K.R. INDIRAversusDR. G. ADINARAYANA

                           K.R. INDIRA                                    A
                                 v.
                      DR. G. ADINARAY ANA

                          OCTOBER 9, 2003

        [DORAISWAMY RAJU AND ARIJIT PASAYAT, JJ.]
                                                                          B

     Negotiable Instruments Act, I 88 I:

     Section I 38 Proviso (b)-Appel/ants husband and wife advancing
loans to respondent-Respondent issuing two cheques each in the name C
of husband and wife-Bouncing of-Common notice of demand-Notice
not specifically containing any demand for payment of cheque amount-
Held, the notice is imperfect-Demand in the notice has to be in relation
to amount covered by the bounced cheque which is conspicuously absent
in the notice issued-However, any further or additional claims found to D
have been made does not invalidate a notice.

      Section 138-Clause (b) of proviso-Consolidated notice~Validity
of-Held, ifthe consolidated notice is found to provide sufficient information
envisaged by the statutory provision and there is a specific demand for the
payments of the sum covered by the cheque dishonoured, mere fact that E
it is a consolidated notice may not invalidate the same.

     Section 138-0.ffence under-Components of, elucidated.

     Appellants being husband and wife, advanced loans '.o respondent F
for which he executed pronotes with a view to ensure repayment of
loans with interest. Subsequently, four cheques were issued by the
respondent, two in the name of the husband and two in the name of
the wife. The cheques bounced when presented for collection with an
endorsement 'not arranged for'. Thereupon one common notice of
demand was sent by both the appellants calling upon the accused- G
respondent to pay the cheque amounts within 15 days from the receipt
of notices. Though the accused-respondent received the notices, he did
not choose to respond. After waiting for the stipulated period of 15
days, three separate complaints were filed by the appellants. Trial
Court dismissed the complaints holding that tbe appellants failed to H
                                   535
    536               SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A prove that the cheques were issued by way of repayment of the loans
    advanced by the appellants. Appeals were filed before High Court
    which were disposed of by a common judgment acquitting the
    respondent on the ground that the notices sent did not meet the
    requirement of proviso to Clause (b) of Section 138 of the Negotiable
B   Instruments Act, 1881. Hence the present appeals.

         On behalf of the appellants, it was contended.that the essence of
    the notice was to be seen and a bare reading of the notice, even though
    consolidated, showed that the requirements of Clause (b) of proviso to
    Section 138 of the Act were met; that the substance and not form
c   should have primacy and if sufficient compliance was there, question
    of deficiency did not arise.

          Dismissing the appeals, the Court

D         HELD : 1.1. A perusal of the contents of the notice in question
    shows that not only the cheque amounts were different from the alleged
    loan amounts but the demand was made not of the cheque amounts but
    only the loan amount as though it is a demand for the loan amount and
    not the demand for payment of the cheque amount; nor could it be said
E   that it was demand for payment of the cheque amount and in addition
    thereto made further demands as well. What is necessary is making of a
    demand for the amount covered by the bounced cheque which is
    conspicuously absent in the notice issued in this case. The notice is
    imperfect in this case not because it had any further or additional claims
F   as well but it did not specifically contain any demand or the payment of
    the cheque amount, the non-compliance with such a demand only being
    the incriminating circumstance which expose the drawer for being
    proceeded against under Section 138 of the Act. [542-E•G)

          Central Bank of India and Anr. v. Saxons Farms and Ors., (1999]
G 8 sec 221, referred to.
         1.2. Though no formal notice is prescribed in the provision, the
    statutory provisfon indicates in unmistakabte terms as to what should
    be clearly indicated in the notice and what manner of demand it should
H   make. In a given case if the consolidated notice is found to provide
               K.R. INDIRA v. DR. G. ADINARA Y ANA                537

sufficient information envisaged by the statutory provision and there A
was a specific demand for the payment of the sum covered by the
cheque dishonoured, mere fact that it was a consolidated notice, and/
or that further demands in addition to the statutorily envisaged
demand was also found to have been made may not invalidate the
same. [542-B, C-D)                                                    B
     Suman Sethi v. Ajay K. Churiwal and Anr., (2000] 2 SCC 380,
referred to.

     2. The acts which are the components of the offence under Section
138 of the Negotiable Instruments Act are : 1) drawing of the cheque C
by a person on an account maintained by him with a banker, for
payment to another person from out of that account for discharge in
whole/part any debt or liability, (2) presentation of the cheque by the
payee or the holder in due course to the bank, (3) returning the cheque
unpaid by the drawee bank for want of sufficient funds to the credit D
of the drawer or any arrangement with the banker to pay the sum
covered by the cheque, (4) giving notice in writing to the drawer of the
cheque within 15 days of the receipt of information by the payee from 1
the bank regarding the return of the cheque as unpaid demanding
payment of the cheque amount, (5) failure of the drawer to make E
payment to the payee or the holder in the due course of the cheque,
of the amount covered by the cheque within 15 days of the receipt of
the notice. The offence under Section 138 can be completed only with
the concatenation of these acts. [541-E-G)

    CRIMINAL APPELLATE JURISDICTION : Criminal Appeal F
No. 1136 of 2003.

     From the Judgment and Order dated 20.3.2000 of the Karnataka High
Court in Crl. A. No. 271 of 1996.
                                                                         G
                              . WITH

     Crl. A. No. 1137 of 2001.

     Ms. Sangeeta Kumar for the Appellant.
                                                                         H
    538                SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A         Mrs. Lalita Kaushik for the Respondent.

          The Judgment of the Court was delivered by
                         .            .
         ARIJIT PASAYAT, J.: An interesting question in the background
    of Clause (b) of the proviso to Section 138 of the Negotiable Instruments
B   Act, 1881 (in short the 'Act') arisens in these appeals.

          Filtering out unnecessary details the background facts are as
    folllows :

C       Appellant-Dr. K.G. Ramachandra Gupta (in Cr!. A. No. 1137/2001)
  and his wife, Smt. K.R. Indira, (appellant in Cd. A. No. 1136/2001) filed
  complaints alleging that the respondent-Dr. G. Adinarayana, a friend of the
  appellant-Dr. K.G. Ramachandra Gupta acted in a manner unbecoming of
  a friend. In essence, two doctors were trying to use instruments in fighting
  out a bitter legal battle and riot trying to save a person fighting for life.
D Three separate complaints were filed alleging that loans were advanced by
  the appellants to the respondent for which he executed pronotes with a view
  to ensure repayment of loans with interest. Four cheques were issued, two
  in the name of the husband and two in the name of the wife. As the cheques
  bounced when presented for collection with an endorsement 'n"t arranged
E for', notices were issued calling upon the accused-respondent to pay the
  cheque amounts within I 5 days from the receipt of notices. Though the
  accused-respondent received the notices, he did not choose to respond and
  after waiting for the stipulated period of 15 days, complaints were filed
  by the appellants. Tht; trial Court came to the conclusion that the
F complainants' failed to prove that the cheques were issued by way of
  prepayment of the loans advanced by the complainants and accepted the
  contention of the accused that blank cheques given by him in good faith
  were misused. He further held that the accused has not committed any
  offence under Section 138 of the Act. Three appeals namely, Criminal
G Appeal No. 270/1996, 271/1996 and 272/1996 were filed by the two
  appellants. The appeals were disposed of by the impugned common
  judgment.

         One appeal i.e. Criminal Appeal No. 272/1996 was allowed and the
    respondent was found guilty of offence punishable under Section 138 of
H   the Act. The other two appeals were dismissed and the order of acquittal
        K.R. INDIRA v. DR. G. ADINARA YANA [PASA YAT, J.]             539

was affinned. The basic conclusion which fonned the foundation for A
upholding the acquittal was that the notices sent did not meet the
requirements of law, particularly, the proviso to clause (b) of section 138
of the Act.

      It has to be noted that one common notice of demand was sent by B
both the appellants which was served on the respondent. The High Court
held that common notice was not in accordance with law and the essential
ingredients to bring in application of Clause (b) of.proviso to Section 138
of the Act were not there. It was held that when separate cheques were
allegedly issued, complainants were different and related to allegedly
different loan transactions, a common notice is not contemplated.           C
      In support of the appeals, learned counsel for the appellants submitted
that the essence of the notice is to be seen and a bare reading of the notice,
even though it is a consolidated one, shows that the requirements of
Clause (b) of proviso to Section 138 of the Act are met, it is sufficient D
and both the trial Court and the High Court have failed to consider this
aspect. It was submitted that the substance and not fonn should have
primacy, and if sufficient compliance is there, question of deficiency does
not arise.

      Per contra, learned counsel for the respondent submitted that the E
requirements being statutory and mandatory, there is no question of any
substantial compliance with the requirement being considered to be
sufficient, particularly, when the compliance relates to allegation of an
offence being committed. With reference to the notice in question, it was
submitted that the same was vague.                                        F
     The only question for consideration by us is whether the notice
in question purportedly issued under Clause (b) of proviso to Section
138 of the Act was valid or not. Section 139 of the Act has also
relevance and needs reference. We extract below Sections 138 and 139 of
~~:                                                                         G
        "138 - Dishonour ofcheque for insufficiency, etc. offunds in the
        account - Where any cheque drawn by a person on an account
        maintained by him with a banker for payment of any amount of
        money to another person from out of that account for the H
    540 ,              SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A           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 exceeds the amount arranged to be
            paid from that account by an agreement made with that bank, such
B           person shall be deemed to have committed an offence and shall,
            without prejudice to any other provision of this Act, be punished
            with imprisonment for a term which may extend to.one year, or
            with fine which may extend to twice the amount of the cheque,
            or with both :

C                Provided that nothing contained in this section shall apply
            unless -

                 (a)   xxx                     xxx                     xxx

                 (b) the payee or the holder in due course of the cheque, as
D                    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 15 days of the
                     receipt of information by him from the bank regarding
                     the return of the cheque as unpaid; and
E
                 (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 15 days of the receipt of the said notice.
F
                  139 - Presumption in favour of holder - It shall be
            presumed, unless the contrary is proved, that the holder of a
            cheque received the cheque, of the nature referred to in Section
            138 for the discharge, in whole or in part, of any debt or other
            liability."
G
       As was observed by this Court in Central Bank of India and Anr. v.
  Saxons Farms and Ors., [1999] 8 SCC 221 the object of the notice is to
  give a chance to the drawer of the cheque to rectify his omission. The ....
  demand in the notice hes to be in relation to 'said am01.mt of money' as
H described in provision. The expression 'payment of any amount of money'
        K.R. INDIRA v. DR. G. ADINARAYANA [PASAYAT, J.]                541

as appearing in the main portion of Section 138 of the Act goes to show A
it needs to be established that the cheque was drawn for the purpose of
discharging in whole or in part of any debt or any liability, even though
the notice as contemplated may involve demands for compensation, costs,
interest etc. The drawer of the cheque stands absolved from his liability
under Section 138 of the Act if he makes the payment of the amount B
covered by the cheque of which he was the drawer within 15 days from
the date of receipt of notice or before the complaint is filed.

      In Suman Sethi v. Ajay K. Churiwal and Another, [2000] 2 SCC 380
it was held that the legislative intent as evident from Section 138 of the C
Act is that if for the dishonoured cheque demand is not met within 15 days
of the receipt of the notice the drawer is liable for conviction. If the cheque
amount is paid within the above period or before the complaint is filed the
legal liability under Section 138 c~ases to be operative and for the recovery
of other demands such as compensa.tion, costs, interests etc. separate
proceedings would lie. If in a notice any other sum is indicated in addition D
to the amount covered by the cheque, that does not invalidate the notice.

      The offence under Section 138 of the Act can be completed only with
the concatenation of a number of acts. The following are the acts which
are components of the said offence : (1) drawing the cheque by a person E
on account maintained by him with a banker, for payment to another person
from out of that account for discharge iri whole/part 8t?Y debt or liability,
(2) presentation of the cheque by the payee or the holder in due co.urse
to the bank, (3) returning the cheque unpaid by the drawee bank for want
of sufficient funds to the credit of the drawer or any arrangement with the
banker to pay the sum covered by the cheque, (4) giving notice in writing. F
to the drawer of the cheque within 15 days of the receipt of infonnation
by the payee from the bank regarding the return of the cheque as unpaid
demanding payment of the cheque amount, (5) failure of the drawer to
make payment to the payee or the holder in due course of the cheque, of
the amount covered by the cheque within 15 days of the receipt of the G
notice.                                                           ·

      Strong reliance was placed by learned counsel for the appellants in
Suman Sethi 's case (supra) to contend that if the indication in the notice
of other amounts than that covered by the cheque issued, does not as held H
    542                SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.

A by this Court invalidate the notice, there is no reason as to why a
    consolidated notice for two complainants cannot be issued. The extreme
    plea as is sought to be raised in this case based upon Suman Sethi 's case
    (supra) is clearly untenable. Though no formal notice is prescribed in the
    provision, the stafutory provision indicates unmistakable terms as to what
B   should be clearly indicated in the notice and what manner of demand it
    should make. In Suman Sethi's case (supra) on considering the contents
    of the notice, it was observed that there was specific demand in respect
    of the amount covered by the cheque and the fact that certain additional
    demands incidental to it, in the form of expenses incurred for clearance
    and notice charges were also made did not vitiate the notice. In a given
C   case if the consolidated notice is found to provide sufficient information
    envisaged by the· statutory provision and there was a specific demand for
    the payment of the sum covered by the cheque dishonoured, mere fact that
    it was consolidated notice, and/or that further demands in addition to the
    statutorily envisaged demand was also found to have been made may not
D   invalidate the same. This position coutd not be disputed by learned counsel
    for the respondent. However, according to the respondent, the notice in
    question is not separable in that way and that there was .no specific demand
    made for payment of the amount covered by the cheque. We have·perused
    the contents of the notice. Significantly, not only the cheoue amounts were
E   different frcim the alleged loan amounts but the demand was made not of
    the cheque amounts but only the loan amount as though it is a demand for
    the loan amount and not the demand for payment of the cheque amount;
    nor could it be said that it was a demand for payment of the cheque amount
    and in addition thereto made further demands as well. What is necessary
F   is making of a demand for the amount covered by the bounced cheque
    which is conspicuoulsy absent in the notice issued in this case. The notice
    in question is imperfect in this case not because it had any further or
    additional claims as well but it did not specifically contain any demand for
    the payment of the cheque amount, the non-compliance with such a
    demand only being the incriminating circumstance which expose the
G   drawer for being proceeded against under Section 138 of the Act. That
    being the position, the ultimate conclusion arrived at by the trial Court and
    the High Court do not call for interference in these appeals, though for
    different reasons indicated by us. The appeals are, accordingly dismissed.

    M.P.                                                    Appeals dismissed.