Notice should be issued within 30 days from the date of receipt of intimation from Bank.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1077 OF 2009
[Arising out of SLP (Crl.) No. 7797 of 2007]
Sivakumar …Appellant
Versus
Natarajan …Respondent
J U D G M E N T
S.B. SINHA, J :

1. Leave granted.
2. This appeal is directed against a judgment and order dated 03.02.2007
passed by the Madurai Bench of the Madras High Court in Crl. Revision No.
849 of 2005 whereby and whereunder the Criminal Revision application
filed by the appellant herein was dismissed affirming the judgment of the
learned Principal Session Judge, Trichrapalli dated 08.11.2005 passed in Crl.
A No. 87/2005, preferred against the judgment dated 03.05.2005 in CC No.
69/2004 by the learned Judicial Magistrate III, Tiruchirapalli. 3. On or about 14.08.2003, appellant borrowed a sum of Rs. 1,00,000/-
for the purpose of his business as loan from the complainant – respondent.
The said amount was to be repaid within a period of three months. On or
about 20.11.2003 the appellant handed over a cheque bearing No. 0652756
dated 27.11.2003 for a sum of Rs. 1,00,000/- in favour of the respondent.
The said cheque was presented by the complainant for collection to his
banker namely UCO Bank, Trichy Main Branch on 27.11.2003. It was
dishonoured with the remarks “insufficient funds” on 2.12.2003. Information
thereabout was received by the respondent on 3.12.2003.
4. On 02.01.2004, the respondent issued a legal notice to the appellant
calling upon him to pay the amount in question within 15 days from the date
of the receipt of the notice. Admittedly, the appellant neither sent a reply to
the said notice nor paid the amount due.
Respondent thereafter filed a complaint petition against the appellant
under Section 138 of the Negotiable Instruments Act, 1881 (for short “the
Act”) before the Judicial Magistrate No. III, Tiruchirapalli.
25. The learned Judicial Magistrate III convicted the appellant under
Section 138 of the Act and sentenced him to undergo one year’s simple
imprisonment and a fine of Rs. 5000/- and in default thereof to undergo
further six months of simple imprisonment. He was also directed to pay a
sum of Rs. 1,00,000/- as compensation to the respondent under section
357(1) of the Code of Criminal Procedure.
6. Aggrieved thereby and dissatisfied therewith, appellant preferred an
appeal before the Principal Session Judge, Tirchirapalli, which was
dismissed.
7. Appellant filed a revision application thereagainst before the High
Court, which by reason of the impugned judgment has been dismissed.
Appellant is, thus, before us.

8. Before proceeding further, we may place on record that subsequent to
the passing of the impugned judgment, a settlement has been entered into by
and between the appellant and the respondent wherein it has been stated:
3“At this juncture, with the consensus of both the
parties, on the assurance of the 2
nd
party, the 2
nd
party shall receive a sum of Rs. 30,000/- from the
1
st
party and shall not take any action against the
judgment rendered by the court and there shall be
no interest over the issue before or after the
settlement and as such we both have signed in the
presence of the witnesses. 2
nd
party has also
consented to issue a receipt for having received the
said amount to the 1st
party.”
9. The core question which arises for consideration is as to whether the
notice dated 2.01.2004 was issued within the stipulated period of thirty days
from the date of receipt of intimation of the dishonour of cheque.
Section 138 of the Act reads as under:
“138. Dishonour of cheque for insufficiency, etc.
of funds in the account.—Where any cheque
drawn by a person on an account maintained by
him with a banker for payment of any amount of
money to another person from out of that account
for the discharge, in whole or in part, of any debt
or other liability, is returned by the bank unpaid,
either because of the amount of money standing to
the credit of that account is insufficient to honour
the cheque or that it exceeds the amount arranged
to be paid from that account by an agreement made
with that bank, such person shall be deemed to
have committed an offence and shall, without
prejudice to any other provisions of this Act, be
punished with imprisonment for a term which may
extend to two years, or with fine which may extend
to twice the amount of the cheque, or with both:
4Provided that nothing contained in this section
shall apply unless—
(a) the 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, whichever is earlier;
(b) the payee or the holder in due course of the
cheque, as the case may be, makes a demand for
the payment of the said amount of money by
giving a notice in writing, to the drawer of the
cheque, within thirty days of the receipt of
information by him from the bank regarding the
return of the cheque as unpaid; and
(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.”
10. By reason of the provisions of the Act, a legal presumption in regard
to commission of a crime has been raised. The proviso appended thereto,
however, states that nothing contained in the main provision would apply
unless conditions specified in clauses (a), (b) and (c) thereof are complied
with. Clauses (a), (b) and (c) of the proviso, therefore, lay down conditions
precedent for applicability of the main provision. Section 138 of the Act
being penal in nature, indisputably, warrants strict construction.
5 In M/s. Harman Electronics (P) Ltd. & Anr. v. M/s. National
Panasonic India Ltd. [2008 (16) SCALE 317], this Court held:
“8. The proviso appended thereto imposes certain
conditions before a complaint petition can be
entertained.
9. Reliance has been placed by both the learned
Additional Sessions Judge as also the High Court
on a decision of this Court in K. Bhaskaran v.
Sankaran Vaidhyan Balan and Anr.. This Court
opined that the offence under Section 138 of the
Act can be completed only with the concatenation
of a number of acts, namely, (1) Drawing of the
cheque, (2) Presentation of the cheque to the bank,
(3) Returning the cheque unpaid by the drawee
bank, (4) Giving notice in writing to the drawer of
the cheque demanding payment of the cheque
amount, (5) failure of the drawer to make payment
within 15 days of the receipt of the notice. It was
opined that if five different acts were done in five
different localities, any one of the courts exercising
jurisdiction in one of the five local areas can
become the place of trial for the offence under
Section 138 of the Act and the complainant would
be at liberty to file a complaint petition at any of
those places. As regards the requirements of giving
a notice as also receipt thereof by the accused, it
was stated:
‘18. On the part of the payee he has to make
a demand by “giving a notice” in writing. If
that was the only requirement to complete
the offence on the failure of the drawer to
pay the cheque amount within 15 days from
6the date of such “giving”, the travails of the
prosecution would have been very much
lessened. But the legislature says that failure
on the part of the drawer to pay the amount
should be within 15 days “of the receipt” of
the said notice. It is, therefore, clear that
“giving notice” in the context is not the same
as receipt of notice. Giving is a process of
which receipt is the accomplishment. It is
for the payee to perform the former process
by sending the notice to the drawer at the
correct address.’
*** *** ***
14. It is one thing to say that sending of a notice is
one of the ingredients for maintaining the
complaint but it is another thing to say that
dishonour of a cheque by itself constitutes an
offence. For the purpose of proving its case that
the accused had committed an offence under
Section 138 of the Negotiable Instruments Act, the
ingredients thereof are required to be proved. What
would constitute an offence is stated in the main
provision. The proviso appended thereto, however,
imposes certain further conditions which are
required to be fulfilled before cognizance of the
offence can be taken. If the ingredients for
constitution of the offence laid down in the
provisos (a), (b) and (c) appended to Section 138 of
the Negotiable Instruments Act intended to be
applied in favour of the accused, there cannot be
any doubt that receipt of a notice would ultimately
give rise to the cause of action for filing a
complaint. As it is only on receipt of the notice the
accused at his own peril may refuse to pay the
amount. Clauses (b) and (c) of the proviso to
Section 138 therefore must be read together.
Issuance of notice would not by itself give rise to a
7cause of action but communication of the notice
would.”
Keeping in view the aforementioned legal principle, interpretation of
clause (b) of the proviso appended to Section 138 of the Act has to be
considered.
11. We may, however, at the outset notice that both clauses (a) and (b) of
the proviso appended to Section 138 of the Act employed the term “within a
period”. Whereas clause (a) refers to presentation of the cheque to the bank
within a period of six months from the date on which it is drawn, clause (b)
provides for issuance of notice “to the drawer of the cheque within thirty
days of the receipt of information”. The words “within thirty days of the
receipt of information” are significant. Indisputably, intimation was
received by the respondent from the bank on 3.12.2003.
The Parliament advisedly did not use the words ‘from the date of
receipt of information’ in Section 138 of the Act. It is also of some
significance to notice that in terms of Section 9 of the General Clauses Act,
1897, whereupon reliance has been placed by the High Court, the statute is
required to use the word “from” and for the purpose of including the last in a
series of days or any other period of time, to use the word “to”.
8 The departure made from the provisions of Section 9 of the General
Clauses Act by the Parliament, therefore, deserves serious consideration.
12. Indisputably, the notice was issued on the 31st
day and not within a
period of thirty days from the date of receipt of intimation from the bank. If
Section 9 of the General Clauses Act is not applicable, clause (b) of the
proviso appended to Section 138 of the Act was required to be complied
with by the respondent for the purpose of maintaining a complaint petition
against the appellant.
In Munoth Investments Ltd. v. Puttukola Properties Ltd. and Another
[(2001) 6 SCC 588] construing clause (a) of the proviso appended to Section
138 of the Act, this Court held:
“5. In our view, the High Court committed
material irregularity in not referring to the
aforesaid evidence which was recorded by the
Metropolitan Magistrate. Section 138(b) of the Act
inter alia provides that the payee has to make
demand for the payment of money by giving a
notice “to the drawer of the cheque, within fifteen
days of the receipt of information by him from the
bank regarding the return of the cheque as unpaid”.
So fifteen days are to be counted from the receipt
of information regarding the return of the cheque
as unpaid. In the present case, it is the say of the
complainant that the cheque was presented for
9encashment on 12th; it was returned to the Bank
on 13th and information was given to the
complainant only on 17th, as 14th, 15th and 16th
were Pongal holidays. The learned counsel fairly
pointed out that in the complaint it has been stated
that the complainant had received intimation with
regard to the return of the said cheque from his
banker on 13-1-1994. However, he submitted that
this is an apparent mistake and for explaining that
mistake the appellant has led the evidence before
the trial court. Undisputedly, he pointed out that in
the State of Tamil Nadu, 14-1-1994 to 16-1-1994
there were Pongal holidays and, therefore, the
appellant came to learn about the dishonour of his
cheque on 17-1-1994.”
We, with respect, agree with the approach of the learned Judges.
13. Our attention has furthermore been drawn to a decision of the Kerala
High Court in K.V. Muhammed Kunhi v. P. Janardhanan [1998 Crl. L.J.
4330], wherein construing proviso (a) appended to Section 138 of the Act, a
learned Single Judge held:
“…A comparative study of both the Sections in the
Act and the General Clauses Act significantly
indicate that the period of limitation has to be
reckoned from the date on which the cheque or
instrument was drawn. The words ‘from’ and ‘to’
employed in Section 9 of the General Clauses Act
are evidently clear that in cases where there is an
ambiguity or suspicion with reference to the date
of commencement of period of limitation in any
Act or special enactment, the words ‘from’ and
1‘to’ employed in Section 9 of the General Clauses
Act can be pressed into service..”
[See also K.C. Nanu v. N. Vijayan and Anr. 2008 (1) KLJ 327]
We are in agreement with the aforementioned view.
14. Mr. B. Balaji, learned counsel appearing on behalf of the respondent,
however, would contend that the appellant having entered into a settlement
in terms whereof he had deposited a sum of Rs. 30,000/- and an assurance
having been given that no action would be taken against the judgment
rendered by the High Court, this Court should not exercise its discretionary
jurisdiction under Section 136 of the Constitution of India to interfere with
the impugned judgment. We fail to persuade ourselves to agree with the
aforementioned submission.
15. Appellant has a fundamental right of liberty in terms of Article 21 of
the Constitution of India. Liberty of the appellant, therefore, could not have
been taken away except in accordance with the procedure established by
law.
Principles of ‘Estoppel’ or ‘Waiver’ would not, therefore, apply in the
instant case.
1 In any event, the respondent himself has backed out from the
aforementioned settlement. He, therefore, cannot be permitted to take a
different stand.
16. Having, however, regard to the facts and circumstances of the case,
we, in exercise of our jurisdiction under Article 142 of the Constitution of
India, direct that as the civil liability of the appellant stands admitted, the
said sum received by the respondent need not be refunded.
17. For the reasons aforementioned, the impugned judgment cannot be
sustained, which is set aside with the aforementioned directions. The appeal
is allowed.
………………………….J.
[S.B. Sinha]
..…………………………J.
[Asok Kumar Ganguly]
New Delhi;
May 15, 2009

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