JUDGMENT
K.A. Mohamed Shafi, J.
1. The complainant in S. T. C. No. 32 of 1990, on the file of the Judicial First Class Magistrate’s Court, Cherthala, is the appellant.
2. The appellant filed the complaint before the lower court alleging an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, against the respondent. According to him, the respondent borrowed Rs. 10,000 from him on July 15, 1989, from his house and issued a cheque
for Rs. 10,000 drawn on the District Treasury Savings Bank, Alappuzha, and when the cheque was presented for encashment on December 26, 1989, it bounced. It is also alleged that when the appellant came to know about the dishonour of the cheque on January 9, 1990, he caused to send registered notice to the respondent on January 18, 1990, informing about the dishonour of the cheque and calling upon him to pay the amount. But that notice was returned unserved and again he caused to send another notice dated January 30, 1990. But the respondent has not repaid the amount. The lower court after trial by judgment dated September 27, 1990, found the respondent not guilty of the offence alleged against him and acquitted him and set him at liberty, The judgment is under challenge in this appeal.
3. The facts that the respondent has borrowed Rs. 10,000 from the appellant and issued exhibit P-1 cheque in favour of the appellant and on presentation for encashment, it was dishonoured are not in dispute. In exhibit D-1 memo returning exhibit P-1 cheque on January 9, 1990, it is stated that the cheque is out of date and refer to drawer. PW-3, who is the senior accountant in the District Treasury, Alappuzha, has deposed that there was no sufficient amount to the credit of the respondent to honour the cheque and on the date of issue of exhibit P-1 cheque, viz., July 15, 1989, the amount lying to the credit of the respondent was Rs. 123 and exhibit P-1 cheque was returned from the treasury due to two reasons viz., refer to drawer and cheque is out of date. The respondent has no case that there was sufficient fund to honour the cheque in his credit when it was presented for encashment.
4. As per the Treasury Code Vol. I, Rule 245(b) a cheque shall remain current only for three months from the date of issue. Therefore, the treasury dishonoured exhibit P-1 cheque which was issued on July 15, 1989, being out of time when it was presented by the appellant for encashment on December 26, 1989.
5. Counsel for the appellant vehemently argued that the dishonour of the cheque on the ground that the cheque was out of time since the cheque drawn on Treasury Savings Bank is current only for three months from the date of issue as against the banking practice of the currency of cheques for six months from the date of issue, and the provisions of the Negotiable Instruments Act, are illegal and unsustainable. The Treasury Code is framed by the Government of Kerala as empowered under article 283(2) of the Constitution and promulgated by the Governor of Kerala by Notification No. 54282, dated April 6, 1983.
6. As per List 1 which is styled as Union List in the Seventh Schedule to the Constitution, all the items mentioned therein fall within the exclusive jurisdiction of the Union of India and item 45 in List I of Schedule 7 is
banking and entry 46 therein is bill of exchange, cheques, etc. Therefore, counsel for the appellant argued that banking comes within the exclusive jurisdiction of the Government of India and the same can be regulated only by the Government of India and the Reserve Bank of India.
7. Counsel for the appellant further argued that the Treasury Code is intended for transactions in Government money only and not for banking business for the public and if the treasuries conduct banking business, the entire rules and regulations regarding bank including those rules applicable to cheques, etc., contained in the Negotiable Instruments Act and the banking practice should be followed by the treasuries. According to him, though the treasury can regulate the period of validity of cheques, it will bind only the treasuries and persons who are transacting with the treasury by opening accounts with them and it cannot bind a person who has no dealings with the treasury and in whose favour a treasury cheque is issued.
8. Learned counsel for the appellant also argued that appendix 3 to Treasury Code Vol. II relates to rules regulating transactions in the Treasury Savings Bank. Rule 1 in appendix 1 states that the object of the Government in establishing Treasury Savings Bank Scheme is to provide a ready means for the deposit of savings and so to encourage thrift. Treasury Code Vol. I, Part I, Rule 2(c) defines “cheque” and Rule 61(1) deals with non-banking treasuries and Rule 61(2) deals with banking treasuries. Chapter III of the Kerala Treasury Code, Vol. II deals with the rules relating to Treasury Savings Bank. Counsel for the appellant argued that a transaction in the banking treasury is similar to the transaction in ordinary banks and the treasury cheque drawn has to be treated as a cheque drawn on a bank for all purposes under Section 138 of the Negotiable Instruments Act and there cannot be any distinction between an ordinary bank and the treasury bank dealing with banking transactions.
9. Counsel for the appellant further argued that banking being a Union subject in the first list of Schedule VII to the Constitution, the Treasury Code, which is a subordinate legislation promulgated by the Governor of Kerala applicable to the territory in Kerala under Article 283(2) of the Constitution, cannot have overriding effect on the provisions of the Negotiable Instruments Act enacted by the Parliament and the Banking Rules and Regulations and the banking practice approved and enforced by the Central Government. Therefore, according to him, the provision regarding the currency of cheques drawn on a banking treasury reducing the period of currency to three months as provided under Rule 245(b) of Vol. I of the Treasury Code, cannot be pressed into service in this case as against the prevailing banking practice of currency of cheques for six months as provided under the Negotiable Instruments Act.
10. Though the above arguments advanced by counsel for the appellant are very attractive, they cannot be accepted on the face of Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, which reads as follows :
“Provided that nothing contained in this section shall apply unless-(a) the cheque has been presented to the bank within the period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier,”
11. From the above proviso, it is clear that the provisions of Section 138 of the Negotiable Instruments Act are enacted taking into consideration the currency of cheques for a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheques with lesser period of validity than six months, which is the general banking practice and stipulates that the cheque should be presented for encashment either within the period of six months or within the period of validity of the cheque, whichever is earlier. Hence, a cheque which is issued with the reduced validity period has to be presented for encashment within the expiry of that period so as to attract the provisions of Section 138 of the Negotiable Instruments Act. Therefore, the argument advanced by counsel for the appellant that the Treasury Code promulgated by the Governor of Kerala should be subject to the provisions of the Negotiable Instruments Act, the Banking Rules and Regulations issued by the Government of India, the banking practice and the Rules promulgated by the Reserve Bank of India and the provisions of the Treasury Code cannot have overriding effect against the provisions of the Negotiable Instruments Act and the banking practice, need not be considered in this case. , In view of the fact that the cheque was presented by the appellant for encashment after the expiry of currency of three months, the provisions of Section 138 of the Negotiable Instruments Act are not attracted in this case in view of Clause (a) of the proviso to Section 138 of the Act.
12. Even according to the appellant, he received exhibits P-2 memo and D-1 memo returning exhibit P-1 cheque, dated January 9, 1990, and he caused to send a registered notice to the respondent on January 18, 1990, which was returned unserved. Exhibit P-3 is that original notice caused to be sent by the appellant to the respondent which was returned unserved. Again he sent another notice dated January 30, 1990, which was received by the respondent, and thereafter, he filed the above complaint before the lower court on February 20, 1990. Exhibit P-3 contains the endorsement made by the postman to the effect that “refused by the addressee and returned to the sender”. That endorsement is dated January 24, 1990. Therefore, counsel for the respondent argued that the above complaint
filed by the appellant is not sustainable under Section 142 of the Negotiable Instruments Act, since the complaint ought to have filed within one month of the date on which the cause of action under Clause (c) of the proviso to Section 138 of the Negotiable Instruments Act arose. Since exhibit P-3 shows that the notice is refused by the respondent on January 24, 1990, the date of receipt of the notice as well as knowledge of the contents of the registered notice should be imputed to the respondent from the date of refusal of the notice. Therefore, the date of receipt that has to be imputed against the respondent is January 24, 1990. Clause (c) of the proviso to Section 138 of the Act lays down that notice regarding dishonour of the cheque should be sent to the drawer of the cheque within 15 days of the receipt of intimation regarding the dishonour of the cheque. Therefore, the subsequent notice dated January 30, 1990, sent by the appellant to the respondent after the refusal of the first notice exhibit P-3 is beyond the period stipulated under Clause (b) of the proviso to Section 138 of the Act. But the complaint in this case filed by the applicant on February 20, 1990, is within one month of the date on which cause of action arose under Clause (c) of the proviso to Section 138 of the Act since the cause of action in this case arose on January 24, 1990, the date of refusal by the respondent to accept exhibit P-3 registered notice under Clause (c) of the proviso to Section 138 of the Act. Therefore, the contention of the respondent that the complaint filed by the appellant for the offence punishable under Section 138 of the Act is not sustainable, is of no force.
13. Counsel for the appellant finally argued that since there is no dispute of the fact that the cheque was dishonoured for want of funds to honour the cheque to the credit of the respondent and the civil remedy available to the appellant to realise the amount due under exhibit P-1 cheque is barred by time, the above case should be remitted to the lower court for enabling the appellant to proceed against the respondent for the offence of cheating punishable under Section 420 of the Indian Penal Code, 1860. But it is pertinent to note that though there is such a vague allegation in the complaint filed by the appellant, in the evidence adduced by him he had absolutely no case of cheating against the respondent. His only contention was that as the cheque issued by the respondent was dishonoured, he is liable to be punished for the offence punishable under Section 138 of the Negotiable Instruments Act, Therefore, the above submission made by counsel for the appellant at this very distant point of time cannot be countenanced so as to give him an opportunity to put forward and substantiate a new case of cheating which is not even contemplated by him in the above prosecution. Hence, this request of the appellant cannot be allowed.
14. From my foregoing discussions, it is clear that the lower court is perfectly justified in finding that the respondent is not guilty of the offence punishable under Section 138 of the Negotiable Instruments Act and acquitting and setting him at liberty and absolutely no ground is made out in this appeal to interfere with those findings arrived at by the lower court. Therefore, the judgment passed by the lower court is confirmed and the appeal is dismissed.