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1999 (9) TMI 941 - SC - Companies LawWhether the cause of action has arisen at all as the notice sent by the complainant to the accused was returned as unclaimed. ? - Held that - Appeal dismissed. No doubt Section 138 of the Act does not require that the notice should be given only by post therefore, uphold the conviction of the offence under Section 138 of the Act, but we set aside the sentence awarded by the High Court for enabling the trial court to pass orders on the question of sentence and the compensation, if any payable.
Issues Involved:
1. Territorial jurisdiction of the Trial Court. 2. Validity of the notice served to the accused. 3. Conviction and sentence under Section 138 of the Negotiable Instruments Act. 4. Quantum of fine and compensation. Issue-wise Detailed Analysis: 1. Territorial Jurisdiction of the Trial Court: The accused contended that the Trial Court lacked territorial jurisdiction as the cheque was dishonoured at a bank located in a different district. The Trial Court upheld this contention and acquitted the accused. However, the Supreme Court clarified that under Section 177 of the Code, the locality where the bank is situated cannot be the sole criterion for determining the place of offence. The offence under Section 138 of the Negotiable Instruments Act is completed only upon the failure of the drawer to pay the cheque amount within 15 days of receiving the notice. The Court noted that the offence could be tried in any of the localities where any of the acts constituting the offence occurred, as per Sections 178(d) and 179 of the Code. Thus, the High Court was correct in holding that the Trial Court had jurisdiction. 2. Validity of the Notice Served to the Accused: The accused argued that he did not receive the notice regarding the dishonour of the cheque, which is a prerequisite for the cause of action under Section 138. The notice was returned as "unclaimed." The Supreme Court emphasized that "giving notice" is not the same as "receipt of notice." The payee must send the notice to the correct address, and if the notice is returned as unclaimed, it can be deemed to have been served, as per Section 27 of the General Clauses Act. The Court held that a notice returned as unclaimed is presumed to have been served, unless the drawer proves otherwise. The accused failed to rebut this presumption, and hence, the High Court rightly held that the notice was validly served. 3. Conviction and Sentence under Section 138 of the Negotiable Instruments Act: The High Court reversed the Trial Court's acquittal and convicted the accused under Section 138, sentencing him to six months' imprisonment and a fine of Rs. one lakh. The Supreme Court upheld the conviction, noting that the accused admitted his signature on the cheque, and the presumption under Section 118 and Section 139 of the Act was not rebutted by the accused. The Court reiterated that the burden was on the accused to rebut the presumption that the cheque was issued for discharge of a debt or liability, which he failed to do. 4. Quantum of Fine and Compensation: The Supreme Court addressed the issue of the quantum of fine and compensation. The High Court imposed a fine exceeding the limit prescribed for a Judicial Magistrate of the first class, which is Rs. 5,000 as per Section 29(2) of the Code. The Supreme Court noted that while the High Court can convict the accused, it must conform to the jurisdictional limits of the Trial Court regarding the quantum of fine. However, the Court highlighted that the Magistrate could use Section 357(3) of the Code to award compensation to the complainant without any limit. The Supreme Court set aside the sentence awarded by the High Court and remanded the matter to the Trial Court to pass orders on the quantum of sentence and compensation, considering any settlement between the parties. Conclusion: The Supreme Court upheld the conviction of the accused under Section 138 of the Negotiable Instruments Act but set aside the sentence awarded by the High Court. The matter was remanded to the Trial Court to determine the appropriate sentence and compensation, if any, payable to the complainant, ensuring compliance with jurisdictional limits and considering any possible settlement between the parties.
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