Negotiable Instrument is the combination of two words i.e. negotiable and
instrument. Negotiable means transferable and instrument is a written document.
Negotiable Instrument should be of such nature that it should be in writing,
signed by the maker, an unconditional promise or order to pay a fixed amount to
be stated that is freely transferable from one person to another be payable on
demand or at a definite time.
In K.R Indira v Dr. G Adinaryana
[i] the two judge
bench of the Supreme Court observed that the offence under Section 138 of the
Negotiable Instrument Act 1881 could be completed if the following components
are satisfied i.e.:
- A person must have drawn a cheque on an account maintained by him in a
bank for payment of certain amount of money to another person from out of
that account for the discharge of any debt or liability
- That cheque has been presented to the bank within a period of six months
from the date on which it is drawn or within the period of its validity.
- That cheque is returned by the bank unpaid either because the amount of
money standing to the credit of the account is insufficient to honour the cheque
or that exceeds the amount arranged to be paid from that account by an agreement
made with the bank.
- The payee or the holder in due course of the cheque makes a demand for
the payment of the said amount of money by giving 15 days notice period in
writing to the drawer of the cheque, within 15 days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid.
- The drawer of the said cheque fails to make payment of the said amount
of money to the payee.
In the recent times there is debate that broadly centres on clause (c) of
Section 138 of the Negotiable Instrument Act 1881. The said clause i.e. (c)
requires that the drawer of the cheque has failed to make the payment and must
be served with the receipt of notice within period of 15 days. Clause (c)
offers a total period of 15 days to the drawer from the date of receipt of
notice to make payment of the cheque amount on its dishonour.
Now the another
question which arises for the consideration is that Can an offence under Section
138 of the Negotiable Instrument Act 1881 be said to be committed when the
period provided under clause (c) i.e. period of 15 days has not expired. A bare
reading of section 138(c) makes it clear that no complaint can be filed under
section 138 of the Negotiable Instrument Act unless the period of 15 days has
In this case summary I am going to analyse one of the Landmark Judgement of the
Supreme Court headed by the Three Judge Bench in the year 2014 which has
beautifully dealt with an issue that Can cognizance of an offence punishable
under Section 138 of the Negotiable Instrument Act 1881 be taken on the basis of
complaint filed before the expiry of the period of 15 days stipulated in the
notice required to be served upon the drawer of the cheque in terms of Section
138 (c) of the Negotiable Instrument Act 1881?
Facts Of The Case
The appellant i.e. Yogendra Pratap has filed a complaint under section 138 of
the Negotiable Instrument Act against the Respondent i.e. Savitri Pandey in the
court of Additional Civil Judge Judicial Magistrate Sonbhadra in the state of
Uttar Pradesh. The respondent's case was that four cheques issued in his
favour were dishonoured when presented for encashment.
A notice calling upon
the respondent drawer of the cheque to pay the amount covered by the cheques
was issued and duly served upon the respondent as required under section 138 (c)
of the Negotiable Instrument Act 1881. No payment was made by the accused till
7th October 2008 when a complaint under section 138 of the Negotiable Instrument
Act was filed before the magistrate.
The notice in question was served upon on
dated 23rd September 2008; the complaint presented on 7th October 2008 was filed
before the expiry of the stipulated period of 15 days. The magistrate took the
cognizance of the offence on dated 14th October 2008 and issued summons to the
accused. The accused assailed the said order in a petition under Section 482 of
the Code of Criminal Procedure before the High Court of Allahabad. The High
Court of Allahabad was of the view that since the complaint had been filed
within 15 days of service of the notice the same was clearly premature and the
order passed by the Magistrate taking cognizance of the offence on the basis of
such complaint is legally bad. The High Court quashed the complaint and the
entire proceeding relating in terms of its impugned order was raised in appeal
before the Honourable Supreme court of India.
The Supreme Court formulated two questions for its consideration for the instant
- Can Cognizance of the offence punishable under section 138 of the
Negotiable Instrument Act 1881 be taken on the basis of the complaint filed
before the expiry of the period of 15 days stipulated in the notice required
to be served upon the drawer of the cheque in terms of Section 138(c) of the
Negotiable Instrument Act 18881?
- If answer to the question is negative can the complainant be permitted
to present the complaint again in spite of the fact that the period of one
month stipulated under section 142(b) for the filing of such complaint has
The Supreme Court of India while delivering the judgement analysed few decisions
of the High Court which deals with Section 138-142 of the Negotiable Instrument
Act 1881. The Supreme Court examined decisions of Six High Courts to consider
the question whether the Complaint under Section 138 of the Negotiable
Instrument Act 1881 was maintainable when stipulated period of 15 days of the
receipt of the notice as provided in Clause (c) of Section 138 had not expired.
In brief I have discussed some of the decisions of the High Courts with regard
to the instant issues in the controversy.
Bombay High Court: The division bench of the Bombay High Court in Rakesh
Nemkumar Porwal v Narayan Dhondu Joglekar[ii] held that as the complaint was
presented within the period of 15 days of the service of notice, the complaint
was not maintainable for the commission of offence under Section 138 of the
Negotiable Instrument Act 1881 as no offence can be said to have been committed
on the date of lodgement of the complaint. Reading Section 138(c) and Section
142(b) together, no offence can be said to have been committed until and unless
the period of 15 days as prescribed under clause (c) of Section 138 has elapsed.
Punjab And Haryana High Court:In Ashok Verma v Ritesh Agro Pvt
Ltd.[iii] the court held that A perusal of the above section shows that while
the section defines the necessary ingredients of the offence and punishment that
can be awarded for the commission of the offence, the proviso to the section
lays down the conditions precedent for the commission of the offence. According
to this proviso the necessary ingredients of the offence are that the cheque was
presented to the bank within a period of six months from the date on which it
was drawn or the period of its validity, that the cheque is returned unpaid
because of insufficiency of funds or that the amount of the cheque exceeded the
amount arranged to be paid from the bank and the payee gave a notice to the
drawer claiming the amount within 15 days of the receipt of the information from
the bank regarding the return of the cheque and the drawer failed to make
payment within 15 days of the receipt of the notice. Under Sub-clause (c) of the
proviso a 15 days' time is granted to the drawer of the cheque to make payment
and unless this period elapsed and no payment was made, the drawer was not
liable for any offence under Section 138 of the Act.
Andhra Pradesh High Court:In N. Venkata Sivaram Prasad v M/s
Rajeshwari Constructions [iv] the Division Bench of High Court confronted with
the question as to whether the magistrate can take the cognizance of the
complaint given in the case under consideration and proceed with the trial held
that unless and until the criteria laid down in Section 138 are compiled with,
it would not constitute offence.
The Court further held that Proviso (c) clearly
stipulates that the Section does not apply unless the drawer of the cheques
fails to make the payment to the payee within 15 days of the receipt of the said
notice. Thus, the payee has been given liberty to make the payment within 15
days of the receipt of the notice even though the cheque was returned by the
Bank unpaid. Hence, the reading of Proviso (c) to Section 138 clearly denotes
that it would not be an offence if the drawer pays the amount within a period of
15 days as a specified therein. In such circumstances, there could not have been
any complaint alleging the violation of Section 138.
The pre-offence period
granted to the payee should be construed strictly; otherwise the very purpose of
Section 138(c) of the Negotiable Instruments Act would be frustrated. The
complainant should be able to point out to the offence under Section 138 when
the complaint was filed. When the complaint is filed even before the offence is
completed, it cannot be said that the offence is made out and, therefore, such
complaint is invalid in the eye of law.
As already noticed under Section 142 of
the Act no Court shall take cognizance of any offence punishable under Section
138 except upon a complaint in writing made by the payee. Therefore the
necessary ingredient enabling the Magistrate to take cognizance of the offence
is that there should be a complaint in writing by the payee and the said
complaint should disclose an offence under Section 138.
In the complaint made by
the respondent before the Magistrate no offence could have been disclosed as the
time prescribed under Section 138 Proviso (c) was not exhausted by the time the
complaint was presented to the Magistrate. Even by the date of service of
summons, there was no further complaint in writing to the effect that even after
the expiry of 15 days period as mentioned in proviso (c) the drawer failed to
pay the amount.
Karnataka High Court:In Ashok Hedge v Jathin[v] the single judge bench
while dealing with the contention raised by the petitioner that the complainant
has not given 15 days time as contemplated under section 138 of the Negotiable
Instrument Act and the complaint was premature and should not have been
entertained. The court held that From above it is clear that he received the
notice back on 21st September 1989. Even after accepting that the petitioner
refused the notice on dated 20th September 1989, the respondent ought to have
filed the complaint after the expiry of 15 days from the date of receipt of the
notice. Therefore the cause of action had not arisen to file the complaint
against the petitioner and the complaint was premature.
Orissa High Court:
In Sri Niranjan Sahoo v M/S Utkal Sanitary[vi] held
that if the complaint case is filed after the expiry of 15 days as provided then
cognizance of the offence cannot be taken in view of the provision in clause (b)
of Section 142 and consequentially the complaint was liable to be quashed.
Jammu Kashmir High Court:In M/S Harpreet Hosiery Rehari v. Nitu
Mahajan[vii] the court view is to the effect that under law the law the drawer
has got 15 days to make the payment from the receipt of notice of dishonour of
the cheque. It is only thereafter that an action under Section 138 of the
Negotiable Instrument Act can be initiated against the defaulting party.
Section 138 of the Negotiable Instrument Act 1881 comprises the main provision
which defines the ingredient of the offence and the punishment that would follow
in the event of such an offence having been committed. For completion of offence
under the said section of the Negotiable Instrument Act 1881 the ingredients of
offence set out in part of the provision is necessary in clauses (a), (b) and
(c) of the proviso is satisfied.
Thus the court analyzing each and every aspect
of section 138 of the Negotiable Instrument Act held that:
- With regard to the first issue the court held a complaint filed before
the expiry of 15 days from the date of receipt of notice under clause(c) of
Section 138 of the negotiable Instrument Act is not maintainable.
- With regard to the second issue the court observed under Para 42 of the judgement
42. Section 142 of the Negotiable Instrument Act prescribes the mode and also
the time within which a complaint for an offence under Section 138 of the
Negotiable instrument Act can be filed. A complaint made under Section 138
needs to be made within one month from the date on which the cause of action has
arisen under clause (c) of Section 138.
However if the complainant satisfies
the court that he had sufficient cause for not making a complaint within the
prescribed period of one month a complaint may be taken by the court after the
prescribed period. In that case payee or holder in due course may file a fresh
complaint within one month from the decision in the criminal case satisfying the
court of sufficient cause.
The three judge bench of the Supreme Court comprising Chief Justice R. M Lodha,
Justice Kurian Joseph and Justice Rohinton Fali Nariman have beautifully carved
out ruling in the instant case after going to the numerous decision of the High
Court giving the final verdict that any complaint filed under section 138 of the
Negotiable Instrument Act before the expiry of 15 days from the date of receipt
of notice will not be maintainable. The only remedy left for the complainant is
to file a fresh complaint and if could not filed within the time prescribed
under section 142(b) his recourse is to satisfy the court with sufficient
- K.R Indira v Dr. G Adinaryana 2003 8 SCC 300
- Rakesh Nemkumar Porwal v Narayan Dhondu Joglekar (1993 Cri.L.J680)
- Ashok Verma v Ritesh Agro Pvt Ltd (1995) 1 Bank CLR 103
- N. Venkata Sivaram Prasad v M/s Rajeshwari Constructions (1996 Cri.L.J
- Ashok Hedge v Jathin (1997 Cri L.J 3691)
- Sri Niranjan Sahoo v M/S Utkal Sanitary (1998 (3) Crimes 188)
- M/S Harpreet Hosiery Rehari v. Nitu Mahajan (2000 Cri L.J 3625)