Ku. Premlata Chaddha vs Surendra Kumar Soni

S.P. Khare, J.

This order will also govern the disposal of Criminal Appeal No. 1964 of 1997. This appeal has been filed by the complainant against judgment dated July 17, 1995, in Criminal Case No, 844 of 1995, passed by Shri Sanjay Shukla, Judicial Magistrate First Class, Jabalpur, by which the complaint has been held to be barred by limitation as provided in Section 142(b) of the Negotiable Instruments Act, 1881 (hereinafter to be referred to as "the Act").

The facts relevant for decision of the point in issue as stated in the complaint are that accused Surendra Kumar Soni issued a cheque dated April 1, 1993, for Rs. 27,087 in favour of the complainant. It was drawn on the State Bank of India, Kamla Nehru Branch, Jabalpur. It was presented by the complainant for payment, but it was dishonoured vide memo dated April 6, 1993, for want of sufficient funds. The complainant sent the notice dated April 10, 1993, to the accused to pay the amount of the cheque. This notice was received by the accused. He requested the complainant to re-present the cheque to the bank for payment. It was represented but it was again dishonoured for the same reason on August 13, 1993. The complainant again sent the notice dated August 16, 1993, to the accused calling upon him to pay the amount of the cheque within 15 days of the receipt of the notice. It was duly served upon the accused. He failed to make payment of the amount, and therefore, the complaint u/s 138 of the Act was filed on September 9, 1993.

The trial Magistrate held that the complaint is barred by limitation u/s 142(b) of the Act as it was not filed within one month of the date on which the cause of action arose. In the opinion of the learned Magistrate the cause of action arose when the payment was not made by the accused within 15 days of the receipt of the first notice dated April 10, 1993, and there could not be fresh accrual of the cause of action on the second presentation of the cheque, its dishonour and the second notice.

The question of law that falls for consideration in these appeals is whether cause of action for making complaint can arise on the basis of successive bouncing of the cheque ?

Section 138 of the Act introduced by an amendment in the year 1989, creates a new offence when a cheque is returned by the bank unpaid either because the amount of money standing to the credit of the account of the drawer is insufficient to honour the cheque or it exceeds the amount arranged to be paid from the account of the drawer. The other ingredients of the offence as laid down in the proviso are (a) the cheque must be 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 whichever is earlier, (b) the payee must make a demand for payment of the amount of the cheque by giving a notice to the drawer of the cheque within fifteen days after the cheque is returned, and (c) the drawer must have failed to pay the amount demanded within fifteen days of the receipt of the notice. There is a further requirement in Section 142(b) of the Act that the complaint must be made within one month of the date of the expiry of the period of fifteen days of failure to make the payment of the cheque by the drawer.

A cheque can be presented for payment any number of times until it has become stale. If it is dishonoured for a second or subsequent time the payee may serve a demand notice again on the drawer as required by law for payment of the amount of the cheque and on his failure to do so may file a complaint within one month of the fresh cause of action. There is no provision precluding the payee from doing so. Even, if he does not take steps to file complaint when the cheque is dishonoured for the first time he can do so subsequently as a second innings after complying with the procedural requirements within the stipulated time. Successive causes of action can arise on repeated presentation and dishonour of the cheque. It cannot be said that more than one cause of action on the same cheque is not contemplated. Such a construction would neither suppress the mischief nor advance the remedy. That would be against the plain meaning of the statutory provision.

The trial Magistrate relied upon the two decisions of the Kerala High Court in K. Chellakkannu Nadar Vs. Chenkal M.R. Simon and Another, and N. C. Kumaresan v. Ameerappa [1992] 74 Comp Cas 848 : [1992] 1 Cri 23 (Ker), but these have been overruled by the Full Bench of that High Court in S.K.D. Lakshmanan Fireworks Industries and Another Vs. K.V. Sivarama Krishnan and Another, . The Full Bench has held that there is nothing in the provisions in Chapter XVII of the Act which will preclude the creation of successive causes of action on the basis of one and the same cheque. Section 142(b) only prescribes a period of limitation for filing a complaint with reference to a cause of action already accrued. The effect of the provision is only to bar a complaint filed on the basis of a cause of action which arose one month prior to the date of filing of the complaint. It cannot be construed as a provision barring the payee or holder in due course from taking necessary action to complete a fresh cause of action in accordance with law so long as the cheque remains unpaid and filing a complaint on the basis of the fresh cause of action so created notwithstanding the bar against filing a complaint on the basis of the earlier cause of action. Successive causes of action may arise on the basis of one and the same cheque for filing a complaint u/s 142 subject to the restrictions contained in Sections 138 and 142 of the Act, Deferment of prosecution or even omission to prosecute the offender at the earliest opportunity and availing of a cause of action which accrues to him subsequently may not in any way be considered as an act prejudicial to the interest of the drawer or an act intended to harass or embarrass the drawer of the cheque. If at all, such an act can only be considered as an action advantageous to the drawer who is not in a position to pay. Repeated presentation and creation of fresh causes of action cannot also be considered as an action intended to embarrass or harass the drawer as he can at any time pay and avoid the threat of prosecution effectively if he chooses to do so. I am in respectful agreement with the Full Bench decision.

The Karnataka High Court has recently taken the same view in G. Ekantappa Vs. State of Karnataka and another, . It has summarised the legal position thus : "The mere issuance of cheque or its bouncing for insufficiency of funds does not constitute an offence u/s 138 of the Act. An offence is constituted only after a notice of demand u/s 138(b) is served on the drawer and on his failure to make payment within fifteen days. Once there is failure, the offence continues till the amount remains unpaid. Section 142 only imposes certain restrictions in taking cognizance of the offence and nothing more. Therefore, an offence u/s 138 of the Negotiable Instruments Act is in the nature of a continuing offence and as such the complaint based on the second or a subsequent dishonour of the cheque is certainly maintainable in law, notwithstanding the fact that the payee does not avail of the first opportunity to file the complaint after its first dishonour and thereafter notice u/s 138(b) of the Act being served on the drawer of the cheque."

The approach of the Rajasthan High Court is the same in Lallu Lal Agrawal Vs. Damodar Prasad Gupta, when it holds that the right of the holder of the cheque to prosecute the drawer may be exercised even after second or third refusal. The other decisions need not be cited as they have been referred to in the Full Bench decision of the Kerala High Court (S. K. D. L. Fireworks Industries v. K.V. Sivarama Krishnan [1995] 84 Comp Cas 447).

In the result this appeal is allowed. The impugned judgment is set aside and the case is remanded to the trial Magistrate for fresh decision on the merits on the basis of the evidence already adduced by both the sides.