CENTRAL BANK OF INDIA AND ANR. versus SAXONS FARMS AND ORS.

Citation: [1999] SUPP. 3 S.C.R. 534 · Decided: 07-10-1999 · Supreme Court of India · Bench: G.T. NANAVATI · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

A 
CENTRAL BANK OF INDIA AND ANR. 
v. 
SAXONS FARMS AND ORS. 
OCTOBER 7, 1999 
B 
[G.T. NANAVATI AND S.N. PHUKAN, JJ.] 
Criminal Law : 
Negotiable lnstrnments Act, 1881 : Section 138 proviso, clause (b ). 
c ' 
Notice-Object of-Last line of notice stated : "Kindly arrange to make 
the payment .... ''-Held : Object of notice is to give a chance to the drawer of 
the cheque to rectify his omission and also to protect an honest drawer-There 
fore, in the notice a demand for payment of the amount of cheque has to be 
made-Last line of the notice is clear demand for payment-Hence, High 
D Court e"ed in overlooking this demand for payment and in quashing the 
complaint under S.482 Cr.P.C.--Criminal Procedure Code, 1973, S.482. 
Notice-Requirements of-Held: (i) Should be in writin~ (ii) Should 
be given within fifteen days of return of cheque as unpaid and (iii) A demand 
E for payment of the amount of cheque has to be made. 
Notice-Demanding payment-Service of-Held : Is a condition prece-
dent for filing complaint under S.138. 
Section 138 proviso, clause (a)--chequ~resentation of-Number of 
F times-Held : Drawee has the right to present a cheque any number of times 
within its period of validity. 
Respondent No. 1. partnership firm took a loan of over a crore of 
rupees from the appellant-Bank and towards part- repayment of the above 
G loan issued three cheques. These cheques were presented for collection but 
were received back with the remarks "Funds insufficient". Thereafter, the 
appellant sent two notices to respondent No. 1 stating that it would re-
present these cheques again and if the same were returned unpaid, the 
matter would be reported to the police. The notices further reserved the 
right to file a criminal case against respondent No. 1 if it did not arrange to 
H make the payment. Admittedly, Respondent No. 1 received the notices. 
534 
-
--
CENTRAL BANK OF INDIA v. SAXONS FARMS 
535 
All the cheques were re-presented to the bank but were returned with A 
the same remarks "funds insufficient". Thereupon, the appellant-bank 
filed complaints under Section 138 of the Negotiable Instruments Act, 1881 
· in the court of the Judicial Magistrate First Class who took cognizance of 
the complaints. But High Court quashed the complaint under Section 482 
of the Criminal Procedure Code, 1973 on the ground that there was no B 
proper notice as required under Section 138 of the Act and held that there 
was no demand of payment. Hence this appeal. 
Allowing the appeals, this Court 
HELD: 1.1. Though, no form of notice is prescribed in Clause (b) · C 
of the proviso to Section 138 of the Negotiable Instruments Act, 1881 the 
requirement is that notice shall be given in writing within fifteen days of 
receipt of information from the bank regarding return of the cheque as 
unpaid and in the notice a demand for payment of the amount of the 
cheque has to be made. [537-H; 538-A] 
D 
1.2. The object of the notice is to give a chance to the drawer of the 
cheque to rectify his omission and also to protect honest drawer. Service of 
notice of demand in Clause (b) of the proviso to Section 138 is a condition 
precedent for filing a complaint under Section 138 of the Act.[538-B] 
2.1. Regarding demand for payment, the High Court was of the 
opinion that "the intention in the notice was that the cheque was being 
presented again and the applicant/petitioner should arrange the payment 
on re-presentation of the cheque". [538-E] 
E 
F 
2.2. However, a cheque can be presented any number of times to the 
bank within the period of its validity. Therefore, the appellant-bank had a 
legal right to re-present the cheques to the bank as indicated in the notices 
and, therefore, respondents could have arranged payment either through 
bank or directly to the appellant-bank. By not doing so the provision of 
Section 138 is clearly attracted. [538-F; G] 
G 
3. In the present case, the last line of the notice reads : "Kindly 
arrange to make the payment to avoid the unpleasant action of my client". 
This is a clear demand as required under Section 138(b) proviso. The High 
Court erred in overlooking this last line in the notice and in holing that H 
536 
SUPREME COURT REPORTS [1999] SUPP. 3 S.C.R. 
A there was no demand of payment. [538-D; E] 
CRIMINAL APPELLATE JURISDICTION 
Criminal Appeal 
•· 
Nos. 1056-57 of 1999. 
From the Judgment and Order dated 7.8.97 of the Madhya Pradesh 
B High Court in Cr!. M.A. No. 636-37 of 1997. 
Altaf Ahmed, A
Excerpt shown. Read the full judgment & AI analysis in Lexace.