2024 (10) TMI 1680 - HC - Indian Laws

Dishonour of Cheque - service of notice within 30 days from the date of knowledge of bounding of the cheque - HELD THAT - In the case of Kamlesh Kumar 2014 (1) TMI 736 - SUPREME COURT the Apex Court considered the aspect of issuance of notice within a period of 30 days and found that such notice was on 31st of the day from the receipt of cheque return memo observed that it was beyond the period mentioned in clause (b) of the proviso to Section 138 of the NIA Act. In the case of My preferred Transformation and Hospitality Pvt. Ltd 2024 (4) TMI 1287 - DELHI HIGH COURT Delhi High Court discussed the period of limitation with regard to an appeal filed under Section 37 of the Arbitration and Conciliation Act in which provisions of General Clauses Act were taken into account. Present matter is admittedly an action with regards to breach of making payment which is triable as an offence by a Magistrate. Though it is considered as quasi criminal proceeding however consequences of it could be imprisonment as well as payment of fine which could be double the amount of the cheque. Thus while interpreting the provisions of Section 138 of the NIA settled propositions dealing with criminal jurisprudence will have to be taken into account - Record clearly goes to show that notice was in fact dispatched on 9.11.2020 whereas the period of 30 days was over on 8.11.2020. When the period of 30 days as provided under clause (b) of proviso to Section 138 cannot be extended complainant cannot take advantage of Section 10 of the General Clauses Act since it is not mandatory that the notice must be forwarded through postal department and that too by registered post with acknowledgment due - the observation of the learned Magistrate and that of the First Appellate Court with regard to notice dispatched within 30 days is clearly perverse. Complainant failed to explain as to how notice is within 30 days when it was admitted during cross examination that notice was posted on 9.11.2020. It was clearly open and available to the complainant to re-examine himself and clarify this aspect. However since there are no specific averments in the complaint it is clear from the record that demand notice was dispatched beyond 30 days and therefore the complaint filed before the concerned Magistrate was not tenable as statutory obligation stands violated. Timpugned orders passed by both the Courts below are required to be quashed and set aside - Revision allowed.

Summary

The core legal question considered by the Court was whether the notice as contemplated under Section 138(1)(b) of the Negotiable Instruments Act (NIA) was sent within the mandatory period of 30 days from the date of knowledge of the dishonour of the cheque. The issue arose because the demand notice was dated 6.11.2020 but was admittedly posted on 9.11.2020, which was the 31st day from the date of receipt of the bank memo regarding cheque dishonour. The Court also examined whether the provisions of the General Clauses Act, specifically Section 10, could extend the period for sending the notice when the last day fell on a Sunday.

Regarding the first issue of compliance with the 30-day period under Section 138(1)(b) of the NIA, the Court relied on the statutory framework and binding precedents. Section 138 mandates a sequence of conditions for the offence to be complete: (1) drawing of the cheque, (2) presentation and dishonour of the cheque, (3) receipt of intimation of dishonour by the payee, (4) sending a written demand notice within 30 days of such intimation, and (5) failure to make payment within 15 days of receipt of the notice. The Court emphasized that all these conditions are cumulative and mandatory, and non-compliance with any one of them invalidates the complaint.

The Court extensively referred to the Supreme Court judgment in K. Bhaskaran v. Sankaran Vaidhyan Balan, which clarified that the phrase "giving notice in writing" under Section 138(1)(b) means the actual act of dispatching or forwarding the notice demanding payment within 30 days from the receipt of the bank memo. The Court quoted the passage from Maxwell's Interpretation of Statutes highlighting that provisions relating to giving notice should be liberally construed in favor of the person obligated to give notice, but the statutory obligation to send the notice within 30 days is unequivocal.

Applying this principle to the facts, the Court found that although the notice was dated 6.11.2020, it was actually posted on 9.11.2020, which was the 31st day from the date of receipt of the dishonour memo on 9.10.2020. The Court rejected the complainant's contention that the notice was sent on 6.11.2020, as the complainant's own witness (PW1) admitted during cross-examination that the notice was posted on 9.11.2020. The Court held that the date on the notice is irrelevant; what matters is the actual date of dispatch or giving the notice.

The Court further clarified that the mode of sending the notice is not prescribed by the statute and can be by any means including registered post, courier, hand delivery, or electronic communication. The only mandatory requirement is that the notice must be given in writing within the stipulated period. Therefore, the fact that the notice was sent by registered post on the 31st day did not cure the non-compliance.

The second issue was whether the complainant could avail the benefit of Section 10 of the General Clauses Act, which provides that if the last day of a prescribed period falls on a public holiday or Sunday, the act may be done on the next working day without penalty. The complainant argued that since 8.11.2020 was a Sunday, the notice sent on 9.11.2020 should be deemed timely.

The Court examined the applicability of Section 10 of the General Clauses Act in light of the limitation provisions and special statutes. It noted that Section 10 does not apply to acts or proceedings governed by the Limitation Act, and the 30-day period under Section 138(1)(b) is a mandatory statutory period that cannot be extended or condoned. The Court also emphasized that the complainant failed to plead or prove entitlement to this exemption in the complaint or evidence, which is a prerequisite for invoking Section 10.

The Court relied on several precedents, including Kamldesh Kumar v. State of Bihar, which held that a notice sent on the 31st day is beyond the statutory period and invalid; M. G. Mohamed Javid v. Nayeem Hannan, where the Madras High Court rejected a similar contention of extension of time without evidence; and Sridevi Datla v. Union of India, which clarified the limited applicability of Section 10 and the overriding effect of special limitation provisions.

In applying the law to the facts, the Court found that the complainant's own pleadings and evidence admitted that the notice was sent beyond 30 days, and no explanation or proof was offered to justify the delay or invoke Section 10. The Court rejected the argument that the notice could be considered timely due to the Sunday falling on the last day of the period, as the statutory requirement is strict and mandatory.

The Court also dealt with competing arguments regarding the calculation of the 30-day period. The complainant argued for excluding the date of receipt and counting from the next day, but the Court held that the period started from the date of receipt of the memo itself, making 8.11.2020 the last day. The complainant's contention that the notice was sent on 6.11.2020 was negated by the admission of actual dispatch on 9.11.2020.

In conclusion, the Court held that the demand notice was not given within the mandatory 30-day period as required under Section 138(1)(b) of the Negotiable Instruments Act. The delay in sending the notice beyond 30 days rendered the complaint untenable and barred the institution of proceedings under Section 138. The Court quashed and set aside the orders of the Magistrate and the Sessions Court that had upheld the complaint, and directed the acquittal of the accused. The amount deposited by the applicant was ordered to be refunded.

Significant holdings include the following verbatim excerpts:

"The word 'giving a notice in writing' has to be within 30 days from the date of receipt of information or return memo from the bank. Thus whatever is the date mentioned on the notice, cannot be counted for the purpose of calculating the period of 30 days. The words 'giving a notice' must be attributed to the act of actually sending notice by particular mode."

"Clause (b) mandates a demand notice in writing must be given within a period of 30 days from the date of receipt of the intimation from the bank. Such a period of 30 days itself cannot be extended or condoned by considering the limitation Act."

"For the purpose of claiming benefit of Section 10 of the General Clauses Act, first of all the complainant has to disclose it in its complaint and then prove it by leading evidence. Admittedly, the complaint is clearly silent as to when notice was actually dispatched."

"The observation of the learned Magistrate and that of the First Appellate Court with regard to notice dispatched within 30 days is clearly perverse."

Core principles established are that the statutory requirement of sending the demand notice within 30 days of receipt of intimation of cheque dishonour under Section 138(1)(b) of the Negotiable Instruments Act is mandatory and cannot be extended or condoned. The actual date of dispatch or giving of the notice is decisive, not the date mentioned on the notice. The mode of sending the notice is not prescribed and can be any mode, but the notice must be sent within the prescribed time. Section 10 of the General Clauses Act does not apply to extend this period unless pleaded and proved, and in any event, the Limitation Act provisions do not apply to this mandatory period.

The final determination was that the complaint under Section 138 of the Negotiable Instruments Act was not maintainable due to non-compliance with the mandatory requirement of sending the demand notice within 30 days, leading to the quashing of the complaint and acquittal of the accused.