KODY ELCOT LIMITED Vs. DOWN TOWN HOSPITAL

JUDGEMENT

(1.) THE petitioner who filed a private complaint against the respondent before the Judicial Magistrate, Saidapet, Madras , is a limited company carrying on trade at Thiruvanmiyur within the local jurisdiction of the aforementioned magistrate. THE petitioner filed the complaint against the respondent for an alleged offence under section 138 of the Negotiable Instruments Act, 1881, read with section 142 of the said Act, as modified by Act 66 of 1988. THE allegations made in the complaint were that the respondent placed an order with the petitioner for supply of ultra sound scanner XL model with attachments. In pursuance of the order, the petitioner despatched the goods to the respondent on July 30, 1988. After the installation of the scanner, a part payment towards its cost was made by the respondent. Towards the balance amount due, the respondent sent to the petitioner a cheque dated December 2, 1988, drawn on united Commercial Bank, Guwahati, for Rs. 1, 00, 000. THE petitioner presented this cheque to the Bank of India at Madras on May 20, 1989. THE cheque was returned by the petitioner's banker with an endorsement "exceeds arrangements". THE petitioner, thereafter, on june 5, 1989, sent a registered notice to the respondent stating that the deliberate issue of a cheque without adequate funds was an offence punishable under section 138 of the Negotiable Instruments Act and that the respondent should arrange to clear the dues. THE said notice was received on June 16, 1989, by the respondent who had, by a letter dated June 17, 1989, acknowledged the said receipt. THEreafter, the petitioner preferred the private complaint on july 12, 1989. THE Trial Magistrate returned the complaint to the petitioner holding that the facts mentioned in the complaint did not constitute an offence for taking cognizance. In the course of his reasoning, the Trial magistrate has observed that, at the time of issuing the cheque involved in this case, sections 138 and 142 of the Act were not in force and they were brought into the statute book with effect only from April 1, 1989. In the view of the Magistrate, retrospective operation could not be given to those sections so as to attach a new disability in respect of past transactions, since the fundamental rule of English law was that no statute shall be construed to have retrospective operation unless such a construction appeared clearly or would arise by necessary and distinct implication. Challenging the return of the complaint by the Judicial Magistrate, Saidapet, as not in consonance with law, this petition has been filed under section 482, Criminal Procedure Code, to set aside the order, with a further direction to the Magistrate to dispose of the complaint in accordance with law. Mr. R. Subramania Aiyar, learned counsel for the petitioner, contended that the Magistrate had erred in interpreting the provisions of sections 138 and 142 (b) of the Negotiable Instruments Act, as amended by Act 66 of 1988, while holding that the cheque itself should have been drawn after April 1, 1989, to attract the penal provisions of the Act. He also urged that the date of issue of the cheque was immaterial and all that was required by the law was that it should have been dishonoured after April 1, 1989, when the provisions of the Act became operative. Since the complaint was returned even before taking it on file, the respondent had not come into the picture and, in law, is not entitled to any notice at this stage. However, I heard Mr. R. Shanmughasundaram, the learned Additional Public Prosecutor, in respect of all the contentions put forth by learned counsel for the petitioner. THE Additional Public Prosecutor represented that the date of issue of the cheque cannot be a material circumstance since it would be current for six months and if the cheque was returned by the bank for the reasons contemplated under the Act, the offence would be complete. I have carefully considered the submissions made by both learned counsel. It is better to extract sections 138 and 142 of the Act. "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 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 the amount of money standing to the credit of that account is insufficient to honour the cheque or 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 provision of this Act, be punished with imprisonment for a term which may extend to one year 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 6 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 the money by giving a notice, in writing to the drawer of the'cheque'within 15 days of receipt of information by him from the bank regarding the return of the cheque as unpaid and (c) the drawer of such cheque fails to make the payment of said amount of money to the payee, or, as the case may be, to the holder in due course of the cheque within 16 days of receipt of the said notice. Explanation.---For the purposes of this section,'debt or other liability'means a legally enforceable debt or other liability. 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 (c) no court inferior to that of a Metropolitan magistrate or a Judicial Magistrate of the first class shall try an offence punishable under section 138. " * THE issuing of the cheque, by itself, is not an offence. To attract the offence punishable under section 138 of the Act : (a) a cheque must have been drawn by a person on an account maintained by him with a banker for payment of an 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 (b) the cheque must have been returned by the bank unpaid, either because the amount of money standing to the credit of that account was insufficient to honour the cheque or it exceeded the amount arranged to be paid from that account by an agreement made with that bank (c) the cheque must have been presented to the bank within the period of six months from the date on which it was drawn or within the period of its validity, whichever was earlier (d) the payee or the holder, in due course, of the cheque must have made a demand for payment, by a notice in writing to the drawer of the cheque within fifteen days of the receipt of information by him from the bank, returning the cheque unpaid, and (e) the drawer of such cheque must have failed to make the payment of the said amount to the payee or the holder in due course within 15 days of the receipt of the said notice. Only on the happening of certain contingencies contemplated by the provisions of section 138 of the Act, the offence is committed. THE cheque, though might have been issued prior to the commencement of the Act, the contingencies contemplated by the Act can arise within the period of validity of the cheque or six months, whichever is earlier. Though the penal provision was non-existent when the cheque was issued by the respondent, the court is bound to look into the general scope and purview of the statute, and the remedies sought to be applied. Equally, the court must look into the former state of law and the contemplation of the legislation. THE intention of the Legislature appears to be to make the drawer of the cheque liable for penalties, if cheques were to be issued without sufficient funds while settling liabilities, at the same time providing adequate safeguards to prevent harassments to honest drawers of cheques. Laws made justly for the benefit of individuals and for the community as a whole, may relate to a time antecedent to their commencement. Even though the claim on which the action is based may be of an anterior date and actions may have begun earlier, the provisions of section 138 of the Act, taken as a whole on the facts narrated, would prima facie disclose the commission of an offence punishable under section 138 of the Act. Even if the cheque had been issued prior to the commencement of the Act, if it were to be returned by the banker on the twin grounds contained in the section, the offence will be complete. THE drawer of the cheque is given a further opportunity to make payment on a demand made after the return of the cheque and only if he failed to make payment within 15 days of the receipt of the said notice, the offence stands committed. Section 142 of the Act provides the period of limitation to enable the court to take cognizance of the offence on a complaint preferred in writing by the payee or the holder in due course. THE cause of action would arise under section 138 (c)where the drawer of the cheque fails to make payment within 15 days of the receipt of the said notice. THE complaint must be laid within one month from the date. THE impugned order of the Judicial Magistrate, Saidapet, is unsustainable for the reasons stated above. THE Judicial Magistrate, Saidapet, is directed to take the complaint on file and dispose of it in accordance with law. This petition is allowed.