V. Pauloose v. Muvattupuzha Chitty Fund & Nishad & State of Kerala

## IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE V.K.MOHANAN THURSDAY, THE 28TH DAY OF NOVEMBER 2013/7TH AGRAHAYANA, 1935 ## CRL.A.No. 255 of 2003 (B) -------------------------AGAINST THE ORDER/JUDGMENT IN CC 1152/1998 of J.M.F.C.-I MUVATUPUZHA DATED 20-12-2002 APPELLANT/COMPLAINANT:: --------------------------- V.PAULOSE, S/O. VARKEY, MANITHOTTATHIL HOUSE, SOUTH MARADI P.O., MUVATTUPUZHA. BY ADV. SRI.JOHN JOSEPH(ROY) RESPONDENTS/ACCUSED & STATE:: -------------------------------- ## 1. THE MUVATTUPUZHA CHITTY FUND, REPRESENTED BY THE MANAGING PARTNER, SRI.P.M.ALIYAR. ## 2. NISHAD, S/O. HAMSA, KUNNUMMAKUDIYIL HOUSE, MUDAVOOR P.O., VAZHAPPILLY, MUVATTUPUZHA. 3. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R1 & R2 BY ADV. SRI.JOHN K.GEORGE R3 BY PUBLIC PROSECUTOR SRI.E.M.ABDUL KHADIR THIS CRIMINAL APPEAL HAVING BEEN FINALLY HEARD ON 28-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **'CR'** ## **V.K.MOHANAN, J.** ## **-------------------------------------Crl.A.No.255 of 2003 --------------------------------------Dated this the 28[th] day of November, 2013** ## **JUDGMENT** Question that arose for consideration in this appeal is whether a notice issued and served on the accused under Section 138(b) of the Negotiable Instrument Act, without mentioning the number of the dishonoured cheque can be treated as a legal and valid notice in terms of the proviso 'b' of Section 138 of the N.I. Act. 2. To consider the above legal question, the necessary factual inputs are as follows:- The complainant in a prosecution for the offence punishable under Section 138 of the Negotiable Instrument Act [hereinafter referred to for short as 'N.I. Act only' for convenience] is the appellant, as he is aggrieved by the judgment dated 20/12/2002 in C.C.No.1152 of 1998 of the court of the Judicial First Class Magistrate Court-I, Muvattupuzha, since the learned Magistrate acquitted the accused under Section 255(1) of Cr.P.C. Crl.A.No.255 of 2003 :-2-: 3. The case of the complainant is that, accused No.1 is the Managing Partner of Muvattupuzha Chitty Fund and the second accused is the partner and they started a 40 months' chit for an amount of `50,000/-, which began on August, 1994 and the complainant joined the above chit as 17[th] chittal and the scheme was matured in the year 1997. It is the further case of the complainant that the 37[th] chit bid held on 15/9/1997 was won by the complainant. The complainant further allege that, thereafter, both the accused executed and issued a post dated cheque bearing No.23095 dated 17/8/1998, in favour of the complainant for an amount of `43,750/- drawn on Union Bank of India, Muvattupuzha for discharging their liability due to the complainant. It is the further case of the complainant that, when the above said cheque was presented for encashment, the same was dishonoured due to insufficiency of fund. It is the further case of the complainant that, on such dishonour of cheque, the complainant caused to send a statutory notice by registered notice, demanding the cheque amount and though both the accused have accepted the same, Crl.A.No.255 of 2003 :-3-: no amount as covered by the dishonoured cheque was paid back within the stipulated time and therefore the accused-two in numbers have committed the offence punishable under Section 138 of the N.I. Act. 4. With the above allegation, the complainant by filing a private complaint approached the court below, upon which, cognizance was taken for the said offence and instituted C.C.No.1152 of 1998 and during the trial of the case, PWs.1 to 3 were examined from the side of the complainant and produced Exts.P1 to P9 documents. No evidence, whatsoever, was adduced from the side of the defence. The trial court, after considering the entire evidence and materials and the rival contentions, among other, it was found that there is no proper demand from the part of the complainant in respect of Ext.P1 cheque for constituting an offence under Section 138 of the N.I. Act as alleged against the accused and also found that the testimony of PW.1 contains contradictions and inconsistencies as regards the alleged transaction. Consequently, the accused are acquitted under Section 255(1) Crl.A.No.255 of 2003 :-4-: of Cr.P.C., finding that the complainant has not succeeded in proving his case beyond reasonable doubt. It is the above finding and order of acquittal, that are challenged in this appeal. 5. Heard Sri.John Joseph (Roy), the learned counsel for the appellant and Sri.John K.George, the learned counsel for respondents 1 and 2. 6. The Hon'ble Apex Court in a recent decision reported in **Mokkiah & Anr. Vs. State, Rep. by the Inspector of Police, Tamil Nadu** [2013 (1) Supreme 88] **,** has held as follows:- “8. In a recent decision in Murugesan & Ors. vs. State Through Inspector of Police, 2012 (10) SCC 383, one of us Ranjan Gogoi, J. elaborately considered the broad principles of law governing the power of the High Court under Section 378 of the Code of Criminal Procedure while hearing the appeal against an order of acquittal passed by the trial Judge. After adverting to the principles of law laid down in Sheo Swarup vs. King Emperor, AIR 1934 PC 227 (2) and series of subsequent pronouncements in para 21 summarized various principles as found in para 42 of Chandrappa & Ors. vs. State of Crl.A.No.255 of 2003 :-5-: ## Karnataka, (2007) 4 SCC 415 as under: ............ “42. From the above decisions, in our considered view, the following general principles regarding powers of the appellate court while dealing with an appeal against an order of acquittal emerge: (1) An appellate court has full power to review, re-appreciate and re-consider the evidence upon which the order of acquittal is founded. (2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law. (3) Various expressions, such as, 'substantial and compelling reasons', 'good and sufficient grounds', very strong circumstances', 'distorted conclusions', 'glaring mistakes', etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of 'flourishes of language' to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion. (4) An appellate court, however, must bear in mind that in case of acquittal, there is Crl.A.No.255 of 2003 :-6-: double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court. (5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.” (emphasis supplied). Thus, it can be seen that, in order to interfere with an order of acquittal recorded by the court below, the appellate court should satisfy that, the appellant has succeeded in making out any compelling circumstance or substantial reason, otherwise the double presumption of innocence cannot be disturbed. Keeping in mind the dictum laid down by the Hon'ble Apex Court in the above decision, let us examine the plea of the appellant against the judgment of the court below and the findings thereon. Crl.A.No.255 of 2003 :-7-: 7. No doubt, in order to attract an offence under Section 138 of the N.I. Act, service of a statutory notice on the drawer of a cheque as contemplated under Section 138 (b) of the N.I. Act is a condition precedent. In the present case, one of the findings of the court below is that the complainant has not succeeded in establishing that he had issued a valid and legal statutory notice. In order to come into the above conclusion, the learned Magistrate has found that, in Ext.P4 statutory notice, instead of the cheque number, the complainant has shown the account number with respect to the account allegedly maintained by the accused. In the complaint also, instead of giving the cheque number, account number is given. According to the learned counsel for the appellant, the said defect is only a minor mistake which can be neglected, particularly in view of the decision in **Viswanathan Vs. Ramachandran Nair** [1996(2)KLT449]. The learned counsel for the respondent vehemently submitted that, in view of the mandatory nature of proviso (b) of Section 138 of the N.I.Act, a proper notice showing the cheque number is Crl.A.No.255 of 2003 :-8-: absolutely necessary, failing which, no conviction can be entered into. 8. I have carefully considered the above rival contentions of the respective counsel and I have gone through the evidence and materials on record. 9. In the light of the above rival contentions, the only question to be considered is whether the learned Magistrate is correct and legal in his finding that the complainant failed to issue proper statutory notice to the accused and further question that arose for consideration in this appeal is whether a notice issued and served on the accused under Section 138 (b) of the Negotiable Instrument Act, without being mentioned the number of the dishonoured cheque can be treated as a legal and valid notice in terms of the proviso 'b' of Section 138 of the N.I. Act. 10. Section 138 of the N.I. Act reads as follows:- **“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 Crl.A.No.255 of 2003 :-9-: 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 be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided 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 Crl.A.No.255 of 2003 :-10-: 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.” [Emphasis supplied] It is relevant to note that Chapter XVII of the N.I. Act, 1881, deals with the penalties in case of dishonour of certain cheques for insufficiency of funds or when the cheque amount exceeds the amount arranged to be paid from that account, by an arrangement made with that bank in the accounts. The caption of Section 138 of the N.I. Act shows “Dishonour of cheque for insufficiency, etc., of funds in the account.” Further, on a reading of the entire Section, it can be understood that, the clauses in the proviso to Section 138 of the N.I. Act are made as mandatory, by incorporating the words which reads “Provided that nothing contained in this section shall apply unless-” Certainly, the object of issuing a notice, as contemplated under proviso (b) of Section 138 of the N.I. Act, is to make the Crl.A.No.255 of 2003 :-11-: account holder and the drawer of the cheque, known the factum of dishonour of cheque and give him an opportunity to relieve him of his liability connected with the dishonour of such cheque in view of the penal clause of Section 138 of the N.I. Act. On realising such facts, connected with the cheque which he issued, it is for the drawer of the cheque to make up his mind as to how the situation shall be dealt with, connected with such notice, either to dispute and contend against the proceedings contemplated or to admit the liability and take further steps to clear the liability, or to negotiate with the holder of such dishonoured cheque, etc. So, the issuance of a statutory notice, as contemplated by proviso (b) of Section 138 of the N.I. Act, is with a specific purpose. According to me, the issuance of such a statutory notice is absolutely necessary and inevitable, since, if there is failure on the part of the drawer of the cheque in paying the money covered by the cheque in question within the time and in case the allegations are proved, he will be visited with civil and criminal consequences. So, giving a statutory notice as contemplated Crl.A.No.255 of 2003 :-12-: in proviso (b) to Section 138 of the N.I. Act, is an essential mandatory requirement, which should be complied with strictly. 11. In the present case, it is beyond dispute that no cheque number is given in Ext.P4 statutory notice. Same is the position, when the complainant approached the court by filing the complaint where also no cheque number is given. On the strength of the decision cited above, the learned counsel submitted that in the present case also there was no other transaction between the complainant and the accused and therefore, in view of the above decision, the findings of the trial court are not correct and are liable to be interfered with. 12. I am unable to sustain the above contention. It is relevant to note that the above decision rendered by this Court, entirely on a different footing. In the above reported case, the only defect noticed by the court is that there is difference in the cheque number. It is on that factual input, this Court, in the above decision among other, it was found:“Here, in the case at hand, it has come out in evidence that Crl.A.No.255 of 2003 :-13-: there was only one transaction of issuance of cheque between the parties, and a mistake in the number could not mislead the drawer of the cheque and so there was sufficient compliance with the terms of S.138(b) when Ext.P3 was issued.” So, on the basis of the above factual foundation, this Court has held that “In that view of the matter Ext.P3 was a proper and sufficient notice under Section 138(b) and the belated issuance of the correction notice Ext.P5 does not matter at all and there is no bar of limitation. In the circumstances, the acquittal of the accused by the lower court cannot be sustained.” [Emphasis supplied] In the present case, the complainant did not issue any subsequent notice, within the time limit, giving or correcting the cheque number. Indeed, it is relevant to note that, even according to the complainant, he is one of the subscribers of the chitty conducted by the accused and altogether there were 40 subscribers. If that be so, it can be presumed that the accused had transaction with several such subscribers, during which they might have issued several cheques either from the very same account or from Crl.A.No.255 of 2003 :-14-: any other account. Therefore, even if the complainant has bid only one chitty, and between the complainant and the accused, there is only one transaction, the accused has got transaction with several other subscribers and hence, according to me, the dictum laid down by this Court in the aforesaid decision cannot be made applicable in the present case, since the accused has similar transactions with other similar subscribers. If that be so, it is absolutely mandatory upon the complainant to inform the accused that the cheque, which was issued by the accused, had been dishonoured and only by giving the details of the cheque, the purpose contemplated by Section 138(b) would be served. 13. In this juncture, it is not out of context to refer to paragraph 8 of the aforesaid decision of the learned Single Judge of this Court in which the learned Judge has considered certain decisions of some other High Courts connected with Section 80 of C.P.C. and held “Under Section 80 of C.P.C. notice should disclose correctly the cause of action for suit. Such a requirement is not available in Section 138(b) and so Crl.A.No.255 of 2003 :-15-: ## the rigour is less in the latter case.” [Emphasis supplied] 14. According to me, it is pertinent to note that the liability contemplated under Section 138 of the N.I. Act, is not only civil, but also criminal. If the offence under Section 138 of the N.I. Act is proved, the accused is liable to be sentenced to pay a fine, which will be equivalent to double of the cheque amount or to undergo a maximum sentence of imprisonment for two years or with both. Considering the above civil and criminal liability, the legislature, in their wisdom, incorporated the proviso. Clause (b) of such proviso contemplates a notice as a warning to the drawer of the dishonoured cheque of the consequences thereof. In this juncture it is equally important to note that, in view of the proviso to Section 138 of the N.I. Act, which I have already extracted, the offence would be completed, not only when the holder of cheque or the drawee complies with the clause 'a' and 'b' of the proviso to Section 138 of the N.I. Act, but also when he files the complaint within the statutory period prescribed by the clause 'c' of the proviso to Section 138 of the N.I. Act, that too on the failure of the Crl.A.No.255 of 2003 :-16-: drawer of the cheque, in giving the amount covered by the dishonoured cheque within the stipulated period. Thus the intention of the legislature, as spelt out from the last clause of the proviso to Section 138 of the N.I. Act, unlike other penal statute, is that a person who is likely to become an accused, due to the dishonour of the cheque issued by him, be given a further opportunity to wash out the liabilities both civil and criminal, by paying off the amount, if actually he is indebted or is liable to pay to the drawee or holder of the cheque. Thus, unless the exact cheque number is mentioned in the statutory notice, as contemplated under Section 138(b) of the N.I. Act, the accused would be prejudiced and he would not be in a position to enjoy the real benefit of the proviso. As in the present case, if the accused are dealing with similar persons and similar transactions, they may not be in a position to trace out the defect, which lead to the issuance of the notice, unless the cheque number is given in the statutory notice, and they may not be, particularly in view of the time constriction, able to take a decision, either to challenge the proceedings, or to Crl.A.No.255 of 2003 :-17-: pay the amount covered by the dishonoured cheque or to negotiate with the holder of the cheque, within the time limit fixed by the proviso (b) to Section 138 of the N.I. Act. Consequently they may have to face the prosecution, even if they actually want to avoid the same. 15. So the issuance of a statutory notice in terms of Section 138 of the N.I. Act, by which the holder of the cheque/complainant shall inform the drawer of the cheque with all clarity, incorporating essential particulars of the dishonoured cheque like the cheque number, account number, name of the bank and date of the cheque and the reason for dishonour of such cheque is a condition precedent, particularly when, in the body of Section 138 of the N.I. Act and in the various clauses of the proviso, references are made to the 'cheque', which is clear from the emphasis given while I quoted the above section. But no hard and fast rule can be laid down, while answering the question, and whether the accused is prejudiced due to the absence of any of such details mentioned above with respect to the cheque in question, Crl.A.No.255 of 2003 :-18-: depends upon the facts and circumstances of each case. Giving account number, to which the dishonoured cheque pertained, in the statutory notice cannot be treated as valid and legal in terms of proviso 'b' to Section 138 of the N.I. Act. Without issuing such a statutory notice, the drawer of such cheque will not be in a position to enjoy his right and remedies as envisaged by the proviso 'b' and 'c' to Section 138 of the N.I. Act and resultantly he is likely to be visited with civil or criminal liabilities or with both. Hence the notice contemplated by the above statute, as per clause 'b' of the proviso to Section 138 of the N.I. Act is a condition precedent, for entering into a conviction against the drawer of the cheque and such notice contemplated by the statute is not an empty formality. However, in this case, the number given in the statutory notice and in the complaint, is not with respect to the cheque, but is only the account number. Hence in the present case, no such statutory notice in terms of Section 138(b) is issued and therefore, according to me, the learned Magistrate is fully justified in his finding. In view of the failure of the Crl.A.No.255 of 2003 :-19-: complainant in complying with the above mandatory provision of the statute, no legal conviction is possible and hence I am not proposed to consider the other finding of the learned Magistrate on merit. In the light of the above discussion and the materials and the evidence referred to above, it can be seen that the appellant has miserably failed in making out any compelling circumstance or substantial reason to interfere with the order of acquittal recorded by the trial court by which the double presumption of innocence bolsters in favour of the accused. Thus there is no perversity in the finding and judgment of the court below, which warrant interference of this Court in appeal. In the result, I find no merit in this appeal and accordingly the same is dismissed. skj **V.K.MOHANAN, JUDGE** True copy P.A. to Judge