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  • provisions of Section 138 of the Negotiable Instrument Act,
  • Sec. 138 of the Negotiable Instrument Act, 1881.4.
  • Sec 138(B) of Negotiable Instrument Act, 1881,
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
Acts
  • provisions of Section 138 of the Negotiable Instrument Act,
  • Sec. 138 of the Negotiable Instrument Act, 1881.4.
  • Sec 138(B) of Negotiable Instrument Act, 1881,
Smart Summary

Factual and Procedural Background

The non-petitioner Rajendra, engaged in business dealing with automotive and industrial lubricants and petroleum articles in Udaipur, filed a complaint on 24.6.95 against the accused-petitioner for dishonour of a cheque under Section 138 of the Negotiable Instruments Act, 1881. The accused-petitioner had issued three cheques for purchases; the first two were paid, but the third cheque dated 10th April 1995 was dishonoured by Bank of Baroda, Udaipur on 6th May 1995 due to insufficient funds. The complainant sent a notice on 16th May 1995, served on 18th May 1995, demanding payment. Upon non-payment, the complaint was filed. After inquiry under Section 200 Cr.P.C., process was issued against the accused-petitioner. The accused-petitioner moved an application on 6th Jan 1997 to drop proceedings, claiming the notice was legally defective for allowing only seven days to pay instead of fifteen. The learned Addl. Chief Judicial Magistrate rejected this application, holding the notice valid.

Legal Issues Presented

  1. Whether the notice served under Section 138 of the Negotiable Instruments Act, 1881, which specified a payment period shorter than 15 days, is invalid.
  2. Whether the proceedings against the accused-petitioner should be dropped on the ground of alleged defect in the notice.

Arguments of the Parties

Accused-Petitioner’s Arguments

  • The notice served under Section 138(B) of the Negotiable Instruments Act was defective because it allowed only seven days for payment instead of the statutory fifteen days.
  • This defect rendered the notice invalid and warranted dropping the proceedings against him.

Non-Petitioner’s Arguments

The opinion does not contain a detailed account of the non-petitioner’s arguments beyond the factual narrative and reliance on statutory provisions and precedent.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Samant v. K.G.N Traders Clarification that the notice under Section 138 need not specify a 15-day payment period; any mention of time is unnecessary and does not invalidate the notice. The court relied on this precedent to hold that a notice specifying seven days for payment is not invalid, as the statute itself does not require the notice to specify any time period for payment.
Embee Textiles Ltd. v. Sandhu Ram and Co. Suggested that notice must give 15 days for payment, and deviation may invalidate the notice. The court respectfully disagreed with this view, noting the lack of full reasoning and holding that the statutory proviso does not mandate such a requirement.

Court's Reasoning and Analysis

The court analyzed the proviso to Section 138 of the Negotiable Instruments Act, 1881, which requires the payee or holder in due course to give written notice demanding payment within 15 days of receiving information of cheque dishonour. However, the proviso does not mandate that the notice itself must specify any particular time period for payment. The court observed that the statutory liability arises if the drawer fails to pay within 15 days after receiving the notice, irrespective of any time frame mentioned therein. Citing the Samant v. K.G.N Traders judgment, the court rejected the argument that a notice specifying less than 15 days for payment is invalid. The court found no prejudice to the accused-petitioner resulting from the seven-day period mentioned in the notice. Consequently, the court concluded that the proceedings were not vitiated by the alleged defect in the notice and that the statutory provisions were complied with.

Holding and Implications

The petition challenging the validity of the notice under Section 138(B) of the Negotiable Instruments Act and praying for dropping the proceedings was dismissed.

The decision affirms that a notice under Section 138 need not specify a 15-day period for payment to be valid. The statutory timeline for payment runs from the receipt of the notice, regardless of any time frame mentioned therein. No prejudice having been caused to the accused-petitioner, the proceedings continue. This ruling clarifies the procedural requirements for notices under Section 138 and confirms that deviations in the notice’s stated payment period do not invalidate the proceedings. No new precedent was set beyond affirming existing interpretations.

    Satyavan Chaplot v. Rajendra

    A.K Singh, J.:— Heard and perused the record. This petition under Sec. 482 Cr. P.C is directed against the order dated 17.2.97 passed by the learned Addl. Chief Judicial Magistrate No. 1, Udaipur in complaint case No. 76/96. By the aforesaid order, the learned Addl. Chief Judicial Magistrate held that the notice served by the nonpetitioner under Sec 138(B) of Negotiable Instrument Act, 1881, is not invalid and he rejected the petitioner's prayer for dropping the proceedings instituted against him.

    2. The facts of the case so far as they are necessary for the disposal of this petition may be summarised below.

    3. Non-petitioner Rajendra filed a complaint in the Court of Addl. Chief Judicial Magistrate No. 1, Udaipur on 24.6.95 According to the averments made in the complaint, the nonpetitioner-complainant carries on the business in Udaipur and deals with automotive and industrial lubricants and petroleum articles. It is alleged that the accused-petitioner purchased certain articles from the non-petitioner-complainant, the particulars of which are given in para No. 2 of the complaint. Three cheques were issued by the accused-petitioner. The first cheque was issued on 25th November, 1994. The second was issued on 5th April, 1995 and the third cheque was issued on 10th April, 1995. The amount of the first two cheques was duly paid by the bank but the amount of the third cheque dated 10th April, 1995 was not paid by the bank on the ground that the accused did not get sufficient amount in his bank account. The Bank of Baroda, Udaipur dis-honoured the above mentioned cheque on 6th May, 1995. The on-petitioner complainant sent a notice to the accused petitioner on 16th May, 1995. The notice was served on 18th May, 1995. The amount of the cheque was not paid inspite of the service of the notice. Therefore, the non-petitioner complainant filed a complaint alleging commission of the offence punishable under Sec. 138 of the Negotiable Instrument Act, 1881.

    4. After conducting an inquiry under Sec. 200 of the Code of Criminal Procedure the learned Addl. Chief Judicial Magistrate No. 1 issued process against the accused petitioner. On 6th Jan., 1997, the accused petitioner moved an application praying that the proceedings against him should be dropped because the notice served upon him was bad in the eye of law. In this application, it was not pointed out as to what was the defect with which the notice was suffering. It was argued before the learned Addl. Chief Judicial Magistrate that in the notice served on the accused, 15 days time should have been given to him to make the payment and since the place of 15 days only seven days' time was given to him, therefore, the notice was bad in law. The arguments advanced by the accused petitioner do not find favour with the learned Addl. Chief Judicial Magistrate No. 1. He, therefore, rejected the application in which prayer for dropping the proceedings was made.

    5. Clause (b) of the proviso given to Sec. 138 of the Negotiable Instrument Act requires that the payee or the holder in due course of the cheque, as the case may be, should make a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 15 days of the receipt of the information by him from the Bank regarding the return of the cheque as unpaid and clause (c) of the proviso provides that 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 15 days of the receipt of the said notice, the liability under Sec. 138 of the Negotiable Instrument Act would arise. A bare perusal of the proviso given in Sec. 138 of the Negotiable Instrument Act shows that the notice, which is required to be served by the payee or the holder in due course of the cheque, is not required by law to contain a statement to the effect that the amount should be paid within any period of time. Therefore, if the sender of the notice has mentioned any period in his notice within which the amount is to be paid, such mention of the period within which the amount is to be paid would be unnecessary in view of the proviso given to Sec. 138 of the Act.

    6. In Samant v. K.G.N Traders* (1) at page 729, the learned Single Judge observed:—

    “Another contention that was urged by the learned counsel for the petitioner was that under Sec. 138, notice giving 15 days' time for payment ought to have been issued and that as in this case the complainant had issued a notice demanding the amount within a week, the notice is invalid and consequently no offence under Section 138 is made out. He relied on the judgment of Punjab and Haryana High Court in Embee Textiles Ltd. v. Sandhu Ram and Co. He has only produced the gist of the judgment. In the head note, it is stated that under Section 138, notice of demand should give 15 days to pay, whereas in the notice under reference 30 days' time had been given and that as such, it was not a proper notice and that the notice did not conform to the specifications of the statute. The facts of that case and the actual reasoning given are not available. However, if that decision purports to lay down that the notice should give 15 days time for payment and that if the time given is either less or more, the notice would be invalid. Irrespectfully disagree with that view.”

    7. After considering the provisions of Section 138 of the Negotiable Instrument Act, the learned Single Judge observed:—

    “A plain reading of the above proviso would indicate that all that the statute requires is that the payee or the holder in due course of the cheque should make a demand for the payment of the amount covered by the cheque by giving a notice in writing to the drawer of the cheque and that such notice should be issued within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. Clause (b) of the proviso does not stipulate that the payee or the holder in due course who issues the notice should give any specific time for by the drawer to pay the amount.

    The sub-clause (c) of the proviso only stipulates that if the drawer of the cheque fails to make the payment of the amount to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice, then the offence would be committed. The cause of action for filing the complaint would arise after the completion of

    15 days from the date the drawer receives the notice and fails to pay the amount within that period. The payee cannot lodge a complaint after the completion of one month from the date the cause of action arise as thee is a bar under Section 142(b). To comply with clause (b) of the proviso to section 138, it is not at all necessary for the payee to specify any time in the notice for making payment even if he specifies a time lesser than 15 days, the statute gives the payee time of 15 days for making payment and if he pays that amount within 15 days of the receipt of the notice, the offence would not be committed. For the purpose of this case, it is not necessary to consider the question as to what would be the consequence if the payee voluntarily gives more than 15 days for payment while issuing the notice. In the case referred to above the notice had given 30 days time for payment and possibly that may be the reason why that notice was held invalid. But in the present case, the fact that the notice gives 7 days time for payment does not render it invalid.”

    8. Above observations support the conclusion arrived at by me that if a period of less than 15 days is mentioned in the notice as the period within which the payment of the amount of cheque is to be made, the notice could not be invalid because the proviso given below under Section 138 of the Act does not require the payee or the holder of the cheque to mention any period in the notice. Having regard to the provisions contained in Sec. 138 of the Act, I am of the opinion that the principle that the proceedings are vitiated for non-compliance of the statutory provision is not applicable to the notice issued under cl. (b) of the proviso given below Sec. 138 of the Negotiable Instrument Act because there is no violation of law if any particular period within which payment is to be made is mentioned in the notice and such period is other than the less or more than 15 days. Besides, no prejudice has been caused to the accused petitioner by giving him a notice by which he was required to make the payment of the amount of cheque within a period of seven days. Therefore, the proceedings cannot be dropped nor they can be said to have been vitiated on account of causing any prejudice to the accused-petitioner.

    9. For the reasons mentioned above, this petition has no force and deserves to be dismissed and is hereby dismissed.

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    Comments

    Satyavan Chaplot v. Rajendra
    (Dec 16, 1997)