LexM/S. SARA V INVESTMENT & FINANCIAL CONSULTANTS PVT. LTD. AND ANR. versus LLYODS REGISTER OF SHIPPING INDIAN OFFICE STAFF PROVIDENT FUND AND ANR.
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A MIS. SARA V INVESTMENT & FINANCIAL CONSULTANTS PVT. LTD. AND ANR. V. LL YODS REGISTER OF SHIPPING INDIAN OFFICE STAFF PROVIDENT FUND AND ANR. B OCTOBER 11, 2007 [S.B. SINHA AND H.S. BEDI, JJ.] c Negotiable Instruments Act; S. I 38 and Proviso (b) and (c): Dishonour of cheques-Complaint-Service of Notice- Requirements of-Held: S. I 38 of the Act contains a penal provision- Since the provision provides for a severe penalty, it warrants a strict D construction-Service of notice is a statutory requirement for initiation of criminal proceeding-In terms of the provision, a Complaint Petition A could be filed for commission of an offence by a drawee of cheque only fifteen days after the service of the notice to that effect-Complaint of notice required to be communicated to the drawee of cheques-In E the instant case, employees of advocates of respondent allegedly served the notice which did not disclose complete facts about the service of notice to drawee of Cheques-Moreover, filing of complaint on May 9, 2000 after service of notice on May 7, 2000, was pre-mature- Hence, the complaint in question not maintainable as service of notice has not been effected in terms of the provision under Section I 38 of --'< F the Act. Respondent filed a complaint against the appellants in the Court of Metropolitan Magistrate u/s. 138 of the Negotiable Instruments Act alleging, inter alia, that the cheques delivered by him have G bounced. Cheques in question were admittedly issued on 16.3.2000. The memo in regard to non-payment of the cheques was received ,...., ' by the respondent from the bank on 16.3.2000. Legal notices were allegedly issued by them on 30.3.2000 through their Advocate intimating appellants about dishonour of the cheques and calling H 1110 SARA V INVESTMENT & FINANCIAL CONSULT ANTS v. 1111 LLYODSREGISTEROFSHIPPINGINDIANOFFICE upon them to make payment of the amount of cheques. However, A the notices were neither sent under registered cover with acknowledgment due nor even the couriers' service was availed. The notices were allegedly served by the employees/clerks of Advocates for the respondents. Relying on the purported statements made in the complaint petition as also the affidavits of the employees of B Advocates, cognizance was taken by the Metropolitan Magistrate. Aggrieved, the appellants filed an application for recalling of the processes served on them on the premise that the requirements to comply with proviso ( c) appended to Section 138 of the Act having not been complied with, issuance of summons was illegal. The c application was rejected by the Magistrate. A Criminal Revision Application filed thereagainst before the Sessions Court by the appellant was allowed by the Sessions Court. A second revision was filed by the respondent before the High Court, which was allowed by it. Hence the present appeal. D Appellant contended that keeping in view the provisions contained in clauses (b) and (c) of the proviso appended to Section 138 of the Negotiable Instruments Act, the impugned judgment of the High Court is not sustainable. Respondent submitted that the very fact that the appellants have changed their office as a result whereof service of notice could E not be effected, the Magistrate has rightly taken cognizance of the offence; that affidavits have been affirmed by the clerks working with the advocates of the respondents and they were competent to F serve notices upon the appellants which sub-serve the requirements of law; that non-availability of the appellants at their respective addresses would give rise to a presumption that they had been evading service of notice; and that while determining the issue this Court should take into consideration the quantum of the amount G · -_, payable by the appellants to the respondents as also their conduct that they were defaulters to third parties and on that premise the impugned judgment may not be interfered with. Allowing the appeal, the Court H 1112 SUPREME COURT REPORTS [2007] 10 S.C.R. A HELD: 1.1. Section 138 of the Negotiable Instruments Act contains a penal provision. It is a special statute. It creates a vicarious liability. Even the burden of proof to some extent is on the accused. Having regard to the purport of the said provision as also in view of the fact that it provides for a severe penalty~ the provision B warrants a strict construction. Proviso appended to Section
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