Jammu & Kashmir High Court - Srinagar Bench

Khalid Bin Gani And Another vs Mohd. Ashraf Dar on 9 April, 2021

         HIGH COURT OF JAMMU AND KASHMIR
                   AT SRINAGAR

                                                       Reserved On: 29/03/2021
                                                      Pronounced On: 09/042021

                                                             CRMC 113/2019
                                                              CrlM 113/2019
Khalid Bin Gani and another
                                                    ... Petitioner/Appellant(s)
                   Through: Mr. F. A. Bhat, Advocate

                         V/s
Mohd. Ashraf Dar
                                                           ... Respondent(s)

Through: Mr. M. Sultan, Advocate

CORAM: HON'BLE MR. JUSTICE JAVED IQBAL WANI, JUDGE

1. In the instant petition, under challenge is the order dated 15.3.2019

(for short 'impugned order') passed by the court of 4th Additional

District Judge, Srinagar, (for short 'revisional court') in a revision

filed by the respondent herein while throwing challenge to the order

dated 25.6.2018 passed by the CJM Srinagar (for short 'trial court')

in case titled as Khalid Bin Gani and another versus Mohd. Ashraf

Dar.

2. The facts those stem out from the perusal of the petition reveal that

a criminal complaint under section 138 Negotiable Instrument Act

(for short the Act) for dishonor of three cheques issued by the

respondent herein in favour of the petitioners, had been instituted

after the complainants/petitioners herein had sent a demand notice

through registered post inasmuch as after the expiry of stipulated

period the accused/respondent herein had failed to pay the amount

covered under cheques in question.

3. A perusal of the petition further reveals that the accused/respondent

herein appeared before the trial court after being summoned and

filed bail bonds thereof. The statement of the accused/respondent

herein has been recorded under section 242 CrPC wherein the

accused is stated to have admitted the issuance of cheques but

disputed to have received the demand notice. The

accused/respondent herein, however, admitted to have received the

notice of the complaint of the trial court and despite that did not pay

the cheque amounts after the receipt of the said notice of the trial

court.

4. A further perusal of the petition reveals that the accused/respondent

herein came to be convicted vide judgment dated 30.11.2015 for

commission of offence under section 138 Negotiable Instruments

Act by the trial court on account of his admission recorded in his

statement under section 242 CrPC. Further perusal of the petition

would also reveal that an appeal had been preferred by the

accused/respondent against the judgment dated 30.11.2015 before

the Additional Sessions Judge, Srinagar, which judgment had been

set aside on 30.5.2016 remitting the case back to the trial court for

proceedings in the matter in accordance with law.

5. It is further revealed from the perusal of the petition that the

complainants/petitioners herein examined three witnesses in the

complaint and concluded their evidence on 27.1.2017 whereupon

the accused/respondent herein came to be directed to lead the

evidence. The right of the accused/respondent herein to adduce

evidence had been closed vide order dated 6.5.2017, which order

had been questioned by the accused/respondent herein in a revision

before the court of 1st Additional Sessions Judge, Srinagar, which

court vide order dated 30.11.2017 while disposing of the revision

petition directed the trial court to afford two more opportunities to

the accused/respondent herein for adducing evidence.

6. A perusal of the petition further reveals that the accused/respondent

herein failed to avail the opportunities aforesaid, as were granted by

the revisional court vide order dated 30.11.2017 and did neither

appear before the trial court nor led any evidence thereof resulting

into forfeiture of his surety bonds. Further perusal of the petition

reveals that the accused/respondent herein moved an application for

sending postal record as submitted by the complainants/petitioners

herein to the FSL expert for its opinion, which application came to

be rejected by the trial court vide order dated 25.6.2018 against

which order the accused/respondent herein filed a revision before

the revisional court which revision has been allowed in terms of

impugned order dated 15.3.2019.

7. The order impugned is being questioned inter alia on the grounds

that the revisional court failed to notice the law governing the

subject inasmuch as the only claim projected by the

accused/respondent herein had been that he did not receive the

demand notice despite the fact that he admitted the question of

liability, the issuance of cheques, signing of the cheques by him as

also non-payment of cheque amount to the petitioners. It is being

urged in the grounds that the only question to be gone into by the

trial court was to see as to whether the demand notice provided by

law had been given by the complainants/petitioners herein to the

accused/respondent herein. The complainant/petitioners in this

regard are stated to have examined witnesses who had deposed that

the demand notices dated 8.8.2015 and 31.8.2015 had been duly

served and delivered by the postman. The postmaster concerned is

stated to have upon examination on 27.1.2017 clearly stated that the

notices had been served and the accused/respondent herein had

received the same on his correct and true address. The sending of

postal receipts for FSL examination is stated to be an attempt by the

accused/respondent herein to protract the litigation as far as

possible. The application filed in this regard is stated to be clear

abuse of process of law.

8. It is being further urged in the grounds that the accused/respondent

herein had denied only the receipt of notice and did not dispute the

correctness of the address on which the notice was sent. It is being

stated in the grounds that the address of the accused/respondent

herein as recorded in the demand notice had been the same as

recorded in the registered letters. The same address of the

accused/respondent herein is stated to have been mentioned by the

complainant in the complaint and the accused/respondent herein is

stated to have appeared in response to a notice issued by the trial

court on the same address of the accused/respondent herein. The

revisional court is stated to have upset the finding recorded by the

trial court overlooking the aforesaid position.

9. It is being further urged in the grounds that the revisional court

overlooked the law laid down by the Supreme Court in case titled as

C. C. Alavi Haji vs. Palapetty Muhammed reported in (2007) 6

SCC 555 and judgment of this court passed in Dev Raj Bhasin Vs

Parveen Kumar Kandhari, reported in (2008) 1 SLJ 41 inasmuch

as the object of law in regard to Negotiable Instruments Act laid

down by the Apex Court in case titled as M/s Dalmia Cement

(Bharat) Ltd vs M/s Galaxy Traders & Agencies Ltd reported in

AIR 2001 SC 676 and law laid down by the Apex Court in case

titled as Meters and Instruments Private Limited and another

versus Kanchan Mehta reported in (2018) 1 SCC 560.

10. Heard learned counsel for the parties and perused the record.

11. Before testing the validity or otherwise of the order impugned, it

would be advantageous and appropriate to refer to the judgment of

the Apex Court in C. C. Alavi Haji's case, supra, whereunder the

object of section 138 of the Negotiable Instruments Act came to be

considered and explained by the Apex Court.

"Para-4: Chapter XVII of the Act originally containing Sections 138 to 142 was inserted in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 with the object of promoting and inculcating faith in the efficacy of banking system and its operations and giving credibility to negotiable instruments in business transaction. The introduction of the said Chapter was intended to create an atmosphere of faith and reliance on banking system by discouraging people from not honouring their commitments by way of payment through cheques. Section 138 of the Act was enacted to punish those unscrupulous persons who purported to discharge their liability by issuing cheques without really intending to do so. To make the provisions contained in the said Chapter more effective, some more Sections were inserted in the Chapter and some amendments in the existing provisions were made. Though, in this reference, we are not directly concerned with these amendments but they do indicate the anxiety of the Legislature to make the provisions

more result oriented. Therefore, while construing the provision, the object of the legislation has to be borne in mind.

12. A reference to the judgment of the Apex Court passed in Meters

and Instruments Private Limited and another versus Kanchan

Mehta reported in (2018) 1 SCC 560 being relevant and germane

herein, would also be appropriate and advantageous wherein at paras

6 and 7 and 18.1, 18.2, 18.3 and 18.4 following has been laid down:

"6. The object of introducing Section 138 and other provisions of Chapter XVII in the Act in the year 1988 3 was to enhance the acceptability of cheques in the settlement of liabilities. The drawer of cheque is made liable to prosecution on dishonour of cheque with safeguards to prevent harassment of honest drawers. The Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to amend the Act was brought in, inter-alia, to simplify the procedure to deal with such matters. The amendment includes provision for service of summons by Speed Post/Courier, summary trial and making the offence compoundable.

7. This Court has noted that the object of the statute was to facilitate smooth functioning of business transactions. The provision is necessary as in many transactions cheques were issued merely as a device to defraud the creditors. Dishonour of cheque causes incalculable loss, injury and inconvenience to the 3 Vide the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 payee and credibility of business transactions suffers a setback 4. At the same time, it was also noted that nature of offence under Section 138 primarily related to a civil wrong and the 2002 amendment specifically made it compoundable 5. The offence was also described as 'regulatory offence'. The burden of proof was on the accused in view of presumption under Section 139 and the standard of proof was of "preponderance of probabilities" 6 . The object of the provision was described as both punitive as well as compensatory. The intention of the provision was to ensure that the complainant received the amount of cheque by way of compensation. Though proceedings under Section 138 could not be treated as civil

suits for recovery, the scheme of the provision, providing for punishment with imprisonment or with fine which could extend to twice the amount of the cheque or to the both, made the intention of law clear. The complainant could be given not only the cheque amount but double the amount so as to cover interest and costs. Section 357(1)(b) of the Cr. P.C. provides for payment of compensation for the loss caused by the offence out of the fine7. Where fine is not imposed, compensation can be 4 Goa Plast (P) Ltd. v. Chico Ursula D'Souza (2004) 2 SCC 235 5 Vinay Devanna Nayak v. Ryot Sewa Sahakari Bank Ltd.(2008) 2 SCC 305 6 Rangappa v. Sri Mohan (2010) 11 SCC 7 R. Vijayan v. Baby (2012) 1 SCC 260 awarded under Section 357(3) Cr.P.C. to the person who suffered loss. Sentence in default can also be imposed. The object of the provision is not merely penal but to make the accused honour the negotiable instruments.

18. i) Offence under Section 138 of the Act is primarily a civil wrong. Burden of proof is on accused in view presumption under Section 139 but the standard of such proof is "preponderance of probabilities". The same has to be normally tried summarily as per provisions of summary trial under the Cr.P.C. but with such variation as may be appropriate to proceedings under Chapter XVII of the Act. Thus read, principle of Section 258 Cr.P.C. will apply and the Court can close the proceedings and discharge the accused on satisfaction that the cheque amount with assessed costs and interest is paid and if there is no reason to proceed with the punitive aspect.

ii) The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.

iii) Though compounding requires consent of both parties, even in absence of such consent, the Court, in the interests of justice, on being satisfied that the complainant has been duly compensated, can in its discretion close the proceedings and discharge the accused.

iv) Procedure for trial of cases under Chapter XVII of the Act has normally to be summary. The discretion of the Magistrate under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart

from the sentence of imprisonment, the Court has jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C. With this approach, prison sentence of more than one year may not be required in all cases.

13. Further reference to the C. C. Alavi Haji's judgment, supra, in

regard to provisos (b) and (c) appended to section 138 of Act

inasmuch as presumption regarding service of notice by post would

be pertinent herein. The Apex Court has in paras 6, 13, 14, 16 and

17 observed and held as under:

"6. As noted hereinbefore, Section 138 of the Act was enacted to punish unscrupulous drawers of cheques who, though purport to discharge their liability by issuing cheque, have no intention of really doing so. Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act, extracted above. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days' time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may be filed against him. As noted above, the object of the proviso is to avoid unnecessary hardship to an honest drawer. Therefore, the observance of stipulations in quoted Clause (b) and its aftermath in Clause (c) being a pre-condition for invoking Section 138 of the Act, giving a notice to the drawer before filing complaint under Section 138 of the Act is a mandatory requirement."

"13. According to Section 114 of the Act, read with illustration (f) thereunder, when it appears to the Court that the common course of business renders it probable that a thing would happen, the Court may draw presumption that the thing would have happened, unless there are circumstances in a particular case to show that the common course of business was not followed. Thus, Section 114 enables the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Consequently, the court can presume that the common course of business has been followed in particular cases. When applied to communications sent by post, Section 114 enables the Court to presume that in the common course of natural events, the communication would have been delivered at the address of the addressee. But the presumption that is raised under Section 27 of the G.C. Act is a far stronger presumption. Further, while Section 114 of Evidence Act refers to a general presumption, Section 27 refers to a specific presumption. For the sake of ready reference, Section 27 of G.C. Act is extracted below:

"27. Meaning of service by post: Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or sendor any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre- paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.| "14. Section 27 gives rise to a presumption that service of notice has been effected when it is sent to the correct address by registered post.

In view of the said presumption, when stating that a notice has been sent by registered post to the address of the drawer, it is unnecessary to further aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice. Unless and until the contrary is proved by the addressee, service of notice is deemed to have been effected at the time at which the letter would have been delivered in

the ordinary course of business. This Court has already held that when a notice is sent by registered post and is returned with a postal endorsement "refused" or "not available in the house" or "house locked" or "shop closed" or "addressee not in station", due service has to be presumed. [Vide Jagdish Singh Vs. Natthu Singh ; State of M.P. Vs. Hiralal & Ors. and V.Raja Kumari Vs. P.Subbarama Naidu & Anr. ] It is, therefore, manifest that in view of the presumption available under Section 27 of the Act, it is not necessary to aver in the complaint under Section 138 of the Act that service of notice was evaded by the accused or that the accused had a role to play in the return of the notice unserved."

"16. As noticed above, the entire purpose of requiring a notice is to give an opportunity to the drawer to pay the cheque amount within 15 days of service of notice and thereby free himself from the penal consequences of Section 138. In Vinod Shivappa (supra), this Court observed: One can also conceive of cases where a well intentioned drawer may have inadvertently missed to make necessary arrangements for reasons beyond his control, even though he genuinely intended to honour the cheque drawn by him. The law treats such lapses induced by inadvertence or negligence to be pardonable, provided the drawer after notice makes amends and pays the amount within the prescribed period. It is for this reason that Clause (c) of proviso to Section 138 provides that the section shall not apply unless the drawer of the cheque fails to make the payment within 15 days of the receipt of the said notice. To repeat, the proviso is meant to protect honest drawers whose cheques may have been dishonoured for the fault of others, or who may have genuinely wanted to fulfil their promise but on account of inadvertence or negligence failed to make necessary arrangements for the payment of the cheque. The proviso is not meant to protect unscrupulous drawers who never intended to honour the cheques issued by them, it being a part of their modus operandi to cheat unsuspecting persons."

"17. It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque

amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected. A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138, by ignoring statutory presumption to the contrary under Section 27 of the G.C. Act and Section 114 of the Evidence Act. In our view, any other interpretation of the proviso would defeat the very object of the legislation. As observed in Bhaskaran's case (supra), if the "giving of notice" in the context of Clause (b) of the proviso was the same as the "receipt of notice" a trickster cheque drawer would get the premium to avoid receiving the notice by adopting different strategies and escape from legal consequences of Section 138 of the Act."

14. It is pertinent and relevant to mention here that the judgment of the

Apex Court in C. C. Alavi Haji's case, supra, has been delivered

upon reference made by a two judge bench of the judgment passed

by the Apex Court in case titled as D Vinod Shivappa vs. Nanda

Belliappa reported in (2006) 6 SCC 456. The said judgment had

been relied upon by the learned counsel for the accused/respondent

herein in support of his case set up before this court.

15. Keeping in mind the aforesaid legal position, what emerges from the

perusal of the record of the case is that the accused/respondent

herein is admitted to have received the notice of the court issued

upon institution of the complaint of the petitioners herein on the

same address which address is reflected in the demand notice as also

registered postal receipts. The accused/respondent herein has denied

to have received the demand notice but accepts to have received the

notice of the court on the same address. Pertinently the

accused/respondent herein has not been able to derive any contrary

statement from the postmaster during his cross-examination on

27.1.2017 about the non-receipt of demand notice when the

postmaster appeared as a witness of complainants before the trial

court. The accused/respondent herein has not been able to rebut the

presumption as to the service of demand notice upon him while

availing cross-examination of the said postmaster. Otherwise as

well, the accused/respondent herein in view of law laid down by the

Apex Court in C. C. Alavi Haji's case, supra, ought to have within

15 days of the receipt of the summon from the court in respect of the

complaint filed by the petitioners herein under section 138 of the

Act made payment of the cheque amount and submitted to the court

that he had made payment within 15 days of receipt of the summon

and, therefore, the complaint was liable to be rejected. It does not lie

in the mouth of the accused/respondent herein in view of law laid

down in C. C. Alavi Haji's judgment, supra, that a person who does

not pay within 15 days of receipt of the summon from the court

cannot contend that there was no proper service as required under

section 138 of the Act by ignoring statutory presumption to the

contrary under section 27 of the General Clauses Act and section

114 of the Evidence Act.

16. A perusal of the record of the proceedings prima facie suggest that

the accused/respondent herein has been delaying and protracting the

proceedings in the complaint on one pretext or the other and latest

by filing an application praying therein for sending of the postal

receipt to FSL, Srinagar. It is highly improbable in the facts and

circumstances of the case that the accused would receive summon

of the court issued in the complaint on the same address and deny to

have received the demand notice issued by the petitioners herein

sent through registered post and delivered by the postman on the

same address against his signature and proved thereby as well by the

complainant. The defence being set up on the basis of the application

by the accused/respondent herein seemingly is an attempt aimed to

protract and delay the proceedings, which defence is not available

to the accused/respondent herein in terms of law laid down by the

Apex Court in C. C. Alavi Haji's case, supra, whereunder, at the

cost of risking repetition, it is in explicit terms laid down as under:

"A person who does not pay within 15 days of receipt of the summons from the court along with the copy of complaint under section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under section 138 by ignoring statutory presumption to the contrary under section 27 of the General Clauses Act and section 114 of the Evidence Act."

17. The judgments referred to and relied upon by the revisional

court per se are quite distinguishable and are misplaced in the

facts and circumstances of the case. The Revisional Court

manifestly has erred while overlooking the legal position referred to

hereinabove inasmuch as the law laid down by the Apex Court in C.

C. Alavi Haji's case, supra, and Meters and Instruments Private

Limited's case, supra, and has proceeded to set aside the order of

the trial court on wrong premise.

18. Viewed thus, the order of the revisional court dated 15.3.2019

passed by the learned court of 4th Additional District Judge,

Srinagar, is set aside, and the order passed by the trial court dated

25.6.2018 is upheld. Petition allowed and disposed of as above.