Holding

The cause of action arises on receipt of the fax notice, which constitutes valid "notice in writing", and a complaint filed after the ensuing one‑month period is barred, rendering the magistrate's cognizance invalid.

Summary

Sil Import USA issued post‑dated cheques that were returned for insufficient funds. Exim Aides Silk Exporters sent a notice of demand to the drawer by fax on 11‑June‑1996 and again by registered post on 25‑June‑1996. A complaint under Section 138 of the Negotiable Instruments Act was filed on 8‑August‑1996, beyond the one‑month period prescribed in Section 142. The Supreme Court held that the cause of action arose on the date the fax notice was received, that a fax satisfies the statutory requirement of "notice in writing", and that the complaint was therefore time‑barred. Consequently, the magistrate had no jurisdiction to take cognizance of the offence and the appeal was allowed, dismissing the complaint.

Issues considered

When does the cause of action arise under Section 138/142 – upon receipt of a fax notice or upon receipt of a registered post notice?
Does a fax transmission satisfy the statutory requirement of "notice in writing" under Section 138?
Is a complaint filed after the one‑month limitation period prescribed in Section 142 barred?

Legislation cited

Code of Criminal Procedure, 1973

Subjects

Negotiable Instruments ActSection 138Section 142cheque bouncenotice in writingfaxlimitation periodstatutory interpretationcriminal prosecution

Judgment

A M/S. SIL IMPORT, USA
v. ·•
M/S. EXIM AIDES SILK EXPORTERS, BANGALORE

MAY 3, 1999

B [K.T. THOMAS AND M.B. SHAH, JJ.]
-
Negotiable Instruments Act, 1988-Sections 138, 142-Prosecution for
dishonour of cheques-Appellant issuing a cheque to Respondent-Returned
by Bank for want offunds-Respondents sending notice by fax-Subsequent
C notice also sent by registered post-Complaint filed within 30 days after
receipt of registered notice but beyond limitation after receipt offax notice-
Whether barred by time-Held, yes-The cause of action arose on receipt of
fax notice, Hence the court has no jurisdiction to take cognizance of the
1

complaint.
D Interpretation of Statutes

Negotiable Instruments Act, 1988-Sections 138, 142-Whether notice
by fax is compliance with legal requirement of "Notice in Writing"-Held,
-
yes-The legislature must be presumed to have been aware of the modern
E devices and equipment already in vogue and also in store for future.

The appellant owed a huge sum of money to the Respondent towards·
export sale consideration of finished silk products on the orders placed by
them. The appellant issued two post-dated cheques to Respondent. On
presentation they were returned for want of sufficient funds. The respondent
p sent a notice to appellant by fax on 11.6.1996 and on the next day the notice
was again sent by registered post which was served on 25.6.1996. The
respondent then filed a complaint before the Magistrate's Court on 8.8.1996.
After process was served, the appellant filed a petition to quash the complaint
and the Magistrate dismissed the complaint on the ground of delay.

G The revision petition filed before the High Court by the Respondent
was allowed. The High Court held that the cause of action would arise only
after expiry of 15 days from date of receipt of registered notice and therefore
the complaint was filed within time.

On appeal the appellant contended that the magistrate .tias no
H jurisdiction to take cognizance of the offence after expiry of 30 days from
958
SILIMPORT, USA v. EXIM AIDES SILK EXPORTERS 959
the date of cause of action and in the present case the respondent's complaint A
is barred by time, and that if the notice sent by fax is to be treated as the
notice in writing contemplated under the provisions of the Act the period of
limitation expired on 26. 7.1996.

The respondent contended that 15 days can be counted only from the
date when the appellant received the notice sent by registered post, and that B
the complaint was therefore within time.

Allowing the Appeal, the Court

HELD : 1. On the date when the notice sent by fax reached the drawer
of the cheque the period of 15 days has started running and on the expiry C
of that period the offence is completed unless the amount has been paid in
the meanwhile. If no complaint was filed within one month therefrom the
payee would stand forbidden from launching a prosecution thereafter, due to
the clear interdict contained in Section 142 of the Act. In this case the
complainant has admitted the fact that written notice was sent by fax. The D
appellant has admitted its receipt on the same date. The last day when the
respondent could have filed the complaint was 26-7-1996. But the complaint
was fded only on 8-8-1996. So the court has no jurisdiction to take cognizance
of the offence on the said complaint. [966-E-G]

2. The High Court's view that the sender of the notice must know the E
date when it was received by the sendee, for otherwise he would not be in a
position to count the period in order to ascertain the date when cause of
action has arisen is fallacious. As per the clause (c) of Section 138, the
starting date of "the receipt of the said notice". Once it starts, the offence
is completed on the failure to pay the amount within 15 days therefrom.
Cause of action would arise if the offence is committed. If a different F
interpretation is given, the absolute interdict incorporated in Section 142 of
the Act that no court shall take cognizance of any offence unless the complaint
is made within one month of the date on which the cause of action arises,
would become otiose. (964-G; 965-A-B]
G
Sadanandan Bhadran v. Madhavan Sunil Kumar, (1998] 6 SCC 514,
referred to.

3. When the legislature contemplated that notice in writing should be
given to the drawer of the cheque, the legislature must be presumed to have
been aware of the modern devices an equipment already in vogue and also H
960' SUPREME COURT REPORTS [1999] 2 S.C.R.

A in store for future. So if the notice envisaged in clause (b) of the proviso to -··
Section 138 was transmitted by fax it would be compliance with the legal
requirement. [963-H; 964-G]

State v. S.J. Choudhary, [1996) 2 SCC 428, referred to.

B Francis Bennion "Statutory interpretation", referred to.

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No.
488of1999 .

. From the Judgment and Order dated 4.11.98 of the Karnataka High Court
C in Crl. R. No. 851of1996.

Dhruv Mehta, S.K. Mehta, F. Anam and Ms. Shobha for the Appellant.

Krishnamurthi Swami and G.R. Mohan for the Respondent.

D The Judgment of the Court was delivered by

THOMAS, J. Leave granted.

A fax message sent by the respondent for his own safeguard has now
boomeranged. Neither can he disown sending the fax message nor can he
E own its full implication. Thus he is forked in a catch-22-situation. Such a
situation arose in a criminal proceeding which respondent launched against
appellant for the offence under Section 138 of the Negotiable Instruments Act
(for short 'the Act').

How the above situation is reached can be summarised thus:
F
Respondent is a proprietary concern doing business in finished silk
products by exporting them to foreign countries. Appellant is a company
having its Headquarters in California (USA). Appellant has been placing
orders with the respondent for exporting such silk materials. According to the
G respondent, appellant owed a sum of 72075 U.S. dollars (equivalent to more
than 26 lakhs of rupees) towards the sale consideration of several consignments
of materials despatched to the appellant on the orders placed. After much
correspondence and negotiations appellant company issued some post dated
cheques on State Bank of India (California-ARTESIA Branch). Three of such
cheques were presented on 3-5-1996 after those cheques attained maturity, for
H encashment through Bank of Madurai, Bangalore Branch. Two cheques were
SILIMPORT, USAv. EXIMAIDES SILK EXPORTERS [THOMAS,J.] 961

returned dishonoured with the reason "no sufficient funds". A
On receipt of such intimation respondent sent a notice to the appellant
company by fax on 11-6-1996. On the next day the respondent sent the same
notice by registered post also which was served on the appellant on 25-6-
1996. On 8-8-1996 respondent filed a complaint before the Additional Chief
Metropolitan Magistrate, Bangalore in respect of cheque No.188 dated 20-1 ~ B
1995 (for 5998.40 US dollars) and another cheque No.187 (with which the
present appeal is not concerned). The Metropolitan Magistrate, after receiving
the complaint on file took cognizance of the offence and issued process to
the appellant. It was sought to be quashed for which the appellant filed a
petition before the magistrate on various grounds. Learned magistrate upheld C
some of the grounds urged by the appellant and dismissed the complaint
discharging the accused by his order dated 20-11-1996.

Respondent thereupon moved the High Court of Karnataka in revision
against the aforesaid order of discharge. A single judge of the High Court
allowed the revision petition and set aside the order of the Metropolitan D
Magistrate and restored the complaint on file with a direction to proceed with
the prosecution in respect of cheque No.188. It is the said order of the High
Court which is now being challenged.

The only point canvassed by the appellant, in this appeal, was that the
magistrate has no jurisdiction to take cognizance of the offence after the E
expiry of 30 days from the date of cause of action and in this case when
respondent filed a complaint on 8-8-1996, the aforesaid period of 30 days
stood expired much earlier. The said plea was based on the fact situation that
respondent sent the notice by fax on 11-6-1996 receipt of which has been
owned by the appellant in full measure. If the notice sent by fax is to be F
treated as tile notice in writing contemplated in the Section, the cause of
action should have arisen on the expiry of 15 days therefrom (i.e. 26-6-1996)
and the period of limitation for filing the complaint expired on 26-7-1996,
according to the appellant. As the complaint was filed long after that date the
magistrate has no jurisdiction to take cognizance of the offence, contended
learned counsel. G
Section 142 of the Act reads thus:

'142. Cognizance of ojfences:-Notwithstanding anythfog contained
in the Code of Criminal Procedure, 1973 (2of1974),

(a) no court shall take cognizance of any offence punishable under H
962 SUPREME COURT REPORTS [1999) 2 S.C.R.

A section 138 except upon a complaint, in writing, made by the payee
or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which
the cause of action arises under clause (c) of the proviso to section
138;
B
(c) no court inferior to that of a Metropolitan Magistrate or a Judicial
Magistrate of the first class shall try any offence punish~ble under
Section 138.'

The language used in the above Section admits of no doubt that the
C magistrate is forbidden from taking cognizance of the offence ifthe complaint
was not filed within one month of the date on which the cause of action arose.
Completion of the offence is the immediate forerunner of rising of cause of
action. In other words cause of action would arise soon after completion of
the offence, and the period of limitation for filing the complaint would
simultaneously start running.
D
To circumvent the above hurdle, respondent submitted that 15 days can
be counted only from 25-6-1996 the date when appellant received the notice
sent by registered post, and the cause of action would have arisen only on
11-7-1996. The complaint which was filed on 8-8-1996 is therefore within time,
according to the learned counsel for the respondent.
E
The above controversy could have been averted if respondent had filed
the complaint on any day between I Ith and 26th of July, 1996, because any
date during that interregnum would have been good either when the fax
message is treated as the notice or when the registered notice is treated as
the required intimation. Hence, on the facts of the case, the real point in
F controversy is, when did the cause of action arise? A decision on the said
point is vitally crucial for further continuance of the criminal proceeding, as
law has imposed an interdict on the court against taking cognizance of the
offence after the expiry of 30 days counted from the date of arising of cause
·' of action.
G Learned single judge has adopted the following reasoning for concluding
that the cause of action had arisen on the expiry.of 15 days from 25-6-1996:
..,
"This is a situation whereby the petitioner/complainant had placed
himself within the two horns of a bull and it was not possible for him
to avoid strike to one or the other. To put it otherwise, if the
H complainant had lodged the complaint under the assumption that the
SIL IMPORT, USA v. EXIM AIDES SILK EXPORTERS [THOMAS, J.] 963

fax message was received by him, the accused would have contended A
that he had not received the fax message and therefore, the complaint
filed on the basis of it is premature, as there is nothing for the
complainant to establish that the same was served on him. To be on
a safer side, he has waited for the acknowledgement of the notice sent
to him and filed it within 45 days from the date of receipt of the B
acknowledgement."

The sum and substance of the said reasoning appears to be that cause
of action would arise only on the expiry of 15 days from the date which the
complainant knows to be the date of service of notice.

The requirement for sending a notice after the cheque is returned by the c
Bank unpaid is set out in clauses (b) and (c) of the riroviso to Section 13 8
of the Act. They read thus:
'
·'
"Provided that nothing contained in this section shall apply unless:-

(b) the payee or the holder in due course of the cheque, as the case D
may be, makes a demand for the payment of the said amount of money
-'
a
by giving notice, in writing, 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; and

( c) the drawer of such cheque fails to make the payment of the said E
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."

The duty cast on the payee on receipt of information regarding the
return of the cheque unpaid is mentioned in clause (b) of Section 138. Within F
15 days he has to make a demand for payment. The mode of making such
demand is also prescribed in the clause, that it should be "by giving notice
in writing to the drawer of the cheque". Nowhere it is said that such notice
must be sent by registered post or that it should be despatched through a
messenger. G
. Chapter XVII of the Act, containing Sections 138 to 142, was inserted
in the Act as per Banking Public Financial Institution and Negotiable
Instruments Laws (Amendment) Act, 1988. When the legislature contemplated
that notice in writing should be given to the drawer of the cheque, the
legislature must be presumed to have been aware of the modem devices and H
964 SUPREME COURT REPORTS [1999]'2 S.C.R.

A equipment already in vogue and also in store for future. If the court were to
interpret the words 'giving notice in writing' in the section as restricted to the
customary mode of sending notice through postal service or even by personal
delivery, the interpretative process would fail to cope up with the change of
time.

B Facsimile (or Fax) is a way of sending hand-written or printed or tyQed
materials as well as pictures by wire or radio. In the West such mode of
transmission came to wide use even way back in the late 1930s. By 1954
International News Service began to use Facsimile quite extensively.
Technological advancement like Facsimile, Internet, E-mail etc. were on swift
C progress even before the Bill for the Amendment Act was discussed by the
Parliament. So when Parliament contemplated notice in writing to be given we
cannot overlook the fact that Parliament was aware of modem devices and
equipment already in vogue.

Francis Bennion in "Statutory Interpretation" has stressed the need to
D interpret a statute by giving "allowances for any relevant changes that have
occurred, since the Act's passing, in law, social conditions, technology, the
meaning of words, and other matters."

For the need to update legislations, the Courts have the duty to use
E interpretative process to the fullest extent permissible by the enactment. The
following passage at page 167 of the above book has been quote~ with
approval by a three Judge-Bench of this Court in State v. S.J. Chaudhary,
[1996] 2 sec 428:

"It is presumed that Parliament intends the court to apply to an
-
ongoing Act a construction that continuously updates its wording to
F
allow for changes since the Act was initially framed (an updating
construction). While it remains law, it is to be treated as always
speaking. This means that in its application on any date, the language ...,.
of the Act, though necessarily embedded in its own time, is
nevertheless to be construed in accordance with the need to treat it
G as current law."

So if the notice envisaged in clause (b) of the proviso to Section 138 •
was transmitted by fax it would be compliance with the legal requirement.

The High Court's view is that the sender of the notice must know the
H date when it was received by the sendee, for otherwise he would not be in
SILIMPORT,USAv. EXIMAIDESSILKEXPORTERS [THOMAS, I.) 965
a position to count the period in order to ascertain the date when cause of A
action has arisen. The fallacy of the above reasoning is that it erases the
starting date of the period of 15 days envisaged in clause ©. As per the said
clause the starting date is the date of "the receipt of the said notice". Once
it starts, the offence is completed on the failure to pay the amount within 15
days therefrom. Cause of action would arise if the offence is committed.
B
If a different interpretation is given to the absolute interdict incorporated
in Section 142 of the Act that, no court shall take cognizance of any offence
unless the complaint is made within one month of the date on which the cause
of action arises, would become otiose.

In this context the decision of a two Judge-Bench in Sadanandan C
Bhadran v. Madhavan Sunil Kumar, [1998) 6 SCC 514, can be referred to. A
payee did not file the complaint within 45 days of sending the notice after
the cheque was bounced back, but he presented the cheque once again
thereafter and issued another notice. When a new cause of action arose on
the strength of t~e second presentation of the cheque a complaint was filed
by the payee on the strength of that second presentation of the cheque. This D
Court has stated the law in that case as follows:
"Consequent upon the failure of the drawer to pay the money
within the period of 15 days as envisaged under clause © of the
proviso to Section 138, the liability of the drawer for being prosecuted E
for the offence he has committed arises, and the period of one month
for filing the complaint under Section 142 is to be reckoned accordingly.
The combined reading of the above two sections of the Act leaves
no room for doubt that cause of action within the meaning of Section
142 ©arises-and can'arise-only once."
(emphasis supplied) F
(para 6)

Learned Judges proceeded further to consider whether in a case where
notice in writing was sent after the first dishonour of the cheque, the payee
can once again present the cheque, get it dishonoured for the purpose of
filing the complaint. Following statement of law has been clearly adumbrated G
by this Court in paragraph 7 thereof.
"Besides the language of Section 138 and 142 which clearly postulates
only one cause of action, there are other formidable impediments
which negate the concept of successive causes of action. One of them
is that for dishonour of one cheque, there can be only one offence H
966 SUPREME COURT REPORTS [1999] 2 S.C.R.

A and such offence is committed by the drawer immediately on his
failure to make the payment within fifteen days of the receipt of the
notice served in ai;cordance with clause (b) of the proviso to Section
138. That necess!}fily means that for similar failure after service of
fresh notice on subsequent dishonour, the drawer cannot be liable for
any offence nor can the first offence be treated as offence of the first
B one. At that stage, it will not be a question of waiver of the right of
the payee to prosecute the drawer but of absolution of the drawer of
an offence, which stands already committed by him and which cannot
be committed by him again."
The above view of this Court is in direct conflict with the view expressed
C by the Full Bench of the Kerala High Court in Mis. SKD Lakshmanan Fireworks
Industries v. K. V. Sivarama Krishnan, (1995) Crl. Law Journal 1384. (In the
headnote made in a volume of Supreme Court Cases which reported
Sadanandan Bhadran, [ 1998] 6 SCC 514 the Editor has noted thus: SKD
Lakshmanan Fireworks Insustries v. K. V. Sivarama Krishnan, (1995) Crl. Law
D Journal 1384 Ker. FB is approved. This needs correction through a corrigendum
because the dictum of the Full Bench in SKD Lakshmanan Fireworks
Industries v. Sivaram Krishnan .has been disapproved by this Court in
Sadanandana Bhadran 's case).
The upshot of the discussion 1s, on the date when the notice sent by
E Fax reached the drawer of the cheque the period of 15 days (within which he
has to make the payment) has started running and on the expiry of that period
the offence is completed unless the amount has been paid in the meanwhile.
If no complaint was filed within one month therefrom the payee would stand
forbidden from launching a prosecution thereafter, due to the clear interdict
contained in Section 142 of the Act. '
F In this case the complainant has admitted the fact that written notice
was sent by fax. Appellant has admitted its receipt on the same date. (It must
be remembered that respondent has no case that fax has not reached the
appellant on the same date). The last day when the respondent could have
filed the complaint was 26-7- 1996. But the complaint was filed only on 8-8-
G 1996. So the court has no jurisdiction to take cognizance of the offence on
the said complaint.
In the result, we allow th is appeal and set aside the impugned judgment
in so far as it relates to cheque No.188. The complaint filed by the respondent
on the said cheque will stand dismissed.

H V.M. Appeal allowed.