Limitation Period For Issuing Notice To Drawer Excludes Day On Which Bank Informs Holder Of Cheque Dishonour: Karnataka High Court

The Karnataka High Court has reiterated that the day on which a bank intimates to the holder of cheque of its dishonour has to be excluded and the same cannot be taken into consideration while calculating the period of limitation for issuing notice for payment to the drawer under Negotiable Instruments Act.

Section 138(b) is an important condition for the application of offence of cheque dishonour. It states:

"Provided that nothing contained in this section shall apply...unless the payee or the holder in due course of the cheque, 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...". 

Justice H P Sandesh held thus while allowing an appeal filed by one B R Anand (appellant) who had approached the court questioning the order passed by the trial court acquitting the accused V R Gisha for the offence under Section 138 of the Negotiable Instruments Act.

The high court referred to Apex Court's decision in Econ Antri Limited V/s Rom Industries Limited and another (2014) wherein the Supreme Court held that period of limitation for filing complaint under Section 142(a) is to be calculated by excluding the date on which cause of action arose.

The high court noted that intimation from the bank was given on 05.08.2017 and notice was given on 04.09.2017.

Then it said, “In view of the judgment the intimation given by the bank has to be excluded and the same cannot be taken into consideration and if the same is taken into consideration, the notice is within time of 30 days and hence, the very finding given by the Trial Court is erroneous with regard to the limitation is concerned.”

Background

The appellant-complainant had retired from the service in 2014 and received the retirement service benefits from the BESCOM authority. The respondent accused being co-employee wanted to perform her sister's marriage and requested hand loan of Rs.11,70,000/- and she want to discharge her liability towards constructions of house in which she is residing now.

The appellant conceded her request paid the above said amount in the month of June 2014 and she has agreed and promised to repay the amount within two years. After two years the appellant requested her to repay the amount; she issued a Cheque dated 02.08.2017 drawn on Canara Bank assuring that on presentation of the Cheque, it would be honored.

When the cheque was presented, the same was returned with an endorsement 'Funds insufficient'; immediately a demand was made but the accused did not come forward to pay the same. A notice was served on the respondent-accused but no reply was given.

Hence, compliant was filed and cognizance was taken and accused was secured before the Trial Court and did not plead guilty. The appellant-complainant examined himself as P.W.1. The respondent-accused did not lead any defense evidence.

The Trial Court having considered the material on record, came to the conclusion that notice was not issued within period of 30 days (under Section 138(b)) and notice was given on 31st day. The trial court thus acquitted the accused. Against this the appellant approached the high court. 

The appellant contended that the Trial Court committed an error in coming to the conclusion that notice was issued after the limitation period and failed to take note of the date of the notice. Also the trial court comes to the erroneous conclusion that there was an alteration and fails to take note of the signature made by the accused when the correction was made in the Cheque and it is not the case of the accused that the signature did not belong to the accused.

The respondent opposed the appeal contending that the very reasoning given by the Trial Court with regard to the limitation as well as not proving the case of the complainant is based on the material available on record.

Finding:

The court also refused to accept the reasoning of the trial court in regards to alterations made in the cheque. It said, “When the correction was made, counter signature was also made by the complainant, also not explained anything and when such material is not available before the Court, the Trial Court ought not to have come to a such a conclusion that the case of the complainant cannot be believed and the very finding given by the Trial Court is against the material on record and fails to take note of all these factors into consideration while acquitting the accused.”

Following which it set aside the trial court order and directed the respondent to pay the fine of Rs.12,00,000 and out of that the complainant is entitled for an amount of Rs.11,70,000/- and remaining amount of Rs.30,000/- shall be defrayed in favour of the State

Appearance: Advocate Lohit M for Appellant.

Advocate Chandrashekar P Patil for Respondent

Citation No: 2025 LiveLaw (Kar) 186

Case Title: B R Anand AND V R Gisha

Case No: CRIMINAL APPEAL NO.567 OF 2019

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