Receipt of Acknowledgment card u/s 138 of NI Act

[csarengarajan]

Section 138 of NI Act is very complicated one. Various decisions given various courts in India. Extra care has to be taken in respect  of filing compliant under 138 NI Act   This is one of the few example. By sending  registered post,  obtaining receipt of acknowledgement card is also very important.

Kindly go through the same.

Negotiable Instruments Act, 1881, Sections 138 and 142(b) -

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Court : CALCUTTA HIGH COURT

Brief : : Negotiable Instruments Act, 1881, Sections 138 and 142(b) - LIMITATION - Date of Receipt of AD - Dishonour of cheque - Limitation - Receipt of A.D. - Complainant sent demand notice with Acknowledgement card to petitioner - Petitioner received notice on 18.1.1999 - However, complainant received acknowledgement card on 9.4.1999 - Complaint filed within 30 days from the date of receipt of acknowledgement card - Held, receipt of notice by drawer is an important factor from which cause of action shall accrue - Hence, complaint barred by limitation.[Para 8-10]

Citation : Criminal Revision No. 2239 of 1999 and Criminal Appeal No. 22 of 2000 - Decided on 26th April, 2000 7

Judgment :

2001 STPL (DC) 190 CAL
CALCUTTA HIGH COURT

(PANIGRAHI, J.)

DARSHAN SINGH
VERSUS
STATE

Criminal Revision No. 2239 of 1999 and Criminal Appeal No. 22 of 2000 - Decided on 26th April, 2000

Negotiable Instruments Act, 1881, Sections 138 and 142 — Dishonour of cheque — Limitation — Receipt of A.D. - Complainant sent demand notice with Acknowledgement card to petitioner — Petitioner received notice on 18.1.1999 — However, complainant received acknowledgement card on 9.4.1999 — Complaint filed within 30 days from the date of receipt of acknowledgement card — Held, receipt of notice by drawer is an important factor from which cause of action shall accrue — Hence, complaint barred by limitation.
[Para 8-10]

Cases Referred :
SIL Import Usa v. Exim Aides Silk Products Silk Exporters, Bangalore 1999 ISJ (Banking) 441.
Santa Priya Engineers (Pvt.) Ltd. & Anr. v. Uday Sankar Das & Anr., 1993 Criminal Law Reporter (Calcutta 236) = 1994 ISJ (Banking) 468.

JUDGMENT

Basudeva Panigrahi, J.- The accused in complaint case No. C/221 of 1999 filed under section 138 of the Negotiable Instruments Act has filed this case under section 482 of the Code of Criminal Procedure for quashing of the criminal case mentioned before. At the time of hearing of the rule an interim stay of further proceeding of the criminal procedure was passed. Therefore, the complainant/opposite party being aggrieved by such interim order has filed an application for vacating the same.

2. The learned advocates appearing for both the parties have however, agreed that instead of taking of the vacating application, they suggested to take up the original application for quashing of the proceeding. Therefore, the matter was taken up for hearing. The complainant/opposite party was the petitioner's financier for purchasing a truck on hire purchase agreement. Accordingly he availed of the loan to purchase the truck. It was agreed by and between the parties that the petitioner shall pay hire charges in respect of the loan for 24 monthly instalments to the opposite party No. 2 commencing from 29th May, 1997. But however, a cheque sent by the petitioner was bounced. Therefore, the opposite party No. 2 sent a notice to the petitioner calling upon the latter to clear up the dues. Even after receipt of the said notice when the petitioner failed to discharge his liability towards the bounced cheque, the opposite party No. 2 was, therefore, obliged to file a complaint under section 138 of the Negotiable Instruments Act. Pursuant to the said complaint process was issued and accordingly the petitioner appeared before the Court below. But being aggrieved by such initiation of the criminal proceeding he has filed this case for quashing of the case.

3. Mr. S.S. Roy the learned advocate appearing for the petitioner has strongly contended that since the criminal complaint was barred by limitation as it was not filed within 15 days after service of notice,
therefore, the learned Additional Chief Judicial Magistrate ought to have dismissed the complaint on the ground of limitation. Mr. Roy has further stressed that the petitioner received the notice on 18.1.1999, therefore, the opposite party no. 2 ought to have filed complaint within 30 days from the date of service of notice upon the petitioner.

4. Mr. Mukherjee, the learned advocate appearing for the complainant/opposite party No. 2 has repelled the said contention of Mr. Roy by submitting that the period of limitation of 30 days should run not from the date of service of notice but from the date of knowledge of such service by the complainant. In this case the opposite party No. 2 only derived knowledge of such service by the complainant. In this case the opposite party no. 2 only derived knowledge of such service after receipt of the 'acknowledgement due card' from the post office on 09.4.1999 and, therefore, the complaint was filed within 30 days therefrom. In this background it cannot be said that the complaint was barred by limitation.

5. While examining the contention raised by both parties it is to be seen the legislative intention of filing a complaint under section 138 of the Negotiable Instruments Act, which is, quoted as follows :-

"Provided that nothing contained in this section shall apply unless -

(a) * * *

(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 fifteen 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."

6. In this case necessary dates may be stated. The opposite party No. 2 deposited the cheque for encashment on 18.12.1998 and it was dishonoured on the ground that the petitioner did not have enough cash in the bank. The memo of dishonouring of the cheque was received by the opposite party No. 2 on 21.12.1998. Therefore, the complainant/opposite party sent a letter with A/D to the petitioner on 22.12.1998 asking the petitioner to pay the amount failing which a case under section 138 N.I. Act shall be initiated. The petitioner received the notice after signing it in the A/D card on 18.1.1999. The opposite party No. 2 received the A/D card on 09.4.1999. The complainant filed the case within 30 days from the date oreceipt of the A/D card.

7. While constituting of an offence under section 138 of the Act five acts must be proved.

1. Drawing of the cheque;

2. Presentation of the cheque to the bank;

3. Returning of the cheque unpaid by the drawee bank;

4. Giving of 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 cheque.

8. In section 142 of the Act it has however, provided that such complaint is made within one month of the date on which the cause of action under clause 'C' of the proviso to section 138. In Clause 'C of the proviso to section 138 it is stated that if a drawer of cheque in question fails to make payment of the said amount to the payee or as the case may be to the holder in due course of a cheque within 15 days of the receipt of the said notice, the complaint has to be lodged within 30 days therefrom. Identical question came up for consideration before the Hon'ble Supreme Court in the case of SIL Import Usa versus Exim Aides Silk Products Silk Exporters, Bangalore, 1999 ISJ (Banking) 441. The High Court was of course of the view that the case should be filed within 45 days from the date of receipt of the acknowledgement which the Hon'ble Supreme Court has disagreed and mandated that the case has to be filed under section 142 of the Act within 30 days of the date of receipt of the notice by the drawer.

"Para 19. The High Court's view is that the sender of the notice must know the date when it was received by the sendee, for otherwise he would not be in a position to count the period in order to ascertain the date when cause of action has arisen. The fallacy of the above reasoning is that it erases the starting date of the period of 15 days envisaged in clause (c). As per the said clause the starting date is the date of "the receipt of the said notice". Once it starts, the offence is completed on the failure to pay the amount within 15 days therefrom. Cause of action would arise if the offence is committed.

Para 20. If a different interpretation is given the absolute interdict incorporated in Section 142 of the Act that no court shall take cognizance of any offence unless the complaint is made within one month of the date of which the cause of action arises, would become otiose."

9. Once the cause of action has started running, it cannot remain suspended subsequently. Under Clause 'C to the proviso to Section 138 the cause of action will start running from the date of receipt of the notice but not from the date of receipt of the 'acknowledgement due card'. It is true that in the above case the notice, was sent in two ways, one by fax message, and the other by registered post with A/D. In that case the date of notice was taken from the date of receipt of the fax message and the limitation was accordingly allowed to run from the date of receipt of the fax message. The Karnataka High Court was under erroneous view that the limitation shall run from the date of receipt of the 'acknowledgement due card' by the complainant. The receipt of the 'acknowledgement due card' by the complainant is not material for the purpose of computation of limitation. Only the receipt of notice by the drawer is an important factor from which day the cause of action shall accrue and within 30 days therefrom the complaint has to be filed failing which it would be barred by limitation under section 142 of the Act.

10. Mr. Mukherjee, the learned advocate appearing for the opposite party No. 2 has relied upon a judgment reported in 1993 Criminal Law Reporter (Calcutta 236) = 1994 ISJ (Banking) 468 in the case of Santa Priya Engineers (Pvt) Ltd. & Ann versus Uday Sankar Das & Anr. It is true that the learned Single Judge Mr. A.K. Dutta (as he then was) held that the cause of action shall accrue from the date of receipt of the 'acknowledgement due card' by the complainant but in view of the authoritative pronouncement of the Supreme Court it is bound to be held that the aforesaid judgment is no longer good law and impliedly overruled. In this case the complaint has not been filed within a month from the date of receipt of the notice i.e. on 18.1.1999. Accordingly the complaint seems to be prima facie barred by limitation under section 142 of the Act. In the result the application is allowed and the criminal case C/221 of 1999 is hereby quashed.

CRR 2239 of 1999 and CRAN 22 of 2000 (Dated 27.4.2000)

11. Heard Mr. Roy, the learned advocate appearing for the applicant.

12. It has been indicated by Mr. S.S. Roy that in the second line of the judgment at page 3 it was inadvertantly recorded as 15 days instead of 45 days. Therefore, necessary correction be made. In the seventh line of the' same page it has been written as 30 days instead of 45 days. Therefore, it may be corrected as 45 days. In the 4th line of second paragraph of the same page instead of 30 days it may be corrected as 45 days. At page 5 of the judgment although the name of the parties of the case appearing before the Hon'ble Supreme Court was quoted but not the citation. Therefore, the citation be added as SCC (3) page 600 after the name of the parties. At page 6 of the judgment in the 17th line of the second paragraph 'within 30' days be replaced by 45 days. At page 7 in the third line instead of within a month let it be substituted by within 45 days.

13. This order be treated as part of the judgment.

Orders accordingly.

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