1959) SC 1118 and Gopal Das Sindhi & Ors., v. State of Assam & Anr., AIR (1961) SC 986, referred to. 3. Mere presentation of the complaint in the court cannot be held to mean, that its cognizance had been taken by the Magistrate. If the complaint is found to be pre-mature, it can await maturity or be returned to the complainant for Tiling later and its mere presentation at an earlier date need not necessarily render the complaint liable to be dismissed or confer any right upon the accused to absolve himself from the criminal liability for the offence committed. In the instant case mere presentation of the complaint on 8.11.1994 when it was returned to the complainant/Appellant on the ground that the verification was not signed by the counsel, could not be termed to be an action of the Magistrate taking cognizance within the meaning of Section 142 of the Act. No cognizance was taken on 8.11.1994, but the Magistrate is shown to have applied his mind and taken cognizance only on 17.11.1994. Therefore, the High Court wrongly held that the complaint is pre-mature and is liable to be dismissed. [176-D; 177-B-D] Nirmaljit Singh Hoon v. The State of West Bengal & Anr., [1973] 3 SCC 753 and D. Lakhsminarayana Reddy & Ors. v. Narayana Reddy & Ors., AIR (1976) SC 1672, referred to. 4. The respondent has paid the entire sum to the appellant. Therefore, no useful purpose would be served by sending the respondent back to jail. Accordingly, the sentence of imprisonment awarded to the respondent is substituted with the imposition of fine of Rs. 5,000 to be deposited within two months. [177-F-H] CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 752 of 2000.

CASE NO.:

1891 Panama Canal Company Liquidation Court Tr...

1891 Panama Canal Company Liquidation Court Trial in Paris, France (Photo credit: Wikipedia)

Special Leave Petition (crl.) 1636 of 1999

 

PETITIONER:
NARSINGH DAS TAPADIA

Vs.

RESPONDENT:
GOVERDHAN DAS PARTANI & ANR.

DATE OF JUDGMENT: 06/09/2000

BENCH:
K.T. Thomas & R.P. Sethi.

 
JUDGMENT:
SETHI,J.

Leave granted.
L…I…T…….T…….T…….T…….T…….T…….T..J
On proof of charge, the respondent was convicted by the
Trial Court under Section 138 of the Negotiable Instruments
Act, 1881 (hereinafter referred to as “the Act”) and
sentenced to undergo simple imprisonment for six months.
His appeal was dismissed by the Appellate Court confirming
the conviction and sentence passed by the Trial Court.
However, in revision, the High Court set aside the judgment
of the Trial Court as well as the Appellate Court holding
that the complaint filed against the respondent was
pre-mature.
The facts of the case are that the respondent borrowed a
sum of Rs.2,30,000/- from the appellant and issued a
post-dated cheque in his favour. When the cheque was
presented for demand on 3.10.1994, the same was dishonoured
by the bank on 6.10.1994 due to “insufficient funds”. The
appellant demanded the accused to repay the amount vide his
telegrams sent on 7.10.1994 and 17.10.1994. A notice was
also issued to the respondent on 19.10.1994 demanding to
repay the amount. Despite receipt of the notice on 26th
October, 1994, the respondent neither paid the amount nor
gave any reply. To prove his case, the complainant/
appellant examined three witnesses and proved documents
Exhibits P-1 to P-6. In his statement under Section 313 of
the Cr.P.C. the respondent denied the allegations but
refused to lead any defence evidence. On analysis of the
evidence and after hearing the counsel for the parties, the
Trial Court concluded as under:
“The complainant established that the accused borrowed
Rs.2,30,000/- from him and the accused issued Ex.P3; cheque
and the cheque was returned due to insufficiency of funds
and the accused did not repay the amount inspite of receipt
of notice from the complainant and hence the accused is
liable for punishment u/s 138 of N.I. Act.”

As noticed earlier, the appeal filed by the respondent
was dismissed on 19th April, 1997. The High Court found
that as the notice intimating the dishonourment of cheque
was served upon the accused on 26th October, 1994, the
complainant/appellant could not file the complaint unless
the expiry of 15 days period. It was found on facts that
the complaint filed on 8.11.1994 was returned after finding
some defect in it. However, when re-filed, the court took
the cognizance on 17.11.1994. The High Court held that the
original complaint having been filed on 8.11.1994 was
pre-mature and liable to be dismissed.

Section 142 of the Act provides: “Cognizance of
offences– Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (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;

(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.”

Sub-section (c) of Section 138 which makes the dishonour@@
JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ
of cheque an offence provides that nothing contained in the@@
JJJJJJJJJJ
Section shall apply unless:

“(c) the drawer of such cheque fails to make the payment
of the said amount of money to the payee or as the case may
be, to the holder in due course of the cheque within fifteen
days of the receipt of the said notice.

Explanation–For the purposes of this section, ‘debt or
other liability’ means a legally enforceable debt or other
liability.”

The compliance of clause (c) of proviso to Section 138
enables the Court to entertain a complaint. Clause (b) of
Section 142 prescribes a period within which the complaint
can be filed from the date of the cause of action arising
under clause (c) of the proviso to Section 138. No period
is prescribed before which the complaint cannot be filed,
and if filed not disclosing the cause of action in terms of
clause (c) of the proviso to Section 138, the Court may not
take cognizance till the time the cause of action arises to
the complainant.

“Taking cognizance of an offence” by the court has to be
distinguished from the filing of the complaint by the
complainant. Taking cognizance would mean the action taken
by the court for initiating judicial proceedings against the
offender in respect of the offence regarding which the
complaint is filed. Before it can be said that any
Magistrate or Court has taken cognizance of an offence it
must be shown, that he has applied his mind to the facts for
the purpose of proceeding further in the matter at the
instance of the complainant. If the Magistrate or the Court
is shown to have applied the mind not for the purpose of
taking action upon the complaint but for taking some other
kind of action contemplated under the Code of Criminal
Procedure such as ordering investigation under Section
156(3) or issuing a search warrant, he cannot be said to
have taken cognizance of the offence [Narayandas Bhagwandas
Madhavdas v. State of West Bengal AIR 1959 SC 1118; and
Gopal Das Sindhi & Ors. v. State of Assam & Anr. AIR 1961
SC 986].

This Court in Nirmaljit Singh Hoon v. The State of West
Bengal & Anr. [1973 (3) SCC 753] observed:@@
JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ

“Under Section 190 of the Code of Criminal Procedure, a
Magistrate can take cognizance of an offence, either on
receiving a complaint or on a police report or on
information otherwise received. Where a complaint is
presented before him, he can under Section 200 take
cognizance of the offence made out therein and has then to
examine the complaint and his witnesses. The object of such
examination is to ascertain whether there is a prima facie
case against the person accused of the offence in the
complaint, and to prevent the issue of process on a
complaint which is either false or vexatious or intended
only to harass such a person. Such examination is provided
therefore to find out whether there is or not sufficient
ground for proceeding. Under Section 202, a Magistrate, on
receipt of a complaint, may postpone the issue of process
and either inquire into the case himself or direct an
inquiry to be made by a Magistrate subordinate to him or by
a police officer for ascertaining its truth or falsehood.
Under Section 203, he may dismiss the complaint; if, after
taking the statement of the complainant and his witnesses
and the result of the investigation, if any, under Section
202, there is in his judgment ‘no sufficient ground for
proceeding’.”

Mere presentation of the complaint in the court cannot
be held to mean, that its cognizance had been taken by the
Magistrate. If the complaint is found to be pre-mature, it
can await maturity or be returned to the complainant for
filing later and its mere presentation at an earlier date
need not necessarily render the complaint liable to be
dismissed or confer any right upon the accused to absolve
himself from the criminal liability for the offence
committed. Again this Court in D.Lakshminarayana Reddy &
ors. v. V. Narayana Reddy & Ors. [AIR 1976 SC 1672]
dealt with the issue and observed:

“What is meant by ‘taking cognizance of an offence’ by
the Magistrate within the contemplation of Section 190?
This expression has not been defined in the Code. But from
the scheme of the Code, the content and marginal heading of
Section 190 and the caption of Chapter XIV under which
Sections 190 to 199 occur, it is clear that a case can be
said to be instituted in a Court only when the Court takes
cognizance of the offence alleged therein. The ways in
which such cognizance can be taken are set out in clauses
(a), (b) and (c) of Section 190(1). Whether the Magistrate
has or has not taken cognizance of the offence will depend
on the circumstances of the particular case including the
mode in which the case is sought to be instituted, and the
nature of the preliminary action, if any, taken by the
Magistrate. Broadly speaking, when on receiving a
complaint, the Magistrate applies his mind for the purposes
of proceeding under Section 200 and the succeeding sections
in Chapter XV of the Code of 1973, he is said to have taken
cognizance of the offence within the meaning of Section
190(1)(a). If instead of proceeding under Chapter XV, he,
has in the judicial exercise of his discretion, taken action
of some other kind, such as issuing a search warrant for the
purpose of investigating, or ordering investigation by the
police under Section 156(3), he cannot be said to have taken
cognizance of any offence.”
In the instant case mere presentation of the complaint
on 8.11.1994 when it was returned to the complainant/
appellant on the ground that the verification was not signed
by the counsel, could not be termed to be an action of the
magistrate taking cognizance within the meaning of Section
142 of the Act. The High Court appears to have committed
not only mistake of law but a mistake of fact as well. No
cognizance was taken on 8.11.1994, but the Magistrate is
shown to have applied his mind and taken cognizance only on
17.11.1994. The learned Judge of the High Court, without
reference to various provisions of the Act and the Code of
Criminal procedure, wrongly held thus:

“The date of filing i.e. 8.11.1994 in this case is
crucial. The return of the complaint filed by the
respondent to comply with some objections and subsequent
filing on 17.11.1994 in this case does not have any affect.
Therefore, the complaint is pre-mature and is liable to be
dismissed.” As the impugned judgment is based upon wrong
assumptions of law and facts, the same is liable to be set
aside.

In view of what has been stated hereinabove, this appeal
is allowed by setting aside the impugned order, with the
result that the conviction of the respondent under Section
138 of the Act is upheld.

So far as awarding of sentence is concerned, we are
inclined to take a lenient view in the light of the
subsequent developments in the case. The respondent has
filed an affidavit on 24.8.2000 submitting that the
appellant has been paid a sum of Rs.3,94,243.33 which
includes the cheque amount and the interest payable thereon.
In support of his submission he has filed Annexures R-1 and
R-2 along with the affidavit. Learned counsel for the
appellant has admitted the payment of the amount. Thus, we
feel that no useful purpose would be served by sending the
respondent back to jail as the interests of justice would be
served by imposing a penalty of fine alone in the
circumstances adverted to above. Accordingly, upon
conviction under Section 138 of the Act, the sentence of
imprisonment awarded to the respondent is substituted with
the imposition of fine of Rs.5,000/- to be deposited within
two months. In case the amount of fine is not deposited
within the time specified, the respondent shall suffer
imprisonment of three months in default thereof.

 

 

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