Case Note & Summary
The appellant, Prabhakar Gaidhane, filed a criminal appeal against the acquittal of the respondent, Nivruti Kamdi, by the Judicial Magistrate, First Class, Karanja, in Criminal Complaint No.484/2004 for an offence under Section 138 of the Negotiable Instruments Act, 1881. The dispute arose from a business transaction where the respondent had purchased rice from the appellant and issued eight cheques of Rs.10,000 each on 18.11.2000, which were dishonoured due to insufficient funds. The appellant filed five criminal cases under Section 138 of the N.I. Act. The parties entered into a compromise, and on 28.6.2003, the respondent sought permission to compound the offences. In pursuance of the compromise, the respondent issued a fresh cheque bearing No.670947 dated 25.12.2003 for Rs.80,000 drawn on Shikshak Sahakari Bank Ltd., Nagpur, towards full and final settlement. The learned Magistrate granted permission to compound the earlier offences. However, when the appellant deposited the fresh cheque, it was dishonoured on 14.5.2004 due to insufficient funds. The appellant sent a notice on 2.6.2004 by registered post, which was returned with the endorsement 'Not Claimed'. Consequently, the appellant filed a fresh complaint under Section 138 of the N.I. Act. The respondent claimed that the earlier compounding of offences discharged him from all liability, and that the notice was not served. The trial court acquitted the respondent. On appeal, the High Court held that the fresh cheque issued as part of the compromise constituted a separate and independent liability, and its dishonour was a distinct offence under Section 138 of the N.I. Act. The court further held that the notice sent by registered post to the correct address with the endorsement 'Not Claimed' was deemed to be served under Section 27 of the General Clauses Act, 1897. The court set aside the acquittal and convicted the respondent under Section 138 of the N.I. Act, sentencing him to pay a fine of Rs.1,20,000, with Rs.1,10,000 to be paid as compensation to the appellant.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Section 138 - Compromise Cheque - The dishonour of a cheque issued as part of a compromise between the parties constitutes a separate offence under Section 138 of the Negotiable Instruments Act, 1881, and the earlier compounding of offences does not absolve the accused of liability under the fresh cheque. (Paras 5-10) B) Negotiable Instruments Act - Notice - Deemed Service - Section 138 - Where a notice is sent by registered post to the correct address of the accused and is returned with endorsement 'Not Claimed', it is deemed to be served under Section 27 of the General Clauses Act, 1897, and the complainant is not required to prove further service. (Paras 11-14)
Issue of Consideration
Whether the dishonour of a cheque issued as part of a compromise between the parties constitutes a separate offence under Section 138 of the Negotiable Instruments Act, 1881, and whether the notice sent by registered post with endorsement 'Not Claimed' is deemed to be served.
Final Decision
The appeal is allowed. The judgment and order of acquittal dated 2nd September, 2005 passed by the Judicial Magistrate, First Class, Karanja in Criminal Complaint No.484/2004 is set aside. The respondent is convicted for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 and sentenced to pay a fine of Rs.1,20,000 (Rupees One Lakh Twenty Thousand only), in default, to undergo simple imprisonment for six months. Out of the fine amount, Rs.1,10,000 (Rupees One Lakh Ten Thousand only) shall be paid to the appellant as compensation.
Law Points
- Compromise does not extinguish liability under a fresh cheque issued in pursuance of settlement
- Dishonour of cheque issued as part of compromise constitutes a separate offence under Section 138 of the Negotiable Instruments Act
- 1881
- Notice sent by registered post to correct address with endorsement 'Not Claimed' is deemed served under Section 27 of the General Clauses Act
- 1897
