REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1190 OF 2008
[Arising out of SLP (Crl.) No. 541 of 2008]
Subodh S. Salaskar ...Appellant
Versus
Jayprakash M. Shah & Anr. ...Respondents
JUDGMENT
S.B. SINHA, J :
1. Leave granted.
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2. Whether the proviso appended to Section 142 of the Negotiable
Instruments Act, 1881 (for short "the Act") inserted by the Negotiable
Instruments (Amendment and Miscellaneous Provisions) Act, 2002, is
retrospective in operation is the question involved in this appeal which
arises out of a judgment and order dated 19.10.2007 passed by the High
Court of Judicature at Bombay in Criminal Writ Petition No. 330 of
2007.
3. The relationship between the parties hereto was that of a borrower
and creditor. A financial loan of Rs. 1,70,000/- was obtained by the
appellant in 1996 from the respondent No. 1, which according to him has
been paid off. Two post dated cheques, one bearing No. 460157 dated
6.12.1996 for a sum of Rs. 26,900/- and the other bearing No. 460158
dated 28.09.2000 for a sum of Rs. 1,70,000/-, however, were handed
over to him.
4. Appellant contends that the amount of loan was repaid in cash.
Admittedly, the cheques were presented before the bank on 10.01.2001.
They were returned to the respondent No. 1 by the bank alleging that no
such account, in the name of the appellant was in operation. A legal
notice dated 17.01.2001 was sent by speed post asking the appellant to
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pay the said amount of Rs. 1,70,000/- failing which legal action
including criminal action would be taken against him.
5. A complaint petition alleging commission of an offence under
Section 138 of the Act, however, was filed only on 20.04.2001.
6. Indisputably, the complaint petition was sought to be amended for
adding Section 420 of the Indian Penal Code in the complaint petition.
The said application was allowed by an order dated 14.08.2001.
7. Appellant filed an application for discharge on 16.12.2003 inter
alia on the premise that the said complaint petition was barred by
limitation. It was dismissed by an order dated 14.11.2006. The revision
application filed by the appellant before the learned Additional Sessions
Judge was also dismissed. A criminal writ petition filed by the appellant
marked as Criminal Writ Petition No. 330 of 2007 before the High Court
of Bombay has been dismissed by reason of the impugned judgment
holding:
(i) The question as to whether the complaint is barred by limitation
is a mixed question of law and fact. Even otherwise as a result
4
of amendment of Clause (b) of Section 142 of the Act even if
delay has been caused in filing the complaint, the Magistrate
has power to condone the delay;
(ii) Although the Magistrate could not have allowed amendment of
the complaint petition but as it discloses sufficient averments in
regard to commission of an offence under Section 420 of Indian
Penal Code, the Trial Court was justified in issuing the process
in respect of the said provision also.
8. Mr. Manish Mohan, learned counsel appearing on behalf of the
appellant would submit that the High Court committed a serious error in
passing the impugned judgment insofar as it failed to take into
consideration that :
(i) the complaint petition was barred by limitation, which would
be evident from the admitted facts;
(ii) the proviso appended to Clause (b) of Section 142 being
substantive in nature cannot be held to be retrospective in
operation;
(iii) allegations made in the complaint petition even if given face
value and taken to be correct in their entirety, no case has been
5
made out for taking cognizance under Section 420 of the Indian
Penal Code;
(iv) in any event, as the principal complaint being for commission
of an offence under Section 138 of the Act was not
maintainable, the application for amendment to insert Section
420 of the Indian Penal Code was also not maintainable.
9. Mr. Santosh Paul, learned counsel appearing on behalf of the
respondent No. 1, submitted that from a perusal of the complaint petition
it would appear that the date of service of notice being not fixed and the
complainant having asked the post office to disclose the date of actual
service of notice, it cannot be said that the legal notice was served upon
the accused immediately after issuance thereof.
In any event, as the complaint petition disclosed commission of an
offence on the part of the appellant under Section 420 of the Indian Penal
Code, the High Court's judgment is unassailable.
10. Section 138 of the Act provides a penal provision. The object of
the Parliament in brining the same in the statute book is well-known,
viz., to create an atmosphere of faith and reliance in the banking system.
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11. The Act was amended in the year 2002 whereby additional powers
have been conferred upon the court to take cognizance even after expiry
of the period of limitation by conferring on it a discretion to waive the
period of one month.
12. Before embarking on the questions raised, we may notice that the
proviso appended to Section 138 of the Act limits the applicability of the
main provision stating:
"138 - Dishonour of cheque for insufficiency,
etc., of funds in the account
*** ***
*** 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 the bank regarding the
return of the cheque as unpaid; and
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(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."
Section 142 of the Act also puts a limitation in the power of the
court to take cognizance of the offences, which reads as under:
"142 . Cognizance of offences
Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 ( 2 of
1974 )--
(a) no court shall take cognizance of any
offence punishable under section 138 except
upon a complaint, in writing, made by the
payee or, as the case may be, the holder in due
course of the cheque;
(b) such complaint is made within one month of
the date on which the cause-of-action arises
under clause (c) of the proviso to section 138 :
Provided that the cognizance of a complaint
may be taken by the Court after the prescribed
period, if the complainant satisfies the Court
that he had sufficient cause for not making a
complaint within such period.
(c) no court inferior to that of a Metropolitan
Magistrate or a Judicial Magistrate of the first
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class shall try any offence punishable under
section 138."
13. As noticed hereinbefore, the proviso appended to Clause (b) of
Section 142 of the Act was inserted by the Negotiable Instruments
(Amendment and Miscellaneous Provisions) Act, 2002.
14. A complaint petition alleging commission of an offence under
Section 138 of the Act must demonstrate that the following ingredients
exist, i.e.:
(a) a cheque was issued;
(b) the same was presented;
(c) but, it was dishonoured;
(d) a notice in terms of the said provision was served on the
person sought to be made liable; and
(e) despite service of notice, neither any payment was made
nor other obligations, if any, were complied with within
fifteen days from the date of receipt of the notice.
9
[See S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another
(2007) 4 SCC 70, Saroj Kumar Poddar v. State (NCT of Delhi) and
Another (2007) 3 SCC 693 and DCM Financial Services Ltd. v. J.N.
Sareen and Another 2008 (8) SCALE 54]
15. Indisputably, therefore, unless the conditions precedent for taking
cognizance of an offence under Section 138 of the Act are satisfied, the
court will have no jurisdiction to pass an order in that behalf.
16. We will have to examine the contentions raised by the leaned
counsel for the parties hereto keeping in view the aforementioned legal
principles in mind. Before, however, we advert thereto, we may place on
record that the averments made in the complaint petition in regard to
service of notice are in the following terms:
"8. I say that the said Bank of the Accused,
returned / dishonoured Cheque No. 460158
dated 28.09.2000 of Rs. 1,70,000/- drawn on
Bank of India, Maheshwari Udyan Branch,
Mumbai, under Bank remark "NO SUCH
ACCOUNT WITH US". The said remark was
given in handwriting by the Branch Manager of
the Bank of India, Maheshwari Udyan Branch,
Mumbai in its Bank Memo dated 10.01.2001,
though in the said Bank Memo at Sr. No. 11, it
is printed at 11(b) Account closed and at 11(c)
no account. This Bank Memo was received by
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me on 17.01.2001. Attached herewith is Xerox
copy of the said Cheque No. 460158 dated
28.09.2000 of Bank of India, 10.01.2001 and
marked thereto as Exhibit "A" thereto which
are very clear and self-explanatory. I am also
attaching herewith Xerox copy of dishonoured
Cheque No. 460157 dated 06.12.1996 of Rs.
26,900/- of the Accused drawn on Bank of
India, Maheshwari Udyan Branch, Mumbai and
marked it as Exhibit "B" thereto which speak
much more about the Bank account No. 1365 of
the Accused lying with his said Bank.
9. I say that immediately, vide my letter
Ref. No. JMS/SSS/CRIM/01/2001 dated
17.01.2001, I sent demand notice to the
Accused through Speed Post Acknowledgment
due postal services. Attached herewith is
Xerox copy of the said Demand Notice along
with copy of postal speed post A.D. receipt No.
000271184 - SSPNL 650 dated 19.01.2001 and
marked it as Exhibit "C" Colly thereto which is
very clear and self-explanatory. I say that I
have not yet received Speed Post
Acknowledgement Slip with due
acknowledgement thereon from the Accused as
to the receipt of the said Demand notice.
10. I say that with abundant and due
precautions with a view to avoid technicalities,
through my advocate, Mr. Sunil Bagwe's letter
Ref. No. SSB/JMS/BOI/01/2001 dated
05.03.2001 asked for detailed information as to
the reasons given by the Branch Manager, in
his Bank memo dated 10.01.2001. The Branch
Manager of the said Bank Branch of the
Accused, after various my approaches, finally
given acknowledgement of the receipt of the
aforesaid letter of my advocate on 14.03.2001,
attached herewith is Xerox copy of the said
letter and marked it as Exhibit "D" thereto
which is very clear and self-explanatory. The
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Branch Manager of Bank of India, Maheshwari
Udyan Branch, Mumbai vide his letter Ref. No.
MU/ADV/MNI/39/853 dated 14.03.2001, given
vague, non-cooperative, unwilling, ill-wishes
reply to my advocate's letter by courier services
on 26.03.2001. Attached herewith is Xerox
copy of the said letter of the Bank of India and
marked it as Exhibit "E" thereto which is very
clear and self-explanatory."
17. As regards purported commission of an offence under Section 420
of the Indian Penal Code, on the part of the petitioner, it was alleged:
"16. I say that the aforesaid Cheque which
was issued by the Accused in discharge of his
debts and liability to me in full, which were
dishonoured by the Bank of the accused with
reason "No such account with us". I say that
the Accused failed and neglected to make
payments as per my demand notice dated
17.01.2001. The Accused has failed and
neglected to make good attempts for payment
of his dishonoured cheques on receipt of my
demand notice, within the stipulated period as
provided under Section 138(c) of the N.I. Act,
1988, therefore, the Accused has committed an
offence punishable under section 138 read with
section 141 and section 142 of the N.I. Act
1881 (as amended) and Section 420 of the
I.P.C."
18. The cause of action of filing the said complaint was stated in the
following terms:
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"17. I say that the aforesaid cheque of the
drawer, the Accused herein was returned by the
Complainant's banker i.e. the Deccan Merchant
Co-op. Bank Ltd. Ghatkopar (E) Branch,
Mumbai 400 077, which is situated within the
jurisdiction of this Hon'ble Court and,
therefore, this Hon'ble Court is competent to
take cognizances of this present complaint and
try the same. The demand notice to the
Accused was issued within the stipulated period
and the present complaint has been filed within
the prescribed period as provided under Section
142 (b) of the Negotiable Instruments Act,
1881 (as amended) and, therefore, the Accused
has committed an offence punishable under
Section 138 read with section 141 and section
142 of the N.I. Act 1881 (as amended) and
Section 420 of the I.P.C.
18. I say that the Accused has drawn Cheque
of post dated in Mumbai with intention to cheat
me. Hence, the accused must have closed his
Bank Account No. 1365 of Bank of India,
Maheshwari Udyan Branch, Mumbai
subsequently and now, after the receipt of my
demand notice, the accused has refused to make
the payment of his dishonoured cheques as
above in Mumbai. Hence, this Hon'ble Court
has jurisdiction to entertain, try and decide this
present complaint. I say that the Accused has
committed criminal offences under the
Negotiable Instruments Act, 1881 (as
Amended) and section 420 of the I.P.C., within
the jurisdiction to take cognizances of the same
and try and decide the said offences."
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19. A complaint petition in view of Clause (b) of Section 142 of the
Act was required to be filed within one month from the date on which the
cause of action arose in terms of clause (c) of the proviso to Section 138
of the Act which stipulates that "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".
The legal notice admittedly was issued on 17th January, 2001. It
was sent by speed post. It was supposed to be served within a couple of
days. A bare perusal of the statements made in paragraph 10 of the
complaint petition, as quoted hereinbefore, clearly demonstrate that
although the actual date of service of notice was allegedly not known, the
complainant proceeded on the basis that the same was served within a
reasonable period; otherwise in absence of service of notice or deemed
service thereof, the question of non-compliance of clause (c) of the
proviso appended to Section 138 of the Act would not arise and
consequently the complaint petition would not be maintainable..
20. In Jindal Steel and Power Ltd. and Another v. Ashoka Alloy Steel
Ltd. and Others [(2006) 9 SCC 340], this Court held:
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"2. By the impugned order, the High Court
has quashed the prosecution under Section 138
of the Negotiable Instruments Act, 1881 (for
short "the Act") and Section 420 of the Penal
Code, on the sole ground that the complaint
was filed two days after the expiry of
limitation. In the present case, notice was sent
under Section 138 of the Act on 4-1-1997,
which was served on the accused on 10-1-1997,
giving him 15 days' time for making payment,
which expired on 25-1-1997. Cause of action to
file the complaint accrued on 26-1-1997, which
day has to be excluded in computing the period
of limitation, as required under Section 12(1) of
the Limitation Act, 1963. Therefore, the
limitation would be counted from 27-1-1997
and the complaint was filed on 26-2-1997,
within a period of one month from that date, as
such, the same was filed well within time. We
find that the point is concluded by a judgment
of this Court in Saketh India Ltd. v. India
Securities Ltd. in which case taking into
consideration the provisions of Section 12(1) of
the Limitation Act, it was laid down that the
day on which cause of action had accrued has
to be excluded for reckoning the period of
limitation for filing a complaint under Section
138 of the Act. In the present case, after
excluding the day when cause of action
accrued, the complaint was filed well within
time; as such the High Court was not justified
in holding that there was two days' delay in
filing the complaint. For the foregoing reasons,
we are of the view that the High Court was not
justified in quashing prosecution of the
respondents."
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21. In terms of the provisions of the General Clauses Act, a notice
must be deemed to have been served in the ordinary course subject to the
fulfillment of the conditions laid down therein. Section 27 of the
General Clauses Act reads as under:
"27. Meaning of service by post.--Where
any Central Act or Regulation made after the
commencement of this Act authorises or
requires any document to be served by post,
whether the expression `serve' or either of the
expression `give' or `send' or any other
expression is used, then, unless a different
intention appears, the service shall be deemed
to be effected by properly addressing, pre-
paying and posting by registered post, a letter
containing the document, and, unless the
contrary is proved, to have been effected at the
time at which the letter would be delivered in
the ordinary course of post."
Thirty days' time ordinarily must be held to be sufficient for
service of notice. In fact when the service of notice is sought to be
effected by Speed Post, ordinarily the service takes place within a few
days. Even under Order V, Rule 9(5) of the Code of Civil Procedure,
1908, summons is presumed to be served if it does not come back within
thirty days. In a situation of this nature, there was no occasion for the
Court to hold that service of notice could not be effected within a period
of thirty days.
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22. Presumption of service, under the statute, would arise not only
when it is sent by registered post in terms of Section 27 of the General
Clauses Act but such a presumption may be raised also under Section
114 of the Evidence Act. Even when a notice is received back with an
endorsement that the party has refused to accept, still then a presumption
can be raised as regards the valid service of notice. Such a notice, as has
been held by a Three-Judge Bench of this Court in C.C. Alavi Haji v.
Palapetty Muhammed and Another [(2007) 6 SCC 555] should be
construed liberally, stating :
"17. It is also to be borne in mind that the
requirement of giving of notice is a clear
departure from the rule of criminal law, where
there is no stipulation of giving of a notice
before filing a complaint. Any drawer who
claims that he did not receive the notice sent by
post, can, within 15 days of receipt of summons
from the court in respect of the complaint under
Section 138 of the Act, make payment of the
cheque amount and submit to the court that he
had made payment within 15 days of receipt of
summons (by receiving a copy of complaint
with the summons) and, therefore, the
complaint is liable to be rejected. A person who
does not pay within 15 days of receipt of the
summons from the court along with the copy of
the complaint under Section 138 of the Act,
cannot obviously contend that there was no
proper service of notice as required under
Section 138, by ignoring statutory presumption
to the contrary under Section 27 of the GC Act
17
and Section 114 of the Evidence Act. In our
view, any other interpretation of the proviso
would defeat the very object of the legislation.
As observed in Bhaskaran case if the "giving
of notice" in the context of Clause (b) of the
proviso was the same as the "receipt of notice"
a trickster cheque drawer would get the
premium to avoid receiving the notice by
adopting different strategies and escape from
legal consequences of Section 138 of the Act."
[Emphasis supplied]
23. The complaint petition admittedly was filed on 20.04.2001. The
notice having been sent on 17.01.2001, if the presumption of service of
notice within a reasonable time is raised, it should be deemed to have
been served at best within a period of thirty days from the date of
issuance thereof, i.e., 16.02.2001. The accused was required to make
payment in terms of the said notice within fifteen days thereafter, i.e., on
or about 2.03.2001. The complaint petition, therefore, should have been
filed by 2.04.2001.
24. Ex facie, it was barred by limitation. No application for
condonation of delay was filed. No application for condonation of delay
was otherwise maintainable. The provisions of the Act being special in
nature, in terms thereof the jurisdiction of the court to take cognizance of
18
an offence under Section 138 of the Act was limited to the period of
thirty days in terms of the proviso appended thereto. The Parliament
only with a view to obviate the aforementioned difficulties on the part of
the complainant inserted proviso to Clause (b) of Section 142 of the Act
in 2002. It confers a jurisdiction upon the court to condone the delay. It
is, therefore, a substantive provision and not a procedural one. The
matter might have been different if the Magistrate could have exercised
its jurisdiction either under Section 5 of the Limitation Act, 1963 or
Section 473 of the Code of Criminal Procedure, 1976. The provisions of
the said Acts are not applicable. In any event, no such application for
condonation of delay was filed. If the proviso appended to Clause (b) of
Section 142 of the Act contained a substantive provision and not a
procedural one, it could not have been given a retrospective effect. A
substantive law, as it is well-settled, in absence of an express provision,
cannot be given a retrospective effect or retroactive operation.
25. In Madishetti Bala Ramul (Dead) By LRs. v. Land Acquisition
Officer [(2007) 9 SCC 650], this Court held as under:
"18. It is not the case of the appellants that
the total amount of compensation stands
reduced. If it had not been, we fail to
understand as to how Section 25 will have any
application in the instant case. Furthermore,
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Section 25 being a substantive provision will
have no retrospective effect. The original award
was passed on 8-2-1981: Section 25, as it
stands now, may, therefore, not have any
application in the instant case."
The question is now covered by a judgment of this Court in Anil
Kumar Goel v. Kishan Chand Kaura [2008 AIR SCW 295] holding:
"8. All laws that affect substantive rights
generally operate prospectively and there is a
presumption against their retrospectivity if they
affect vested rights and obligations, unless the
legislative intent is clear and compulsive. Such
retrospective effect may be given where there
are express words giving retrospective effect or
where the language used necessarily implies
that such retrospective operation is intended.
Hence the question whether a statutory
provision has retrospective effect or not
depends primarily on the language in which it
is couched. If the language is clear and
unambiguous, effect will have to be given to
the provision is question in accordance with its
tenor. If the language is not clear then the court
has to decide whether, in the light of the
surrounding circumstances, retrospective effect
should be given to it or not. (See: Punjab Tin
Supply Co., Chandigarh etc. etc. v. Central
Government and Ors., AIR 1984 SC 87).
9. There is nothing in the amendment made to
Section 142(b) by the Act 55 of 2002 that the
same was intended to operate retrospectively.
In fact that was not even the stand of the
respondent. Obviously, when the complaint was
filed on 28.11.1998, the respondent could not
have foreseen that in future any amendment
20
providing for extending the period of limitation
on sufficient cause being shown would be
enacted."
26. Therefore, there cannot be any doubt whatsoever that the courts
below committed a manifest error in applying the proviso to the fact of
the instant case. If the complaint petition was barred by limitation, the
learned Magistrate had no jurisdiction to take cognizance under Section
138 of the Act. The direction to issue summons on the appellant,
therefore, being illegal and without jurisdiction was a nullity.
27. Section 415 of the Indian Penal Code defines "cheating". The said
provision requires: (i) deception of any person, (ii) whereby fraudulently
or dishonestly inducing that person to deliver any property to any person
or to consent that any person shall retain any property, or (iii)
intentionally inducing that person to do or omit to do anything which he
would not do or omit if he were not so deceived, and which act or
omission causes or is likely to cause damage or harm to that person in
body, mind, reputation or property. Deception of any person is common
to the second and third requirements of the provision. [See Devender
Kumar Singla v. Baldev Krishan Singla (2005) 9 SCC 15]
21
28. Noticing the ingredients of cheating, this Court in Suryalakshmi
Cotton Mills Ltd. v. Rajvir Industries Ltd. and Ors., [JT 2008 (1) SC
340], held :
"A bare perusal of Section 415 read with
Section 420 of the Indian Penal Code would
clearly lead to the conclusion that fraudulent or
dishonest inducement on the part of the accused
must be at the inception and not at a subsequent
stage.
22. For the said purpose, we may only notice
that blank cheques were handed over to the
accused during the period 2000-2004 for use
thereof for business purposes but the dispute
between the parties admittedly arose much
thereafter i.e. in 2005.
In B. Suresh Yadav v. Sharifa Bee 2007 (12)
SCALE 364, it was held;
13. For the purpose of establishing the offence
of cheating, the complainant is required to
show that the accused had fraudulent or
dishonest intention at the time of making
promise or representation. In a case of this
nature, it is permissible in law to consider the
stand taken by a party in a pending civil
litigation. We do not, however, mean to lay
down a law that the liability of a person cannot
be both civil and criminal at the same time. But
when a stand has been taken in a complaint
petition which is contrary to or inconsistent
with the stand taken by him in a civil suit, it
assumes significance. Had the fact as purported
to have been represented before us that the
appellant herein got the said two rooms
22
demolished and concealed the said fact at the
time of execution of the deed of sale, the matter
might have been different. As the deed of sale
was executed on 30.9.2005 and the purported
demolition took place on 29.9.2005, it was
expected that the complainant/first respondent
would come out with her real grievance in the
written statement filed by her in the
aforementioned suit. She, for reasons best
known to her, did not choose to do so.
No case for proceeding against the respondent
under Section 420 of the Indian Penal Code is
therefore, made out.
23. Filling up of the blanks in a cheque by itself
would not amount to forgery. Whereas in the
complaint petition, allegations have been made
that it was respondent Nos. 2 and 3 who had
entered into a conspiracy to commit the said
offence as indicated hereinbefore, in the
counter affidavit, it has been alleged that the
employees of the Respondent Company did
so."
29. The cheques were post dated ones. Admittedly they were issued in
the year 1996. They were presented before the bank on a much later
date. They were in fact presented only on 10.01.2001. When the
cheques were issued, the accounts were operative. Even assuming that
the account was closed subsequently the same would not mean that the
appellant had an intention to cheat when the post dated cheques were
issued. Even otherwise the allegations made in the complaint petition,
23
even if given face value and taken to be correct in its entirety do not
disclose commission of an offence under Section 420 of the Indian Penal
Code. They do not satisfy the ingredients of the suit provision. It is,
therefore, in the fact situation obtaining in the instant case, difficult to
hold that the provisions of Section 420 of the Indian Penal Code were
attracted.
30. The court had no jurisdiction to allow the amendment of the
complaint petition at a later stage. Therefore, the High court was not
correct in taking the aforementioned view in the facts and circumstances
of the present case.
31. For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeal is allowed.
...............................J.
[S.B. Sinha]
................................J.
[Cyriac Joseph]
New Delhi;
August 01, 2008
