Mrs. R. Kala vs Mrs. Usha Sampath

V. Kanagaraj, J.—The above Criminal Original Petition has been filed by the petitioner praying to quash the proceedings in C.C. No. 1149

of 2002 on the file of the Court of XVIII Metropolitan Magistrate, Saidapet, Chennai.

On a perusal of the materials placed on record, it comes to be known that the respondent herein has filed a private complaint against the

petitioner before the court of XVIII Metropolitan Magistrate, Saidapet, Chennai, under sections 138 and 142 of the Negotiable Instruments Act

on averments that the petitioner has borrowed a sum of Rs. 1,75,000/- for her business development; that for discharging the liability, the petitioner

issued three cheques dated 5.7.2001 respectively for a sum of Rs. 1,00,000/-, Rs. 50,000/- and Rs. 25,000/- in favour of the respondent; that

when she presented the above said cheques in Nedunkadi Bank Ltd.,Mylapore Branch, on 5.7.2001, they were dishonoured on the same day

with an endorsement ""Exceeds arrangements""; that at the request of the petitioner, the respondent again represented the 3 cheques on 27.11.2001

for collection, but again they were returned on the same day with an endorsement ""Accounts called up""; that the respondent sent a lawyer''s notice

dated 10.12.2001 and the petitioner acknowledged the receipt of the notice, but she did not come forward to settle the cheques amount; that the

learned XIII Metropolitan Magistrate, Saidapet has taken on file the above complaint in C.C. No. 1149 of 2002.

Now the petitioner has come forward with this Criminal Original Petition praying to quash the proceedings in C.C. No. 1149 of 2002 on the file

of the Court of XVII Metropolitan Magistrate, Saidapet,Chennai on grounds that the cause of action for filing the present complaint has been

lapsed since the period of one month after service of notices dated 11.7.2001 on the petitioner/accused had expired at the time of taking

cognizance of the offence alleged; that the respondent/complainant issued 2nd statutory notice u/s 138 of the Negotiable Instruments Act on

10.12.201 after representing the cheques, which were the subject matter of earlier statutory notice dated 11.7.2001; that in case of cheque

dishonour, the cause of action arises only once; that Section 138(c) r/w 142(b) envisages only one cause of action in respect of one and the same

cheque; that since the respondent/complainant has forfeited her right to again present the cheques as such the complaint is barred by time.

In the counter affidavit filed by the respondent besides opposing the prayer for quashing the proceedings, she would submit that the petitioner

places reliance upon a notice issued under date 11.7.2002 said to have been issued by Mr. S. Dhasaiya, Advocate purportedly on her behalf and

that no such notice was sent on her instructions; that in the complaint there is no reference at all much less the notice dated 11.7.2001, was

addressed to the petitioner following the receipt of the dishonoured cheques on 7.7.2001 and it is clearly averred in the complaint that the notice

issued was on 10.12.2001 after the return of the cheques on 27.11.2001 following the representation of the cheques as per the request of the

petitioner; that the notice dated 10.12.2001 is the only statutory notice sent to the petitioner; that the notice alleged to have been sent on

11.7.2001 and now relied upon by the petitioner is her own creation; that to the statutory notice dated 10.12.2001, the respondent sent a reply on

19.12.2001 and that the reply notice is eloquently silent about any earlier notice having been sent to her on behalf of the petitioner and that the

cause of action for the present complaint arose for the first time on the expiry of the fifteen days from the date of receipt of the statutory notice

dated 10.12.2001 and the present complaint has been lodged within 45 days thereof; that in any event, the question whether there was an earlier

notice or not could be decided only by the trial Court; that the petitioner is trying to protract the proceedings against her somehow or other and on

such averments she would pray to dismiss the above Criminal Original Petition.

During arguments, the learned counsel appearing on behalf of the petitioner would only lay emphasis on the factual position of the case as put up

in the above criminal original petition and would seek for the relief extracted supra. But, the petitioner in the grounds of the petition would submit a

Full Bench judgment of the Kerala High Court delivered in S.K.D. Lakshmanan Fireworks Industries and Another Vs. K.V. Sivarama Krishnan

and Another, and would submit that only for the first dishonour and not for the subsequent dishonour, can a prosecution u/s 138 of the Negotiable

Instruments Act could be instituted as per Section 138(c) r/w. 142(b) which envisages only one cause of action in respect of one and the same

cheque.

The learned counsel for the petitioner would also cite another judgment of the Honourable Apex Court delivered in Sadanandan Bhadran Vs.

Madhavan Sunil Kumar, wherein it has been held:

A cheque can be presented any number of times during the period of its validity by payee. On each presentation of the cheque and its dishonour,

a fresh right - and not cause of action - accrues in his favour. He may, therefore, without taking pre-emptory action in exercise of his such right

under Cl.(b) of S. 138, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque.

But, once he gives a notice under Cl.(b) of S. 138 he forfeits such right for in case of failure of the drawer to pay the money within the stipulated

time he would be liable for the offence and the cause of action for filing the complaint will arise. Needless to say, the period of one month for filing

the complaint will be reckoned from the day immediately following the day on which the period of fifteen days from the date of the receipt of the

notice by the drawer, expires.

Consequent upon the failure of the drawer to pay the money within the period of 15 days as envisaged under Cl.(c) of the proviso to S. 138, the

liability of the drawer for being prosecuted for the offence he has committed arises, and the period of one month for filing the complaint under S.

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 S. 142 arises and can arise only once.

On the other hand, the learned counsel appearing on behalf of the respondent, during his arguments, would also cite a judgment of the

Honourable Apex Court delivered in Smt. Chand Dhawan Vs. Jawahar Lal and others, wherein it has been held:

The High Court can exercise its inherent jurisdiction of quashing a criminal proceeding only when the allegations made in the complaint do not

constitute an offence or that the exercise of the power is necessary either to prevent the abuse of the process of the court or otherwise to secure

the ends of justice. No inflexible guidelines or rigid formula can be set out and it depends upon the facts and circumstances of each case wherein

such power should be exercised. When the allegations in the complaint prima facie constitute the offence against any or all of the accused in the

absence of materials on record to show that the continuance of the proceedings would be an abuse of the process of the court or would defeat the

ends of justice, the High Court would not be justified in quashing the complaint.

In consideration of the facts pleaded, having regard to the materials placed on record and upon hearing the learned counsel for both, the short

question that is to be answered in the case in hand is `whether in a cheque bounce case on account of insufficiecy of funds, as contemplated under

Sections 138 to 142 of the Negotiable Instruments Act, the payee or the holder of he cheque is entitled to exercise his right to proceed against the

drawer on a second presentment of the cheque and bounced for want of sufficient funds in the bank so as to honour the cheque in spite of having

already sent the same for collection and dishonoured for the reason of insufficiency of funds?''

So far as Section 138 of the Negotiable Instruments Act is concerned, on presentment of the cheque, as contemplated u/s 138(a), in

accordance with Section 138(b), the payee or the holder in due course of the cheque must make a demand for the payment of the cheque amount

by issuing a notice in writing to the drawer within thirty days of the receipt of information from the bank regarding the return of the cheque as

unpaid. On such compliance being done and in spite of such notice issued, if the drawer fails to make the payment of the said amount to the payee

or the holder in due course within 15 days of the receipt of the said notice as it is required u/s 138(c) of the Act, the cause of action would arise.

If the above requirements are not complied with, within one month from the date on which the cause of action has arisen u/s 138(c), the

complaint has to be lodged before the competent court of law as stipulated u/s 142(b) of the Act.

These are the relevant provisions of law that are to be taken care of while filing a complaint on dishonour of cheques for prosecution of the

drawer u/s 138 of the Negotiable Instruments Act. The question that is to be decided in the case in hand is `in spite of the cheques having been

presented earlier once and dishonoured for the reason of insufficiency of funds, whether issuing the notice contemplated u/s 138(b) of the Act on a

second presentment of the same cheque, would a second cause of action arise''?

In this case, the petitioner would allege that on the first presentment of the cheques before the Bank on 5.7.2001, they were dishonoured with

an endorsement ""exceeds arrangements"" based on which the respondent had also issued notices dated 11.7.2001 on all the three bounced

cheques as contemplated u/s 138(b) of the Negotiable Instruments Act and therefore the cause of action had arisen from the date on which the 15

days time contemplated therein lapsed from the date of receipt of the said notice by the drawer and thereafter within one month, the respondent

should have come forward to file the complaint before the Magistrate concerned in compliance of Section 142(b) of the Negotiable Instruments

Act and therefore a second cause of action would not arise as the respondent has done in the case in hand, on a re-presentment of all the three

cheques again on 27.11.2001 and issuing a second notice on 10.12.2001 which have absolutely no legal backing and hence would seek to quash

the proceeding initiated by the respondent and taken on file by the Court of XVIII Metropolitan Magistrate, Saidapet, Chennai in C.C. No. 1149

of 2002.

The respondent has taken the stand that he did not issue the notice dated 11.7.2001 at all to the petitioner and it has not been issued on her

instructions and therefore the said notice has no bearing on the case registered based on the notice dated 10.12.2001 on account of the three

cheques having been bounced and returned unpaid on presentment of the same on 27.11.2001 and hence would seek to dismiss the above

criminal original petition.

Whether the notice has been issued earlier on the instructions of the petitioner as it is alleged on the part of the petitioner herein could be

decided once it is ascertained whether the cheque had already been sent for collection and in the case in hand there is no denying of the fact by the

respondent that the cheques were earlier sent for collection on 5.7.2001 and therefore the notice issued consequently on 11.7.2001 could only be

true and the respondent cannot take up the defence that in spite of having sent the cheque for collection and the same having been returned

dishonoured for the insufficiency of funds on 5.7.2001, the notice dated 11.7.2001 was not issued on her instructions and this plea has been taken

by the respondent only to avoid the cause of action that arose requiring compliance particularly as contemplated under Sections 138(b),(c) and

142(b) of the Negotiable Instruments Act which would follow. Further, just for the simple reason that the respondent has taken up the defence that

she has not issued any notice, the legal obligation would not get either extinguished or a second opportunity is given under law particularly as given

expression by the judgments of the Full Bench of the Kerala High Court and that of the Honourable Apex Court as brought forth on the part of the

petitioner above and giving effect to all these legalities, the only decision that could be arrived at in the above criminal original petition is that no

second cause of action will run since the respondent has already exhausted or allowed to lapse the time permitted by law in filing the complaint

within such time particularly as contemplated under Sections 138(b) and 142(b) of the Act and therefore this Court is left with no option but to

quash the proceedings pending on the file of the Court of XVIII Metropolitan Magistrate, Saidapet, Chennai in C.C. No. 1149 of 2002 initiated

by the respondent on the second presentment and dishonour of the cheques on 27.11.2001 and followed by the notice dated 10.12.2001 which

are absolutely bereft of any effect or legal consequence and hence the following order:

In result,

(i) the above criminal original petition succeeds and the same is allowed.

(ii) The proceedings in C.C. No. 1149 of 2002 pending on the file of the Court of XVIII Metropolitan Magistrate, Saidapet, Chennai are hereby

quashed.

Consequently, Crl.M.P. NO. 373 of 2003 is also dismissed.