File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Yogendra Pratap Singh v/s Savitri Pandey: Premature Filing Under Section 138 Of Negotiable Instrument Act Stands Dismissed During Notice Period

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.:
  1. 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
  2. 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.
  3. 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.
  4. 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.
  5. 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 expired/ elapsed.

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.

Issues
The Supreme Court formulated two questions for its consideration for the instant case i.e.:
  1. 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?
     
  2. 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 been expired?

Judgement

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.
  1. 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.
     
  2. 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.
     
  3. 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.
     
  4. 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.
     
  5. 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.
     
  6. 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:
  1. 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.
  2. 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.

Conclusion
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 cause.

Footer:
  • (2014) 10 Scc 713
End-Notes:
  1. K.R Indira v Dr. G Adinaryana 2003 8 SCC 300
  2. Rakesh Nemkumar Porwal v Narayan Dhondu Joglekar (1993 Cri.L.J680)
  3. Ashok Verma v Ritesh Agro Pvt Ltd (1995) 1 Bank CLR 103
  4. N. Venkata Sivaram Prasad v M/s Rajeshwari Constructions (1996 Cri.L.J 3409)
  5. Ashok Hedge v Jathin (1997 Cri L.J 3691)
  6. Sri Niranjan Sahoo v M/S Utkal Sanitary (1998 (3) Crimes 188)
  7. M/S Harpreet Hosiery Rehari v. Nitu Mahajan (2000 Cri L.J 3625)

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers



Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


LawArticles

Section 482 CrPc - Quashing Of FIR: Guid...

Titile

The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of th...

Whether Caveat Application is legally pe...

Titile

Whether in a criminal proceeding a Caveat Application is legally permissible to be filed as pro...

How To File For Mutual Divorce In Delhi

Titile

How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Copyright: An important element of Intel...

Titile

The Intellectual Property Rights (IPR) has its own economic value when it puts into any market ...

The Factories Act,1948

Titile

There has been rise of large scale factory/ industry in India in the later half of nineteenth ce...

Law of Writs In Indian Constitution

Titile

Origin of Writ In common law, Writ is a formal written order issued by a body with administrati...

Lawyers Registration
Lawyers Membership - Get Clients Online


File caveat In Supreme Court Instantly