M. Sharma and Co. vs S.K. Soni alias Satish Kumar Soni

M.L. Singhal, J.—through this criminal revision filed by M. Sharma and Co. is sought the revision of the order passed by Additional Sessions Judge-V, Faridabad accepting the revision filed by Shri S.K. Soni alias Soni (Respondent herein) and setting aside the order dated 6.5.1995 passed by Judicial Magistrate Class I, Faridabad whereby he had dismissed the complaint instituted u/s 138 of the Negotiable Instruments Act, 1881 (in short, ''the Act'') by Shri S.K. Soni alias Satish Kumar Soni-complainant.

This criminal revision has arisen in the following facts and circumstances:

S.K. Soni alias Satish Kumar instituted complaint u/s 138 of the Act read with Section 420 of the Indian Penal Code against M. Sharma and Co. through its proprietor on the allegations that the accused took loan of Rs. 42,000/ - from the complainant on 1.12.1991 and agreed to repay the loan amount with reasonable rate of interest. The accused had friendly terms with the complainant. In lieu of the loan amount, the accused gave cheque No. 052451 dated 15.6.1992 in the sum of Rs. 42,000/ - to the complainant drawn on Syndicate Bank, Faridabad. Complainant (S.K. Soni alias Satish Kumar Soni) present this cheque to his banker i.e. State Bank of Patiala, Mathura Road, Faridabad, which was dishonoured by Syndicate Bank with the remarks ''insufficient funds''. Complainant was conveyed the cause of dishonour of cheque vide memo dated 17.6.1992. Thereafter, he informed the accused about the dishonour of the cheque. The accused assured him that in case the cheque was presented over again, the same would be honoured by the bank namely the Syndicate Bank. Acting upon this assurance, the complainant presented the cheque over again but the same was dishonoured vide memo dated 22.9.1992. Complainant sent a legal notice to the accused through his counsel on 28.8.1992 asking for the payment of the amount of the cheque within fifteen days of the receipt of the said legal notice. The accused failed to make payment of the amount of the cheque. S.K. Soni alias Satish Kumar instituted this complaint on 19.10.1992.

The Magistrate made preliminary enquiry into the allegations of the complaint. After making preliminary enquiry into allegations of the complaint, the accused was ordered to be summoned u/s 138 of the Act by the Chief Judicial Magistrate, Faridabad vide order dated 23.7.1993. The accused appeared in Court in response to the process issued to him for appearance. Notice was given to the accused as envisaged u/s 251 of the Code of Criminal procedure setting out the allegations made in the complaint and calling upon him to show cause why he be not convicted u/s 138 of the Act. The accused feeling aggrieved of this order dated 1.3.1994 impugned the same before Sessions Judge, Faridabad. Learned Additional Sessions Judge vide order dated 6.7.1994 set aside the impugned order and remanded back the case to the Court of Magistrate with a direction to start proceedings from the stage of the hearing on the point of notice in terms of Section 251 Code of Criminal Procedure Vide order dated 6.5.1994, Judicial Magistrate 1st Class, Faridabad found no merit in the complaint in view of the fact that presentment of the cheque for the second time could not enlarge the limitation as there was no fresh cause of action with the presentment of the cheque over again. Presentation of the cheque over again did not give any fresh right to the complainant to prosecute the accused. On the cheque which was dishonoured on second presentation, the Magistrate dismissed the complaint and discharged the accused.

Aggrieved from this order dated 6.5.1995 passed by Judicial Magistrate 1st Class, Faridabad, complainant S.K. Soni went in revision to the Court of Additional Sessions Judge, Faridabad which was accepted vide order dated 14.3.1997. Vide order dated 14.3.1997 order dated 6.5.1995 was set aside and the parties were directed to appear before the Magistrate for further proceedings in the case. Aggrieved from this order dated 14.3.1997 passed by Additional Sessions Judge, Faridabad, M. Sharma and Co. accused has come up in revision to this Court u/s 401 Code of Criminal Procedure.

I have heard the learned Counsel for the revision-Petitioner (accused), learned Counsel for the Respondent (complainant) and have gone through the records.

In this petition only question of law involved is whether cause of action arose to the complainant only on the dishonour of the cheque when it was presented for the first time or the said cause of action was a continuing cause of action and the complainant could present the cheque over and over again within the period of six months of its issue and he could base the cause of action on any of the said dishonours.

Section 138 of the Act reads as follows:

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 the account for the discharge, in whole or in part, of any debt or other liability, is returned y the bank unpaid, either because 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 extend to one year, 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, whichever 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 giving a 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 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.

Explanation. for the purposes of this section, "debt or other liability" means a legally enforceable debt or other liability."

Section 142 of the Act reads as follows:

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 u/s 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;

(c) no Court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable u/s 138.

it was submitted by the learned Counsel for the Petitioner that the payee or holder in due course of the cheque as the case may be is required to make a demand for the said amount of money by giving a 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 if drawer of the cheque fails to make 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 said notice, the drawer of the cheque shall be deemed to have committed an offence punishable u/s 138 of the Act and if the payee or holder in due course of the cheque does not make any demand for payment of the said amount of money 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 return of the cheque as unpaid and ignores dishonour of the cheque, no complaint will lie u/s 138 of the Act. It was submitted that such complaint as is contemplated by the provisions of Section 138 of the Act is cognizable only when the same is made within one month of the date on which cause of action arose under Clause (c) of the proviso to Section 138 of the Act. In nutshell his argument was that if the complainant ignored fist dishonour of the cheque and did not file any complaint u/s 138 of the Act, the cause of action became dead and he could not revive the said cause of action on account of subsequent presentment of the cheque. The learned Counsel for the Petitioner relying upon Gulshan Rai v. Darshan Lal, 1994 Important and Selected Judgments (Banking) 687 submitted that Magistrate was justified in dismissing the complaint and discharging the accused when the complainant had taken no action consequent upon the dishonour of the cheque on its presentment on the earlier occasion.

In support of this submission that cause of action died if not availed of after the first dishonour of the cheque and cause of action did not become revived with the presentment of the cheque over again on its dishonour, he drew my attention to judgments rendered in M/s. K.P. Textiles an Anr. v. M/s. Malook Chand Naresh Chand (1992) 19 CLT 388, Mrs. Rita Khanna v. M/s. R.S. Traders (1993) 20 CLT 237 and Karnail Singh v. Ramesh Kumar Gupta (1994) 21 CLT 209. It was submitted by him that limitation had once begun, the complainant was required to give notice to the accused in writing regrading dishonour of the cheque within fifteen days of the receipt of information by him from the bank regarding the dishonour of the cheque. Complainant was required to file complaint u/s 138 of the Act within fifteen days of the receipt of the said notice. It was submitted that if the complainant did not do so, he could not keep the cheque in his drawer and present it again within the period of its validity so as to have fresh cause of action. According to him the proceedings launched on the basis of subsequent dishonour of the cheque are wholly without jurisdiction and the complaint as also the consequential proceedings are liable to be quashed.

Learned Counsel for the Respondent, on the other hand, submitted that the complaint was well within his right to present the cheque to the bank again and again after the same was dishonoured within the period of its validity i.e. six months and could give notice u/s 138 of the Act after last dishonour and thereafter could institute criminal proceedings if payment had not been made after notice. It was submitted by him that in this case, the accused had assured the complainant that if he presented the cheque over again, the same would be honoured by his banker and it was then that he presented the cheque which was dishonoured by the bank. He did not take note of the earlier dishonour of the cheque because the accused had assured him that he would receive payment if he presented the cheque over again. In support of this submission he drew my attention to Lakshmanan v. Shivarama Krishnan 1995 (2) RCR 23 (F.B.), where it was held by Full Bench of Kerala High Court that where a cheque was presented for second time and against dishonoured by the bank and fresh cause of action accrued to the payee to file complaint u/s 138 of the Act. Criminal remedy could not be restricted to first cause of action. Whether a payee or holder in due course of dishonour of cheque could validly initiate prosecution for offence u/s 138 of the Act with reference to second cause of action if he had not taken advantage of first cause of action accrued to him and prosecute the offender any time, was answered by the Full Bench of Kerala High Court in affirmative. Section 142(b) of the Act only prescribes the period of limitation for filing a complaint with reference to cause of action already accrued. The effect of the provisions is only to bar a complaint filed on the basis of 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 actions to complete fresh cause of action in accordance with law so long as the cheque remains unpaid and filing a complaint on the basis of fresh cause of action created notwithstanding the bar against filing of complaint on the basis of earlier cause of action. "Successive causes of action may arise on the basis of one and the same cheque for filing complaint u/s 142 subject to the restrictions contained in Sections 138 and 142 of the Act. So long as cheque remains unpaid and payee or holder in due course is able to establish all the ingredients of the offence and satisfy other requirements of the provisions contained in Sections 138 and 142 of the Act a complaint will be maintainable in spite of the fact that he has not filed any complaint in time on the basis of one or more causes of action accrued to him earlier. Even if successive causes of action arise only one prosecution and conviction or acquittal is possible in view of Section 300 Code of Criminal Procedure since the complaint is bound to be on the basis of the dishonoured of cheque which is bound to be produced in Court as the basis for the prosecution. The cause of action may get barred or become ineffective if no complaint is filed in time as held by Full Bench of Kerala High Court in Lakshmanan v. Shivarama Krishnan (supra). In Stalin Shox (P) Ltd. Co. v. Auto Tensions 1994 (1) RCR 3, the learned Single Judge of the Delhi High Court also took the same view that if a cheque was dishonoured once and was presented again and the same was dishonoured again notice issued within 15 days of the last dishonour would be valid. In Madan Mohan v. K.M. Menon and Ors. 1993 (1) RCR 233, learned Single Judge of the Delhi High Court held that drawee can present the cheque to the bank more than once within the period of validity of the cheque. Cause of action for complaint would arise only when pursuant to the dishonour of the cheque notice was issued and the drawer of the cheque failed to make payment.

In my opinion, which is supported by catena of authorities cited above, the view taken by the learned Additional Sessions Judge, Faridabad impugned through this criminal revision is correct and no exception can be taken to this order. So, this criminal revision petition fails and is dismissed. Nothing said above is meant to be taken an expression of opinion so far as merits of the complaint are concerned, which are to be adjudicated upon by the trial Magistrate. Now, the Magistrate will proceed further with the trial of the case.