B KANNAN Vs. KOTHANDAN

JUDGEMENT

(1.) SO moot a question that arises for consideration in all these actions, revolves on the interpretation of Sec. 138 (c) of the Negotiable instruments Act, 1881 (Act XXVI of 1881 for short'the Act')relatable to the receipt of the notice, as contemplated therein. This question as such, being purely legal, there is no need at all. I think, to relate the facts, even in a summary or general way, in all these actions. Such an interpretation assumes signal and paramount importance, in the context of achieving the purpose, for which Chapter VII, by Sec. 4 of the Banking Public financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act LXVI of 1988 for short'amending Act'), under a new nomenclature for the Chapter,'of penalties in cases of dishonour of certain cheque for insufficiency of funds in the accounts'had been re-introduced.

(2.) 'negotiable Instruments'were devised by the mercantile community, as a safe and very dependable method of discharging pecuniary liabilities and as a substitute for cash payment, which would always involve an element of ample risk, due to either the magnitude of the amount sought to be paid or the geographical distance between the payer and the payee. Such instruments could also be cleverly and conveniently used by several persons to discharge their financial liabilities, inter se. However, a smooth working of the system of negotiable instruments primarily depended upon the honesty and the integrity of the parties there to. The experience, however, of the mercantile community, particularly in India, has been far from adorable in recent times. A number of cheques dishonoured on the apparent ground of insufficiency of funds with the Bankers in the accounts of the drawer, has mounted to such an alarming proportion, as to create a justifiable, doubt and misgiving about the good faith and bona fide intentions of the givers, i. e. , the drawers of the cheques and other endorsers. A practice, it is said has already crept into the several metropolitan markets in India to give cheques merely as a device to stall for the time being, the undesirable contingency of being prevailed upon to make the payment on the spot, thus, substantially eroding the credibility of cheque as a trustworthy substitute for cash payment. There was already a big clamour in the mercantile community about the element of insincerity and light-heartedness, which has crept into the practice of issuing cheques and a fairly effective, though not highly deleterious remedies had to be. provided for to eradicate the evil, which had incarcerated the operational anatomy of the business world. A cheque that is dishonoured may cause incalculable loss, injury or inconvenience to the payee or endorse thereof, in view of the fact that due to the latter's unexpected disappointment, he has also to like the dust, while meeting his own future commitments to other persons. It is true that the Act, prior to the re-introduction of Chapter XVII by the Amending Act, has not failed to provide remedy for the aggrieved party. The remedy would be merely of a civil nature and the process to seek civil justice is notoriously dilatory. To ensure promptitute in remedy against defaulters, therefore, was the only way, in which the element of credibility and dependability could be re-introduced in the practice of issuing negotiable instruments in the form of cheques. The best way to do this is to provide a criminal remedy of penalty, which is the just thing that is said to be done by the amending Act.

(3.) IF the demand, as made under the statutory notice issued, within the time stipulated under clause (c) of the proviso to Sec. 138, is not complied with, the cause of action for the launching of the prosecution against the drawer of such cheque accrues on and from the date of expiry of the period of the statutory notice and the cause of action so accrued enures of the benefit of the payee or the holder in due course to launch a prosecution within a period of one month therefrom, as had been provided for under clauses (b) of sec. 142. Thus the offence becomes complete only when there is a failure on the part of the drawer to comply with the demand made in the statutory notice issued within the time limited under clause (c) of proviso to Sec. 138 and the prosecution launched, within a period of one month therefrom by the aggrieved payee or the holder in due course, as the case may be.