Allowed

Mukundan v. Unnikrishnan

Kerala HC13 Oct 2023CRL.A/300/2011

Case brief

AI extract

What is this about?

In an appeal under Section 138 of the Negotiable Instruments Act, this Court held that the 30-day period for issuing a statutory notice commences only upon receiving intimation of dishonour from the bank, not from the bank's memo date. The Court allowed the appeal, upheld the conviction, and modified the sentence to emphasize compensation.

What did the court decide?

The appeal is allowed, impugned judgment set aside, conviction upheld, and sentence modified to one day's imprisonment and fine payable as compensation.

Mukundan Vs Unnikrishnan — Cheque Dishonour | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.S.DIAS

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FRIDAY, THE 13TH DAY OF OCTOBER 2023 / 21ST ASWINA, 1945

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CRL.A NO. 300 OF 2011

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AGAINST THE JUDGMENT DATED 02.11.2009 IN CRA 549/2008 OF
ADDITIONAL DISTRICT COURT(ADHOC), FAST TRACK COURT NO-II,
THRISSUR

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Crl.L.P. 80/2011 OF HIGH COURT OF KERALA

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APPELLANT/COMPLAINANT:

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MUKUNDAN,
AGED 32 YEARS,
S/O. VASU, KANIPPAYUR VEETTIL,
KANIPPAYUR VILLAGE, DESOM,
THALAPPILLY TALUK, THRISSUR DISTRICT.

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BY ADV SRI.RAJIT

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RESPONDENTS/ APPELLANT/ ACCUSED AND STATE:

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1UNNIKRISHNAN,
S/O. SANKARANKUTTY, KOTHOTTIL HOUSE, KUNNAMKULAM
VILLAGE (P.O.),
THEKKUMPURAM DESOM,
THALAPPILLY TALUK,
THRISSUR DISTRICT, PIN 680 503.

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2STATE OF KERALA REP. BY PUBLIC PROSECUTOR
HIGH COURT OF KERALA, ERNAKULAM.

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BY ADVS.SRI.SANTHEEP ANKARATH

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OTHER PRESENT:

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PP SRI SANAL S RAJ

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THIS CRIMINAL APPEAL HAVING COME UP FOR ADMISSION ON
13.10.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Crl.A.No.300/2011

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Dated this the 13^th day of October, 2023

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J U D G M E N T

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The appeal is filed questioning the legality and correctness of the judgment in Crl.A. No.549/2008 passed by the Court of the Additional Sessions Judge, (Adhoc) (Fast Track Court No-II), Thrissur (Appellate Court) holding the first respondent/accused not guilty for the offence under Section 138 of the Negotiable Instruments Act, 1988 (for brevity, ‘N.I. Act’). For the sake of convenience, the parties are referred to as per the status before the Trial Court.

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Brief relevant facts:

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The complainant had filed C.C. No.1170/2006 before the Court of the Judicial First Class Magistrate, Kunnamkulam(Trial Court), against the accused, alleging him to have committed the offence under Section 138 of the N.I. Act. The complainant’s case is that the accused had owed him an amount of

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Crl.A.No.300/2011

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Rs.70,000/- and in discharge of the said liability, the accused had issued Ext P1 cheque dated 10.05.2006 drawn on the Corporation Bank, Guruvayoor branch. The cheque, on presentation to the complainant’s Bank for collection, was dishonoured by the drawer’s bank – the Corporation Bank – by Ext P2 memorandum dated 24.05.2006, due to ‘insufficiency of funds’ in the bank account of the accused. The said fact was intimated to the complainant by his bank, namely Canara Bank, by Ext P3 intimation dated 29.05.2006. The complainant issued Ext P4 statutory lawyer notice dated 27.06.2006, to the accused, which got returned unclaimed on 29.06.2006. The accused failed to pay the demanded amount. Hence, he committed the offence.

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The learned Magistrate took cognizance of the offence and issued summons to the accused. The accused entered appearance and denied substance of accusation read over to him. In the trial, the

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complainant got himself examined as PW1 and marked Exts P1 to P6 in evidence. The accused denied the incriminating circumstances appearing in evidence against him in the questioning under Section 313 of the Code of Criminal Procedure, 1973(in short, ‘Code’). The accused did not let in any defence evidence.

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Trial Court judgment:

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The learned Magistrate, after analysing the materials on record, found the accused guilty for the offence under Section 138 of the N.I. Act, and convicted and sentenced him to undergo simple imprisonment for a period of three months and pay a fine of Rs.70,000/and in default of payment of fine to undergo simple imprisonment for a further period of three months. If the fine amount was realised, the entire amount to be paid to the complainant as compensation under Section 357(1) (b) of the Code.

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Aggrieved by the said judgment, the accused

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preferred Crl.A.No.549/2008 before the Appellate Court.

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Appellate Court judgment:

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The Appellate Court, after re-appreciating the materials placed on record, arrived at a conclusion that the complainant had failed to comply with the mandate under clause (b) of the proviso to Section 138 of the N.I. Act, which stipulates that the payee has to make a demand in writing for the cheque amount within 30 days (i.e., after the amendment by Act 55 of 2002) on receipt of information by him from bank regarding the return of the cheque. The learned Sessions Judge, relying on the decision of the Hon'ble Supreme Court in Sivakumar v. Natarajan [(2009)13 SCC 623] held that since the complainant had issued Ext P4 statutory lawyer notice after 30 days from the date of Ext P2 memorandum, he has failed to comply with the mandate under the N.I. Act. Consequentially, the

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Appellate Court allowed the appeal and set aside the judgment passed by the Trial Court and acquitted the accused.

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It is assailing the said judgment, the present appeal is filed.

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Heard; Sri. Rajit. R, the learned counsel appearing for the appellant; Sri. Santheep Ankarath,the learned counsel appearing for the first respondent and Sri. Sanal S Raj, the learned Public Prosecutor appearing for the second respondent – State.

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Is there any illegality in the impugned judgment of the Appellate Court?

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The law is quite well settled that the Appellate Court shall be slow in interfering with an order of acquittal unless the conclusion arrived at by the court below is patently erroneous and perverse. Merely because another view is possible, the Appellate Court shall not reverse the finding of the court below and

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convict the accused. The cardinal reason is because an order of acquittal adds to the presumption of innocence of the accused.

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In the case at hand, the Appellate Court has reversed the conviction and sentence passed by the learned Magistrate on a technical ground i.e., of the non-compliance of clause (b) of the proviso to Section 138 of the N.I. Act.

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It is apposite to quote Section 138 of the N.I. Act, which reads as under:

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“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 of the amount of money standing to the credit of that account is insufficient to honour the cheque or that 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 provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], 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—

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(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;

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(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.”

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Interpreting the above provision, in Thomas

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P.J . v.Vijayakumari and Others [2014 (2) KHC 265]

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this Court has succinctly held as follows:

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“17.The thrust of proviso (a) in Sec.138 of the Act is to the 'presentation' of the cheque to 'the bank' which obviously is the drawee bank and not any other bank as the payee wishes. But the thrust in proviso (b) of Sec. 138 of the Act is to the date of receipt of information (regarding dishonour) by the payee. The payee can give notice of dishonour to the drawer only if the payee gets that information. The collecting bank may be the agent of the payee in certain circumstances. But the notice is to be issued by the payee for which he should get information about the dishonour. He could not be compelled or expected to do something which is not possible of him. In such situations, the court while interpreting the provision should bear in mind the principle "lex non cogit ad impossibilia "(the law does not compel a man to do that which

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he cannot possibly perform). In Bennions Statutory Interpretation, 4th Edn. at pages 969 -970 it is stated,

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"All civilized systems of law import the principle lex non cogit ad impossibilia "... If an enactment requires what is legally impossible it will be presumed that Parliament intended it to be modified so as to remove the impossibility.”

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(referred to with approval in Standard Chartered Bank v. Directorate of Enforcement, [2005] 4 SCC 530 - Pr.29). In the circumstances, I am of the view that the expression "the bank " occurring in proviso (b) of Sec.138 of the Act cannot be given the same meaning as given to that expression in proviso (a). The expression occurring in proviso (b) of Sec.138 of the Act has to be given a contextual meaning. Giving the expression in the two provisos the same meaning would do violence to the purport of proviso (b) of Sec. 138 of the Act. For, it is open to the payee to present the cheque through his bank and if it is to be taken that the date for reckoning the period of 15 days is the date on which the collecting bank received the information, it would mean that even before the information regarding dishonour has reached the payee, he is required to issue notice intimating that dishonour and demanding payment.)”

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In view of the categoric declaration of law in Thomas P.J . (supra), there is no room for any doubt that the time period for the payee or the holder in due course of a cheque to send a demand in writing for the

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payment of the cheque to the drawer of the cheque starts to run only from the date of receipt of the information from his bank regarding the return of the cheque as ‘unpaid’, and not from the drawer’s bank.

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In the instant case, it is an undisputed fact that the complainant was informed regarding the dishonour of Ext P1 cheque by his bank only on 29.05.2006 as per Ext P3 intimation. The complainant sent Ext P4 statutory lawyer notice to the accused on 28.06.2006, i.e., well within the thirty days time period mandated under clause (b) of the proviso to Section 138 of the N.I. Act.

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Therefore, the conclusion arrived at by the learned Sessions Judge that the complainant failed to comply with the mandate under the above provision is erroneous and wrong. The decision in Sivakumar v. Natarajan (supra) relied on by the learned Sessions Judge has no application in the case at hand. It should

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be remembered that there may be cheques issued by drawers outside the State, which obviously taken more time to get collected than the local cheques. Therefore, if the interpretation given by the Sessions Judge is accepted, then all such cases will have to be dismissed for no fault of the payee/holder in due course/complainant. Thus, I am inclined to follow the interpretation in Thomas P.J .(supra) and allow the appeal by setting set aside the judgment of the Appellate Court, and confirm the conviction of the first respondent/accused as found by the learned Magistrate in C.C. No.1170/2006.

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Now coming to the question of sentence.

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In Damodar S. Prabhu vs Sayed Babalal.H

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[2010 (5) SCC 663] the Hon’ble Supreme Court has observed that, unlike other forms of crime, the punishment under Section 138 of the N.I Act is not a means of seeking retribution, but is more a means to

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ensure payment of the money. The complainant’s interest lies primarily in recovering the money rather than seeing the drawer of the cheque being incarcerated. While imposing a sentence, the court should always keep in mind the compensatory aspect of the remedy, which should give priority over the punitive aspect.

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Keeping in mind the above principles, I am inclined to modify the sentence that has been imposed by the learned Magistrate and reduce it to one day (till the rising of the Court) and direct the first respondent/accused to pay the cheque amount as fine and in default to undergo sentence, and if the fine amount is realised, the same to be paid as compensation to the appellant/complainant, which would meet the ends of justice.

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In the result,

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(i) The appeal is allowed;

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(ii) The impugned judgment of the Appellate Court is set aside;

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(iii) The conviction passed by the learned Magistrate in C.C. No.1170/2006 is upheld.

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(iv) The sentence imposed by the learned Magistrate is modified and reduced, by sentencing the first respondent/accused to undergo imprisonment for a day (till the rising of Court) and to pay a compensation of Rs.70,000/-(Rupees seventy thousand only) within a period of sixty days from today and in default to undergo simple imprisonment for a period of four months;

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(v) The first respondent is directed to appear before the learned Magistrate on or before 13.12.2023 to undergo the sentence and pay the fine amount, and in default to undergo the default sentence;

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