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Sec.138, 142 N.I.Act Sec.482 Cr.P.C. – Limitation – pending trial – petition for quash of complaint – cheque presented 25/10/08 – bounced 27/10/08 – issued notice 27/10/08 – no reply – again presented 10-11-08 – again bounced 10-11-08 – again issued notice 27-12-08 – filed complaint 07-01-09 – No bar to present the cheque several times with 6 / 3 months from the date of cheque – Limitation of 30 days starts from the date of information of cheque bounce – the complainant admitted in his complaint that cheque was bounced on 10-11-2008 – Complaint filed 07-01-2009 = beyond 30 days from the date of cheque bounce – though two witnesses were examined – is not a bar to quash the complaint – High court committed wrong – Apex court allowed the appeal and quashed the complaint = Kamlesh Kumar …..Appellant Vs. State of Bihar & Anr. ….Respondents = Published in / Cited in / Reported in judis.nic.in/supremecourt/filename=41067

Sec.138, 142 N.I.Act Sec.482 Cr.P.C. – Limitation – pending trial – petition for quash of

A cheque drawn on the Regent Street (Clifton) ...

A cheque drawn on the Regent Street (Clifton) Branch of Westminster Bank, dated 14 August 1956. (Photo credit: Wikipedia)

complaint – cheque presented 25/10/08 – bounced 27/10/08 – issued notice 27/10/08 – no reply – again presented 10-11-08 – again bounced 10-11-08 – again issued notice 27-12-08 – filed complaint 07-01-09 – No bar to present the cheque several times with 6 / 3 months from the date of  cheque – Limitation  of 30 days starts from the date of information of cheque bounce – the complainant admitted in his complaint that cheque  was bounced on 10-11-2008 – Complaint filed 07-01-2009 = beyond 30 days from the date of cheque bounce – though two witnesses were examined – is not a bar to quash the complaint – High court committed wrong – Apex court allowed the appeal and quashed the complaint =

 

a petition under Section 482 of the Cr.P.C. for quashing of the order  dated

28.10.2009 whereby the Court of  Magistrate  had  taken  cognizance  of  the

complaint filed by the respondent No.2  =

The solitary  reason  given  by  the  High  Court

while dismissing the petition is that trial has already  commenced  and  two

witnesses have already been examined and discharged.  Hence, at  this  stage

it would not be proper to interfere with  the  trial. =

 

The cheque in question was presented  on  25.10.2008.   

After  it  was

dishonoured, complainant issued notice dated 27.10.2008  to  the  appellant.

The appellant did not accede to the demand contained  in  the  said  notice.

Even the complainant chose not to file any complaint under  Section  138  of

the N. I. Act at that time.  

Instead, he presented same  very  cheque  again for encashment through his banker on 10.11.2008.  

It bounced  this  time  as well because of insufficient funds.  Another legal notice  dated  17.12.2008

was sent to the appellant.  

As this legal notice also  did  not  invoke  any

positive response from the appellant, this time the  complainant  filed  the

complaint  dated  7.01.2009. 

 

In the present case, the complainant had not filed  the  complaint  on

the dishonor of the cheque in the first instance,  but  presented  the  said

cheque again for encashment.  This right of the  complainant  in  presenting

the same very cheque for the second time  is  available  to  him  under  the

aforesaid provision.  This aspect is already authoritatively  determined  by

this Court

 in MSR Leathers vs.  S.Palaniappan  &  Anr.  (2013)  1  SCC  177.

 

 “Whether the payee or holder  of  a  cheque  can  initiate

           prosecution for an offence under Section 138  of  the  Negotiable

           Instruments Act, 1881 for its dishonor for the second time, if he

           had not initiated any action on the earlier cause of action?”

 

 

This question was answered by the three Judge Bench in  the  aforesaid

matter in the following manner:

 

                 “What is important is that neither Section 138 nor Section

           142 or any other provision  contained  in  the  Act  forbids  the

           holder or payee of the cheque  from  presenting  the  cheque  for

           encashment on any number of occasions  within  a  period  of  six

           months of its  issue  or  within  the  period  of  its  validity,

           whichever is earlier.  That such presentation will  be  perfectly

           legal and justified was not disputed before us even at the Bar by

           the learned counsel appearing for the parties and rightly  so  in

           the light of the judicial pronouncements on that  question  which

           are all unanimous.  Even Sadanandan case, the correctness whereof

           we are examining, recognized that the holder or the payee of  the

           cheque has the right to present the same any number of times  for

           encashment during the period of six months or during  the  period

           of its validity, whichever is earlier.” =

 

 

 Normally,  we  would  have

called upon the parties to prove their respective versions before the  trial

court by leading their evidence.  However, in the present case,  as  rightly

pointed  out  by  the  learned  senior  counsel  for  the   appellant,   the

complainant has accepted in the complaint itself that he  had  gone  to  the

bank for encashment of cheque on 10.11.2008 and the cheque was not  honoured

due to insufficient of funds, thereby admitting that he came to  know  about

the dishonor of the cheque on 10.11.2008 itself.

 

 For the purposes of   limitation,

in so far as legal notice is concerned, it is to be served  within  30  days

of the receipt of information by the drawyee from  the  bank  regarding  the

return of the cheque as unpaid.  

Therefore, after  the  cheque  is  returned

unpaid,  notice  has  to  be  issued  within  30  days  of  the  receipt  of

information in this behalf.  

That is the period of limitation  provided  for

issuance of legal notice calling upon the drawer of the cheque to  make  the

payment.  

After the sending of this notice 15 days time is to  be  given  to

the noticee, from the date of  receipt  of  the  said  notice  to  make  the

payment, if that is  already  not  done.   

If  noticee  fails  to  make  the

payment, the offence can be said to have been committed and  in  that  event

cause of action for filing the complaint would  accrue  to  the  complainant

and he is given one month time from the date of cause of action to file  the

complaint.-

It is, thus, clear from the aforesaid averment made by the complainant

himself that he had gone to the bank for encashing the cheque on  10.11.2008

and found that because  of  unavailability  of  sufficient  balance  in  the

account, the cheque was bounced.  

Therefore, it becomes obvious that he  had

come to know  about  the  same  on  10.11.2008  itself.   In  view  of  this

admission in the complaint about the information  having  been  received  by

the complainant about the bouncing of the cheque on  10.11.2008  itself,  no

further enquiry is needed on this aspect.

 

14.   It is, thus, apparent that  he  received  the  information  about  the

dishonor of the cheque on 10.11.2008 itself.  

However, he did not  send  the legal notice within 30 days therefrom.   

 We, thus, find that the  complaint

filed by him was not maintainable as it was  filed  without  satisfying  all

the three conditions laid down in Section 138 of the N. I. Act as  explained

in para 12 of the judgment in the case of  MSR  Leathers,  extracted  above.

 

 

15.   We have, thus, no hesitation  in  allowing  this  appeal  and  setting

aside the impugned order of the High  Court.   

As  a  consequence,  petition

filed by the petitioner under Section 482, Cr.P.C.  is also allowed and  the

complaint of the complainant is dismissed.

 

[REPORTABLE]

IN THE SUPREME COURT O F INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2083/2013
(arising out of SLP(Criminal) No. 10056 of 2012)
Kamlesh Kumar …..Appellant

Vs.

State of Bihar & Anr. ….Respondents

J U D G M E N T

A.K.SIKRI,J.

1. Leave granted.

2. The appellant herein is facing trial in the complaint filed by
respondent No.2 under Section 138 of the Negotiable Instruments Act (N.I.
Act for short). According to the appellant, criminal complaint is not
maintainable and no such proceedings could be launched against him. He,
therefore, approached the High Court of Judicature at Patna in the form of
a petition under Section 482 of the Cr.P.C. for quashing of the order dated
28.10.2009 whereby the Court of Magistrate had taken cognizance of the
complaint filed by the respondent No.2 issued summons to the appellant.
This petition, however, has been dismissed by the High Court vide impugned
judgment dated 1.11.2012. The solitary reason given by the High Court
while dismissing the petition is that trial has already commenced and two
witnesses have already been examined and discharged. Hence, at this stage
it would not be proper to interfere with the trial. Various contentions
which were raised by the appellant questioning the very maintainability of
the complaint under Section 138 of the N.I. Act are not gone into by the
High Court with the observations that those contentions would be available
to the appellant before the trial court, subject to the rebuttal of
respondent No.2.

3. Mr. Mishra, learned senior counsel appearing for the appellant
submitted that even on admitted facts the complaint was untenable as it was
clearly time barred and not filed within the stipulated period prescribed
in law and therefore the High Court could not have scuttled the issue
raised by the appellant by merely relegating the appellant to the trial
court when the issue could be decided on the admitted facts on records.
He, further, submitted that the appellant had approached the High Court
without loss of any time and if during the pendency of the petition filed
by the appellant under Section 482, Cr.P.C., two witnesses had been
examined in the meantime, that factor could not have weighed against the
appellant.

4. In order to understand the controversy, we may give basic facts which
are undisputed.

5. The complaint under Section 138 of the N.I. Act is filed by respondent
No.2 on the basis of cheque bearing No.003285 drawn on Bank of India, Mahua
Branch where the appellant holds Bank Account bearing No.23371. This
cheque was for a sum of Rs.3,45,000/-. The complainant had presented this
cheque on 25.10.2008 which was returned dishonoured by the Bank. The
defence on merits set up by the appellant is that he is a doctor by
profession who is having his private practice. He found that certain
cheques, some signed and some unsigned, were missing from his clinic in
December 2006 in respect to which he had even given information to the Sub-
Divisional Officer, Mahua, on 30th December 2006. Cheque No. 003285 was
also one of those stolen cheques. We have stated this defence of the
appellant just for record and are not going into this explanation of the
appellant or influenced by it. We only tend to examine as to whether on
admitted events, complaint is not maintainable.
6. The cheque in question was presented on 25.10.2008. After it was
dishonoured, complainant issued notice dated 27.10.2008 to the appellant.
The appellant did not accede to the demand contained in the said notice.
Even the complainant chose not to file any complaint under Section 138 of
the N. I. Act at that time. Instead, he presented same very cheque again
for encashment through his banker on 10.11.2008. It bounced this time as
well because of insufficient funds. Another legal notice dated 17.12.2008
was sent to the appellant. As this legal notice also did not invoke any
positive response from the appellant, this time the complainant filed the
complaint dated 7.01.2009. The summary of the aforesaid events,
accordingly, is as under:-

| Date |Events |
| 25.10.2008 |Cheque presented |
| 27.10.2008 |Legal Notice |
| 10.11.2008 |2nd presentation |
| 17.12.2008 |Legal Notice |
| 07.01.2009 |Complaint filed |

7. On the basis of the aforesaid facts, the submission of Mr. Mishra was
that the complaint was not filed within the limitation prescribed under
Section 138 read with Section 142 of the N. I. Act. To appreciate this
contention, we first state the aforesaid provision which reads as under:

“138. Dishonour of cheque for insufficiency,etc. of funds
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 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 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 be extended to two years, or with fine which may extend
to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

(a) the cheque has been presented to the bank within a period of
six months from the date on which it is drawn or within the period
of its validity, whoever is earlier;

(b) 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; and

(c) the drawyer 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 fifteen days of the
receipt of the said notice.

142. Cognizance of offences.- Notwithstanding anything contained in
the Code of Criminal Procedure, 1973 (2 of 1974)-

(a) no court shall take cognizance of any offence punishable under
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:

[Provided that the cognizance of a complaint may be taken by the
Court after the prescribed period, if the complainant satisfies the
Court that he had sufficient cause for not making a complaint
within such period.]

(c) no court inferior to that of a Metropolitan Magistrate or a
Judicial Magistrate of the first class shall try any offence
punishable under section 138.]”
8. In the present case, the complainant had not filed the complaint on
the dishonor of the cheque in the first instance, but presented the said
cheque again for encashment. This right of the complainant in presenting
the same very cheque for the second time is available to him under the
aforesaid provision. This aspect is already authoritatively determined by
this Court in MSR Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC 177.
Specific question which was formulated for consideration by the Court and
referred to three Judge Bench in that case, the following question for
determination was as under:

“Whether the payee or holder of a cheque can initiate
prosecution for an offence under Section 138 of the Negotiable
Instruments Act, 1881 for its dishonor for the second time, if he
had not initiated any action on the earlier cause of action?”
This question was answered by the three Judge Bench in the aforesaid
matter in the following manner:

“What is important is that neither Section 138 nor Section
142 or any other provision contained in the Act forbids the
holder or payee of the cheque from presenting the cheque for
encashment on any number of occasions within a period of six
months of its issue or within the period of its validity,
whichever is earlier. That such presentation will be perfectly
legal and justified was not disputed before us even at the Bar by
the learned counsel appearing for the parties and rightly so in
the light of the judicial pronouncements on that question which
are all unanimous. Even Sadanandan case, the correctness whereof
we are examining, recognized that the holder or the payee of the
cheque has the right to present the same any number of times for
encashment during the period of six months or during the period
of its validity, whichever is earlier.”
9. To this extent, there cannot be any quarrel and the act of the
complainant in presenting the cheque again cannot be questioned by the
appellant. However, we find that when the cheque was presented second time
on 10.11.2008 and was returned unpaid, legal notice for demand was issued
only on 17.12.2008 which was not within 30 days of the receipt of the
information by him from the Bank regarding the return of the cheque as
unpaid. Non-issuance of notice within the limitation prescribed has
rendered the complaint as not maintainable.

10. In MSR Leathers (supra), this Court analyzed the provisions of
Sections 138 and 142 of the N.I. Act in the following manner:

“The proviso to Section 138, however, is all important and
stipulates three distinct conditions precedent, which must be
satisfied before the dishonor of a cheque can constitute an
offence and become punishable. The first condition is that the
cheque ought to have been presented to the bank within a period
of six months from the date on which it is drawn or within the
period of of its validity, whichever is earlier. The second
condition is that the payee or the holder in due course of the
cheque, as the case may be, ought to make 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. The third condition is that the drawer
of such a cheque should have failed to make payment of the said
amount of money to the payee or as the case may, to the holder in
due course of the cheque within fifteen days of the receipt of
the said notice. It is only upon the satisfaction of all the
three conditions mentioned above and enumerated under the
proviso to Section 138 as clauses (a), (b) and (c) thereof that
an offence under Section 138 can be said to have been committed
by the person issuing the cheque.
Section 142 of the Negotiable Instruments Act governs
taking of cognizance of the offence and starts with a non
obstante clause. It provides that no court shall take cognizance
of any offence punishable under Section 138 except upon a
complaint, in writing, made by the payee or, as the case may be,
by the holder in due course and 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. In terms of clause (c)
to Section 142, no count inferior to that of a Metropolitan
Magistrate or a Judicial Magistrate of the First Class is
competent to try any offence punishable under Section 138.

A careful reading of the above provisions makes it
manifest that a complaint under Section 138 can be filed only
after cause of action to do so has accrued in terms of clause (c)
of the proviso to Section 138 which, as noticed earlier, happens
no sooner than when the drawer of the cheque fails to make the
payment of the cheque amount to the payee or the holder of the
cheque within 15 days of the receipt of the notice required to be
sent in terms of clause (b) of the proviso to Section 138 of the
Act.

The presentation of the cheque and dishonor thereof within
the period of its validity or a period of six months is just one
of the three requirements that constitutes “cause of action”
within the meaning of Sections 138 and 142 (b) of the Act, an
expression that is more commonly used in civil law than in penal
statutes. For a dishonor to culminate into the commission of an
offence of which a court may take cognizance, there are two other
requirements, namely, (a) service of a notice upon the drawer of
the cheque to make payment of the amount covered by the cheque,
and (b) failure of the drawer to make any such payment within the
stipulated period of 15 days of the receipt of such a notice. It
is only when the said two conditions are superadded to the
dishonor of the cheque that the holder/payee of the cheque
acquires the right to institute proceedings for prosecution under
Section 138 of the Act, which right remains legally enforceable
for a period of 30 days counted from the date on which the cause
of action accrued to him. Therefore, there is, nothing in the
proviso to Section 138 or Section 142 for that matter, to oblige
the holder/payee of a dishonoured cheque to necessarily file a
complaint even when he has acquired an indefeasible right to do
so. The fact that an offence is complete need not necessarily
lead to launch of prosecution especially when the offence is not
a cognizable one. It follows that the complainant may, even when
he has the immediate right to institute criminal proceedings
against the drawer of the cheque, either at the request of the
holder/payee of the cheque or on his own volition, refrain from
instituting the proceedings based on the cause of action that has
accrued to him. Such a decision to defer prosecution may be
impelled by several considerations but more importantly it may be
induced by an assurance which the drawer extends to the holder of
the cheque that given some time the payment covered by the
cheques would be arranged, in the process rendering a time-
consuming and generally expensive legal recourse unnecessary. It
may also be induced by a belief that a fresh presentation of the
cheque may result in encashment for a variety of reasons
including the vicissitudes of trade and business dealings where
financial accommodation given by the parties to each other is not
an unknown phenomenon. Suffice it to say that there is nothing in
the provisions of the Act that forbids the holder/payee of the
cheque to demand by service of a fresh notice under clause (b) of
the proviso to Section 138 of the Act, the amount covered by the
cheque, should there be a second or a successive dishonor of the
cheque on its presentation.”
11. It is thus clear that period of limitation is not to be counted from
the date when the cheque in question was presented in the first instance on
25.10.2008 or the legal notice was issued on 27.10.2008, inasmuch as the
cheque was presented again on 10.11.2008. For the purposes of limitation,
in so far as legal notice is concerned, it is to be served within 30 days
of the receipt of information by the drawyee from the bank regarding the
return of the cheque as unpaid. Therefore, after the cheque is returned
unpaid, notice has to be issued within 30 days of the receipt of
information in this behalf. That is the period of limitation provided for
issuance of legal notice calling upon the drawer of the cheque to make the
payment. After the sending of this notice 15 days time is to be given to
the noticee, from the date of receipt of the said notice to make the
payment, if that is already not done. If noticee fails to make the
payment, the offence can be said to have been committed and in that event
cause of action for filing the complaint would accrue to the complainant
and he is given one month time from the date of cause of action to file the
complaint.

12. Applying the aforesaid principles, in the present case, we find that
cheque was presented, second time, on 10.11.2008. The complainant, however,
sent the legal notice on 17.12.2008 i.e. much after the expiry of the 30
days. It is clear from the complaint filed by the complainant himself that
he had gone to the bank for encashment the cheque on 10.11.2008 but the
cheque was not honoured due to the unavailability of the balance in the
account. 13. The crucial question is as to on which date the
complainant received the information about the dishonour of the cheque. As
per the appellant the complainant received the information about the
dishonour of the cheque on 10.11.2008. However, the respondent has
disputed the same. However, we would like to add that at the time of
arguments the aforesaid submission of the appellant was not refuted. After
the judgment was reserved, the complainant has filed the affidavit alleging
therein that he received the bank memo of the bouncing of cheque on
17.11.2008 and therefore legal notice sent on 17.12.2008 is within the
period 30 days from the date of information. Normally, we would have
called upon the parties to prove their respective versions before the trial
court by leading their evidence. However, in the present case, as rightly
pointed out by the learned senior counsel for the appellant, the
complainant has accepted in the complaint itself that he had gone to the
bank for encashment of cheque on 10.11.2008 and the cheque was not honoured
due to insufficient of funds, thereby admitting that he came to know about
the dishonor of the cheque on 10.11.2008 itself. It is for this reason
that appellant has filed reply affidavit stating that this is an after
thought plea as no material has been filed before the court below to show
that the bank had issued memo about the return of cheque which was received
by the complainant on 17.11.2008. The specific averment made in the
complaint in this behalf is as under:

“Subsequently the complainant again went to encash the
cheque given by the accused on 10.11.2008 which again bounced due
to unavailability of balance in the accused account.”

It is, thus, clear from the aforesaid averment made by the complainant
himself that he had gone to the bank for encashing the cheque on 10.11.2008
and found that because of unavailability of sufficient balance in the
account, the cheque was bounced. Therefore, it becomes obvious that he had
come to know about the same on 10.11.2008 itself. In view of this
admission in the complaint about the information having been received by
the complainant about the bouncing of the cheque on 10.11.2008 itself, no
further enquiry is needed on this aspect.

14. It is, thus, apparent that he received the information about the
dishonor of the cheque on 10.11.2008 itself. However, he did not send the
legal notice within 30 days therefrom. We, thus, find that the complaint
filed by him was not maintainable as it was filed without satisfying all
the three conditions laid down in Section 138 of the N. I. Act as explained
in para 12 of the judgment in the case of MSR Leathers, extracted above.
15. We have, thus, no hesitation in allowing this appeal and setting
aside the impugned order of the High Court. As a consequence, petition
filed by the petitioner under Section 482, Cr.P.C. is also allowed and the
complaint of the complainant is dismissed.

……………………………..J.
(K.S.Radhakrishnan)

……………………………..J.
(A.K.Sikri)
New Delhi,

December 11, 2013

 

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