Holding

The notice was not served within the statutory thirty‑day period, making the complaint petition invalid, but the appellant’s civil liability stands admitted and the sum received need not be refunded.

Summary

The appellant borrowed Rs 1,00,000 from the respondent and issued a cheque which was dishonoured on 2 December 2003. The respondent received intimation of the dishonour on 3 December 2003 and issued a legal notice on 2 January 2004, i.e., on the 31st day. The appellant was convicted under Section 138 of the Negotiable Instruments Act and sentenced to imprisonment and fine. The appeal before the Supreme Court centered on whether the notice complied with the statutory requirement of being served within thirty days of receipt of information. The Court held that the notice was issued on the 31st day and thus fell outside the statutory period, rendering the complaint petition untenable. However, invoking its powers under Article 142, the Court set aside the impugned judgment, held that the appellant’s civil liability was admitted, and directed that the sum already received by the respondent need not be refunded. The appeal was allowed.

Issues considered

Whether the notice issued on 2 January 2004 complied with the thirty‑day requirement of Section 138(b) of the Negotiable Instruments Act.
Whether principles of estoppel or waiver apply given the subsequent settlement between the parties.
Whether the appellant’s civil liability can be deemed admitted despite the procedural defect in the notice.

Legislation cited

Code of Criminal Procedures. 357(1)
Constitution of Indias. Article 136, s. Article 142, s. Article 21
General Clauses Act, 1897s. 9
Negotiable Instruments Act, 1881s. 138

Subjects

Section 138Negotiable Instruments ActCheque dishonourNotice periodEstoppelWaiverSettlementArticle 21Article 142Civil liabilityCriminal liability

Judgment

(2009] 9 S.C.R. 386
•
A SIVAKUMAR
v.
NATARAJAN
(Criminal Appeal No. 1077 of 2009)
MAY 15, 2009
B
[S.8. SINHA AND ASOK KUMAR GANGULY, JJ.]

NEGOTIABLE INSTRUMENTS ACT, 1881:

c Section 138 - Complaint Petition - Appellant convicted
by Trial Court - Appeal as well as Revision Application
dismissed - On appeal, Held: Indisputably the notice was
issued on the 31st day and not within 30 days from the date
·of receipt of information from the bank - Since respondent .\

D himself backed out from the settlement between the parties,
he cannot be pennitted to take a different stand - Since the
civil liability of the appellant stands admitted, the sum
received by the respondent need not be refunded -
Constitution of India, 1950, Article 142. .,

E LEGAL PRINCIPLES:
~
Principles of 'Estoppel', 'Waiver' - Applicability of.

In this appeal relating to dishonour of cheque and
subsequent complaint under Section 138 of the
F
Negotiable Instruments Act, 1881, the core question that
arose for consideration was as to whether the notice was
issued within the stipulated period of thirty days from the
date of receipt of intimation of the dishonour of cheque.

G Allowing the appeal, the Court • ·-
HELD: 1. Both clauses (a) and (b) of the proviso
appended to Section 138 of the Negotiable Instruments
Act employed the term "within a period". Whereas clause
H 386
SIVAKUMAR v. NATARAJAN 387
-{
.... ),
(a) refers to presentation of the cheque to the bank within A
a period of six months from the date on which it is drawn,
clause (b) provides for issuance of notice "to the drawer
,( of the cheque within thirty days of the receipt of
' information". The words "within thirty days of the receipt
of information" are significant. [Para 11] (394-B-C] B

(
Mis. Harman Electronics (P) Ltd. & Anr. v. Mis. National
y
Panasonic India Ltd. 2008 (16) SCALE 317, referred to.

2. The Parliament advisedly did not use the words
~from the date of receipt of information' in Section 138 of c
the Act. It is also of some significance to notice that in
terms of Section 9 of the General Clauses Act, 1897,
. '
whereupon reliance has been placed by the High Court,
the statute is required to use the word "from" and for the
..
purpose of 'including the last in a series of days or any b
other period of time, to use the word "to". The departure
made from the provisions of Section 9 of the General
~
Clauses Act by the Parliament, therefore, deserves
serious consideration. [Para 11] (394-0-F]
fE·
3. Indisputably, the notice was issued on the 31st day
and not within a period of thirty days from the date of
receipt of intimation from the bank. If Section 9 of the
~
General Clauses Act is not applicable, clause (b) of the
proviso appended to Section 138 of the Act was required
to be complied with by the respondent for the purpose F
,..,
of maintaining a complaint petition against the appellant.
[Para 12) (394-G]

Munoth Investments Ltd. v. Puttukola Properties Ltd. and
Another (2001) 6 SCC 588, relied on. G

Kera/a High Court in K. V. Muhammed Kunhi v. P.
-:""
Janardhanan 1998 Crl. L.J. 4330 and K. C. Nanu v. N.
Vijayan and Anr. 2008 (1) KLJ 327, approved.

- H
388 SUPREME COURT REPORTS (2009] 9 S.C.R.

J. ~"
"""'
A 4. Appellant has a fundamental right of liberty in
terms of Article 21 of the Constitution of India. Liberty of
the appellant, therefore, could not have been taken away
except in accordance with the procedure established by
. law. [Para 15] [396-F]
~·
B
5. In any event, the respondent himself has backed
out from the settlement. He, therefore, cannot be y
permitted· to take a different stand. [Para 15] [396-G]

6. ~'laving regard to ·the facts and circumstances of
c the case, this Court, in exercise of its jurisdiction under
Article 142 of the Constitution of India, directs that as the
civil liability of the appellant stands admitted, the sum
received by the respondent need not be refunded. [Para
16] [396•H; 397-A]
D
Case Law Reference:
2008 (16) SCALE 317 referred to Para 10
(2001) 6 sec 588 relied on Para 12
·E 1998 Crl. L.J. 4330 approved Para 13
2008 (1) KLJ 327 approved Para 13
~
CRIMINALAPPELLATE JURISDICTION: Criminal Appeal
No. 1077 of 2009.
F ,
Fromthe Judgment & Order dated 03.02.2007 of the High
Court of Judicature of Madras, Madurai Bench in Criminal
Revision no. 849 of 2005.

S. Mahendran for the Appellant.
G
8. Balaji, D. Kumaran and Satya Mitra Garg for the/ t
~
Respondents.

The Judgment of the Court was delivered by
H
-
SIVAKUMAR v. NATARAJAN 389
)

5.B. SINHA, J. 1. Leave granted. A

2. This appeal is directed against a judgment and order
dated 03.02.2007 passed by the Madurai Bench of the Madras
~
High Court in Crl. Revision No. 849 of 2005 whereby and
whereunder the Criminal Revision application filed by the B
..( appellant herein was dismissed affirming the judgment of the
'1
learned Principal Session Judge, Trichrapalli dated
08.11.2005 passed in Crl. A No. 87/2005, preferred against
the judgment dated 03.05.2005 in CC No. 69/2004 by the
learned Judicial Magistrate Ill, Tiruchirapalli. c
3. On or about 14.08.2003, appellant borrowed a sum of
Rs. 1,00,000/- for the purpose of his business as loan from the
complainant - respondent. The said amount was to be repaid
within a period of three months. On or about 20.11.2003 the
appellant handed over a cheque bearing No. 0652756 dated D
27.11.2003 for a sum of Rs. 1,00,000/- in favour of the
respondent. The said cheque was presented by the
complainant for collection to his banker namely UCO Bank,
i Trichy Main Branch on 27.11.2003. It was dishonoured with the
remarks "insufficient funds" on 2.12.2003. Information E
thereabout was received by the respondent on 3.12.2003.

4. On 02.01.2004, the respondent issued a legal notice to
the appellant calling upon him to pay the amount in question
within 15 days from the date of the receipt of the notice. F
Admittedly, the appellant neither sent a reply to the said notice
nor paid the amount due.

Respondent thereafter filed a complaint petition against the
appellant under Section 138 of the Negotiable Instruments Act,
1881 (for short "the Act") before the Judicial Magistrate No. Ill, G
Tiruchirapalli. ·

5. The learned Judicial Magistrate Ill convicted the
appellant under Section 138 of the Act and sentenced him to

- undergo one year's simple imprisonment and a fine of Rs. H
390 SUPREME COURT REPORTS [2009] 9 S.C.R.

I..
A 5000/- and in default thereof to undergo further six months of
simple imprisonment. He was also directed to pay a sum of
Rs. 1,00,000/- as compensation to the respondent under
section 357(1) of the Code of Criminal Procedure.
}-
6. Aggrieved thereby and dissatisfied therewith, appellant
B
preferred an appeal before the Principal Session Judge,
Tirchirapalli, which was dismissed. t

7. Appellant filed a revision application thereagainst before
the High Court, which by reason of the impugned judgment has
c been dismissed.

Appellant is, thus, before us.

8. Before pro'ceeding further, we may place on record that
subsequent to the passing of the impugned judgment, a
D settlement has been entered into by and between the appellant
and the respondent wherein it has been stated:

"At this juncture, with the consensus of both the parties, on
the assurance of the 2nd party, the 2nd party shall receive
E a sum of Rs. 30,000/- from the 1st party and shall not take L

any action against the judgment rendered by the court and
there shall be no interest over the issue before or after the
settlement and as such we both have signed in the i
presence of the witnesses. 2nd party has also consented
F to issue a receipt for having received the said amount to
the 1st party."

9. The core question which arises for consideration is as
to whether the notice dated 2.01.2004 was issued within the
stipulated period of thirty days from the date of receipt of
G intimation of the dishonour of cheque.
.\

Section 138 of the Act reads as under:

"138. Dishonour of cheque for insufficiency, etc. of funds
H in the account-Where any cheque drawn by a person on
SIVAKUMAR v. NATARAJAN [S.B. SINHA, J.] 391

an account maintained by him with a banker for payment A
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 B
exceeds the amount arranged to be paid from that account
by an agreemenf 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 extend C
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- D
(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;

(b) the payee or the holder in due course of the cheque, E
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 F

(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.
G
Explanation.-For the purposes of this section, 'debt or
other liability' means a legally enforceable debt or other
liability."

10. By reason of the provisions of the Act, a legal H
392 SUPREME COURT REPORTS [2009] ·~ S.C.R ~

:>..

A presumption in regard to commission of a crime has been
raised. The proviso appended thereto, however, states that
nothing contained in the main provisi9n would apply unless
conditions specified in clauses (a), (b) and (c) thereof are
complied with. Clauses (a), (b) and (c) of the proviso, therefore, ~

B lay down conditions precedent for applicability of the main
provision. Section 138 of the Act being penal in nature,·
lo
indisputably, warrants strict construction ..

In Mis. Harman Electronics (P) Ltd. & Anr. v. Mis.
NationalPanasonic India Ltd. [2008 (16) SCALE 317], this
c Court held:
}-_
"8. The proviso appended thereto imposes certain ·
conditions before a complaint petition can be entertained.

D 9. Reliance has been placed by both the learned j

Additional Sessions Judge as also the High Court on a
decision of this Court in K. Bhaskaran v. Sankaran
Vaidhyan Ba Ian and Anr .. This Court opined that the
offence under Section 138 of the Act can be completed
only with the concatenation of a number of acts, namely,
E
(1) Drawing of the cheque, (2) Presentation of the cheque
· to the bank, (3) Returning the cheque unpaid by the ·
drawee bank; (4) Giving notice in writing to the drawer of 'I )--
the cheque demanding payment of the cheque amount, (5)
failure of the drawer to make payment within 15 days of
F the receipt of the notice. It was opined that if five different
acts were done in five different localities, any one of the
courts exercising jurisdiction in one of the five iocal areas
can become the place of trial for the offence under Section .
138 of the Act and the.complainant would be at liberty to
G file a·complaint petition at any of those places. As regards ~
the requirements of giving a notice as also receipt thereof.
by the accused, it was stated:

'18. On the part of the payee he has to make a
H demand by "giving a notice" in writing. If that was
I
I,
SIVAKUMAR v. NATARAJAN [S.B. SINHA, J.] 393

the only requirement to complete the offence on the A
failure of the drawer to pay the cheque amount
within 15 days from the date of such "giving", the
travails of the prosecution would have been very
much lessened. But the legislature says that failure
on the part of the drawer to pay the amount should B
be within 15 days "of the receipt" of the said notice.
It is, therefore, clear that "giving notice" in the
context is not the same as receipt of notice. Giving
is a process· of which receipt is the
accomplishment. It is for the payee to perform the c
former process by sending the notice to the drawer
at the correct address.'

*** *** ***
'.
14. It is one thing to say that sending of a notice is one of D
the ingredients for maintaining the complaint but it is
another thing to say that dishonour of a cheque by itself
constitutes an offence. For the purpose of proving its case
that the accused had committed an offence under Section
138 of the Negotiable Instruments Act, the ingredients E
thereof are required to be proved. What would constitute
an offence is s.tated in the main provision. The proviso
appended thereto, however, imposes certain further
conditions which are required to be fulfilled before
cognizance of the offence can be taken. If the- ingredients F
for constitution of the offence laid down in the provisos (a),
(b) and (c) appended to Section 138 of the Negotiable
Instruments Act intended to be applied in favour of the
accused, there cannot be any doubt that receipt of a notice
would ultimately give rise to the cause of action for filing a G
complaint. As it is only on receipt of the notice the accused
at his own peril may refuse to pay the amount. Clauses (b)
and (c) of the proviso to Section 138 therefore must be
read together. Issuance of notice would not by itself give
rise to a cause of action but communication of the notice
H
394 SUPREME COURT REPORTS (2009] 9 S.C.R. '
_._

A would."
,t
Keeping in view the aforementioned legal principle,
interpretation of clause (b) of the proviso appended to Section
138 of the Act has to be considered.
B 11. We may, however, at the outset notice that both
lo-
clauses (a) and (b) of the proviso appended to Section 138 of
the Act employed the term "within a period". Whereas clause
(a) refers to presentation of the cheque to the bank within a
period of six months from the date on which it is drawn, clause
c (b) provides for issuance of notice'"to the drawer of the cheque
within thirty days of the receipt of information". The words "within
thirty days of the receipt of information" are _significant:
Indisputably, intimation was received by the respondent from
the bank on 3.12.2003.
D -·
The Parliament advisedly did not use the words 'from the
date of receipt of information' in Section 138 of the Act. lt--is
also of some significance to notice that in terms of Section 9
of the General Clauses Act, 1897, whereupon reliance has
been placed by the High Court, the statute is required to use
E
the word "from" and for the purpose of including the last in a
series of days or any other period of time, to use the word "to".
i

The departure made from the provisions of Section 9 of
the General Clauses Act by the Parliament, therefore, deserves
F serious consideration.

12. Indisputably, the notice was issued on the 31st day and
not within a period of thirty days from ttie date of receipt of
intimation from the bank. If Section 9 of the General Clauses
G Act is not applicable, clause (b) of the proviso appended to
Section 138 of the Act was required to be complied with by
the respondent for the purpose of maintaining a complaint
petition against the appellant.

In Munoth Investments Ltd. v. Puttukola Properties Ltd.
H and Another [(2001) 6 SCC 588j construing clause (a) of the ~
SIVAKUMAR v. NATARAJAN [S.B. SINHA, J.] 395

proviso appended to Section 138 of the Act, this Court held: A

"5. In our view, the High Court committed material
irregularity in riot referring to the aforesaid evidence which
was recorded by the Metropolitan Magistrate. Section
138(b) of the Act inter alia provides that the payee has to
8
make demand for the payment of money by giving a notice
"to the drawer of the cheque, within fifteen days of the
receipt of information by him from the bank regarding the
return of the cheque as unpaid". So fifteen days are to be
counted from the receipt of information regarding the return C
of the cheque as unpaid. In the present case, it is the say
of the complainant that the cheque was presented for
encashment on 12th; it was returned to the Bank on 13th
and information was given to the complainant only on 17th,
as 14th, 15th and 16th were Pongal holidays. The learned
··counsel fairly pointed out that in the complaint it has been D
stated that the complainant had received intimation with
regard to the return of the said cheque from his banker on
13-1-1994. However, he submitted that this is an apparent
mistake and for explaining that mistake the appellant has
led the evidence before the trial court.! Undisputedly, he E
pointed out that in the State of Tamil Nadu, 14-1-1994 to
16-1-1994 there were Pongal holidays and, therefore, the
appellant came to learn about the dishpnour of his cheque
on 17-1-1994." ·
F
We, with respect, agree with the approach of the learned
Judges.

13. Our attention has furthermore been drawn to a decision
of the Kerala High Court in K. V. Muhammed Kunhi v. P.
Janardhanan [1998 Crl. L.J. 4330], wherein construing proviso G
(a) appended to Section 138 of the Act, a learned Single Judge
held:

"... A comparative study of both the Sections in the Act and
the General Clauses Act significantly indicate that the;~". H
396 SUPREME COURT REPORTS [2009] 9 S.C.R.

A period of limitation has to be reckoned from the date on
which the cheque or instrument was drawn. The words
'from' and 'to' employed in Section· 9 of the General
Clauses Act are evidently clear that in cases where there
is an ambiguity or suspicion with reference to the date of
B commencement of period of limitation in any Act or special
enactment, the wqrds 'from' and 'to' employed in Section
9 of the General Clauses Act can be pressed into service .. "

[See also K.C. Nanu v. N. Vijayan and Anr. 2008 (1) KLJ
c 327]
We are in agreement with the aforementioned view.

14. Mr. 8. Balaji, learned counsel appearing on behalf of
the respondent, however, would contend that the appellant
· 0 having entered into a settlement in terms whereof he had •
deposited a sum of Rs. 30,000/- and an assurance having been
given that no. action would be taken against the judgment
rendered by the High Court, this Court should not exercise its
discretionary jurisdiction under Section 136 of the Constitution
E of India' to interfere with the impugned judgment. We fail to
persuade ourselves to agree with the aforementioned
submission.

15. Appellant has a fundamental right of liberty in terms of
Article 21 of the Constitution of India. Liberty of the appellant,
F therefore, could not have been taken away except in
accordance with the procedure established by law.

Principles of 'Estoppel' or 'Waiver' would not, therefore,
apply in the instant case.
G In any event, the respondent himself has backed out from
the aforementioned settlement. He, therefore, cannot be
permitted to take a different stand.

16. Having, however, regard to the facts and
H circumstances of the case, we, in exercise of our jurisdiction
SIVAKUMAR v. NATARAJAN [S.B. SINHA, J.] 397

under Article 142 of the Constitution of India, direct that as the A
civil liability of the appellant stands admitted, the said sum
received by th~ respondent need not be refunded.

17. For the reasons aforementioned, the impugned
judgment cannot be sustained, which is set aside with the 8
aforementioned directions. The appeal is allowed.

G.N. Appeal allowed.