IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 11.3.2008. CORAM THE HON'BLE MR.JUSTICE M.JEYAPAUL Crl.O.P.No.27888 and 27889 of 2007 and M.P.Nos.1 and 2 of 2007 M/s.Schematic Engineering Company, Proprietrix Vidya Mohan Plot No.120A, Sidco Industrial Estate, Ambattur, Chennai 600 098. Petitioner vs. M/s.Pure Chemical & Solvents (P) Ltd., rep by R.Rajesh Kanna No.32, H Block, 15th Main Road, Anna Nagar, Chennai 600 040. Respondent
Criminal Original Petitions filed under section 482 Cr.P.C. seeking to call for the records and quash the proceedings initiated in C.C.Nos.2606 and 2607 of 2007 pending on the file of XIII Metropolitan Magistrate, Egmore, Chennai.
For petitioner : Mr.N.Baskaran
For respondent : Mr.K.Srinivasan for
Mr.T.Ashok Kumar
COMMON ORDER
These criminal original petitions are filed seeking to quash the criminal proceedings in C.C.No.2606 of 2007 and C.C.No.2607 of 2007 pending on the file of the learned XIII Metropolitan Magistrate, Egmore, Chennai.
2. Both the petitions are taken up for common disposal as both the parties are one and the same and common issues have arisen in both the matters, though the criminal complaints have been laid in connection with two different cheques.
3. The petitioner in both the Criminal Original Petitions is the first accused in C.C.Nos.2606 and 2607 of 2007 pending on the file of the learned XIII Metropolitan Magistrate, Egmore, Chennai. The respondent in both the matters is the complainant in the respective cases.
4. The allegation found in the complainants filed for an offence punishable under section 138 of the Negotiable Instruments Act is that the petitioner who is the Proprietrix of M/s.Schematic Engineering Company, Ambattur, Chennai, issued cheques through the other accused S.P.Mohan Subramanian, the authorised signatory of M/s.Schematic Engineering Company towards the subsisting liability arisen out of the supply of chemicals and solvents on credit by the respondent, but, the cheques presented for collection returned dishonoured with the endorsement “payment stopped by the drawer”. After issuing statutory notice on 2.3.2007 and also after giving rejoinder on 15.3.2007 to the reply notice given by the petitioner on 12.3.2007, the complaints have been launched as against the petitioner and another accused.
5. Though the petitioner has taken many a stand seeking to quash the criminal proceedings, in the additional ground filed before this court, the petitioner has set up a plea that no statutory notice was issued to the petitioner. The complaint has been filed by the respondent after issuing the statutory notice only to the other accused in both the matters. Therefore, the complaints themselves are not maintainable, it is contended.
6. Learned counsel appearing for the petitioner would vehemently submit that inasmuch as no statutory notice was issued to the petitioner, the petitioner cannot be prosecuted for offence under section 138 of the Negotiable Instruments Act. It is his further submission that the rejoinder given by the respondent to the reply notice given by the petitioner is also time barred and therefore, the respondent cannot base his complaint on the rejoinder which was given beyond the period of limitation prescribed under section 138 of the Negotiable Instruments Act. As the mandatory statutory requirement of issuance of pre-complaint notice was not complied with by the respondent, the petitioner will have to be relieved of the criminal prosecution for the offence under section 138 of the Negotiable Instruments Act, he would further contend.
7. Learned counsel appearing for the respondent would strenuously submit that the statutory notice was issued to S.P.Mohan Subramanian in his capacity as the Proprietor of M/s.Schematic Engineering Company, Ambattur, Chennai, but, his wife, Vidya Mohan issued a reply stating that she was the Proprietrix of M/s.Schematic Engineering Company. In continuation of the statutory notice issued to her husband in his capacity as Proprietor of M/s.Schematic Engineering Company, a demand was made from her also in the rejoinder issued by the respondent. The rejoinder issued by the respondent cannot be considered in isolation. It should be read only in conjunction with the statutory notice issued within the period of limitation prescribed under section 138 of the Negotiable Instruments Act. At any rate, he would submit that the petitioner was put on notice of the dishonour of the cheque, but, quite unfortunately, the petitioner did not make arrangements for honouring her commitment. It is his further submission that unscrupulous defaulter cannot be permitted to take such a hyper-technical defence. Therefore, he would submit that the petition seeking quashment merits no consideration.
8. The only point that arises for determination is whether there was any demand for payment of the cheque amount by giving statutory notice to the petitioner.
9. There is sufficient allegation in the complaints that the business transaction was clinched by the respondent only with M/s.Schematic Engineering Company and not with the individual Vidya Mohan. The respondent, having been given to understand that S.P.Mohan Subramanian was the Proprietor of M/s.Schematic Engineering Company, issued the statutory notice on 2.3.2007 within thirty days from the date of receipt of the information from the banker regarding the return of the cheque calling upon him to make payment of the amount mentioned in the subject cheques within fifteen days from the date of receipt of the statutory notice. For the statutory notice which was issued on 2.3.2007, the petitioner, claiming herself as the Proprietrix of Schematic Engineering Company, sent a reply on 12.3.2007 disputing the liability to pay the amount to the respondent by Schematic Engineering Company. The respondent, in continuation of his statutory notice already issued on 2.3.2007, issued a rejoinder on 15.3.2007 calling upon the petitioner to make payment of the amount due within fifteen days from the date of receipt of the notice.
10. Proviso (b) to section 138 of the Negotiable Instruments Act mandates that the payee or holder in due course of the cheque shall make a demand for the payment of the cheque amount by giving notice in writing to the drawer of the cheque within thirty days from the date of receipt of information by him from the bank regarding the return of the cheque as unpaid. Firstly, it is found that the petitioner is not an individual, but, a Proprietrix of a Company. The Company had dealt with the business transaction with the respondent. The subsisting liability has allegedly come into existence only during such transaction the respondent had with M/s.Schematic Engineering Company. M/s.Schematic Engineering Company was put on notice of demand as required under section 138 of the Negotiable Instruments Act. It is also found that the Proprietrix Vidya Mohan was very well aware of the demand made by the respondent immediately after the cheques allegedly issued by her through the other accused returned dishonoured.
11. The purpose of giving statutory notice is to give a liberty to the innocent drawer of a cheque who might have wittingly or unwittingly committed some lapses in providing funds in his or her account. Here is a case where the Proprietorship Concern viz., M/s.Schematic Engineering Company was put on statutory notice. The Proprietrix also having been duly informed of the demand through the statutory notice, issued a reply to the respondent clarifying the position that she was the Proprietrix of M/s.Schematic Engineering Company. As far as the Proprietorship Concern is concerned, service of statutory notice on the Proprietorship Concern represented by “x’ or ‘y’ is a sufficient compliance of the requirement under section 138 of the Negotiable Instruments Act. The Proprietor or Proprietrix cannot be permitted to take a hyper-technical stand that the Proprietrix or Proprietor is totally different and therefore, the statutory notice issued under section 138 of the Negotiable Instruments Act cannot be held valid. The question is whether the Proprietorship Concern was put on notice in compliance of the provision under section 138 of the Negotiable Instruments Act. In this case, the respondent has issued the statutory notice to the Proprietorship Concern through Mohan Subramanian.
12. It is found that the Proprietrix Vidya Mohan was alive of the demand made by the respondent through the statutory notice. Therefore, it is not the case where the Proprietorship Concern was not aware of the statutory demand made by the payee or holder in due course of the cheques. When a statutory notice was issued within thirty days from the date of receipt of information from the bank, any clarification made subsequently in continuation of the statutory notice cannot be taken as a separate statutory notice issued under section 138 of the Negotiable Instruments Act. As rightly pointed out by the learned counsel for the respondent, the rejoinder issued by the respondent making a demand to the Proprietrix Vidya Mohan can be read in continuation of the statutory notice already issued and it cannot be read in isolation so as to conclude that a separate demand made to the Proprietrix was beyond the period of limitation prescribed under section 138 of the Negotiable Instruments Act.
13. The Honourable Supreme Court in VINOD SHIVAPPA,D. v. NANDA BELLIAPPA (2006(3) CTC 591) has observed as follows:-
“12. It is well settled that in interpreting a statute the Court must adopt that construction which suppresses the mischief and advances the remedy. This is a rule laid down in Heydon’s case, 76 ER 637, also known as the rule of purposive construction or mischief rule. 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, which was demonstrated by the fact that there was no sufficient balance in the account to discharge the liability. Apart from civil liability, a criminal liability was imposed on such unscrupulous drawers of cheques. The prosecution, however, was made subject to certain conditions. With a view to avoid unnecessary prosecution of an honest drawer of a cheque, or to give an opportunity to the drawer to make amends, the proviso to Section 138 provides that after dishonour of the cheque, the payee or the holder of the cheque in due course must give a written notice to the drawer to make good the payment. The drawer is given 15 days time from date of receipt of notice to make the payment, and only if he fails to make the payment he may be prosecuted. The object which the proviso seeks to achieve is quite obvious. It may be that on account of mistake of the bank, a cheque may be returned despite the fact that there is sufficient balance in the account from which the amount is to be paid. In such a case if the drawer of the cheque is prosecuted without notice, it would result in great injustice and hardship to an honest drawer. 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.”
14. The statutory notice under section 138 of the Negotiable Instruments Act is contemplated to protect the innocent and unscrupulous drawers of the cheques as held in the aforesaid ratio. The petitioner, having been put on notice of the demand made by the respondent in the aftermath of the dishonour of the cheque allegedly issued by her cannot complain that no statutory notice was issued to her. Such a stand taken by the petitioner will defeat the very purpose of incorporation of such a proviso under section 138 of the Negotiable Instruments Act.
15. In view of the above, the court finds that proper statutory notice has been issued to the Proprietorship Concern, that the Proprietrix also was put on notice of the demand even before the expiry of the period of limitation prescribed under the statute and that the demand made in continuation of the original statutory notice cannot be construed as a fresh demand for payment. In view of the above, the plea of the petitioner that no statutory notice was issued to the petitioner stands rejected. Consequently, the petitions seeking quashment are dismissed. The connected Miscellaneous Petitions are also dismissed.
ssk.
To
XIII Metropolitan Magistrate,
Egmore,
Chennai.