R.M. Kumar vs A.J. Prabhakaran

M. Karpagavinayagam, J.—The interesting question that arises for consideration in these revisions is whether the payee or holder in due

course of a dishonoured cheque can validly initiate prosecution for an offence under S. 138 of the Act with reference to the second cause of action

if he had not taken advantage of the first cause of action accrued to him and prosecuted the offender in time?

In other words, the question is can successive cause of action for prosecution arise on the basis of the one and the same cheque, if the payee or

holder in due course has failed to initiate prosecution on the first cause of action?

In other words, whether the dishonour of the cheque on each occasion of its presentation and on each occasion of non payment of the cheque

amount after statutory notice, gives rise to a fresh cause of action within the meaning of S. 142(b) of the Act?

Since the parties as well as issue raised in these revisions are same, these revisions are disposed of by a common order.

Cr.R.C. No. 730 of 1996 is against the judgment in C.C. No. 42/95 on the file of Judicial Magistrate No. 1, Tindivanam convicting the

petitioner for the offence under S. 138 of the Negotiable Instruments Act, as confirmed by the lower appellate court in C.A. No. 17/96 on the file

of Additional Sessions Judge, Villupuram, sentencing him to undergo rigorous imprisonment for six months and to pay a fine of Rs. 5000/- in

default to undergo simple imprisonment for three months.

Crl.R.C. No. 731 of 1996 is directed against the order of enhancement of sentence raising fine amount from Rs. 5000/- to Rs. 1,10,000/- in

default to undergo simple imprisonment for 22 months made in C.A. No. 47 of 1996 on the file of the Additional Sessions Judge, Villupuram.

The case of the prosecution is this:

The cheque for Rs. 1,00,000/- which was issued by the petitioner/accused in favour of the respondent, was dishonoured on 17.10.94. On

26.10.94 the respondent/complainant sent a statutory notice demanding the cheque amount. On 3.11.94 this notice was received by the

petitioner/accused. Despite the receipt of notice no payment was made. However, the complainant/respondent again presented the same cheque

on 30.12.94 and the same was also dishonured on 3.1.95. Since the intimation about the dishonour was received by the complainant on 7.1.95, he

sent another statutory notice on 11.1.95. However, the said notice was returned as refused. Taking the refusal as a service of notice, the

complainant/respondent filed the present complaint before the trial Court as there was no payment within 15 days from the date of the said service.

After trial, the lower Court found the petitioner guilty for the offence under S. 138 of the Negotiable Instruments Act. The appellate court not

only confirmed the verdict of the trial Court but also enhanced the sentence as referred to above.

On being aggrieved over these orders of the lower appellate court, confirming the conviction and enhancing the sentence, these two revisions

have been filed by the petitioner/accused. In this context, the question framed above has been raised.

It is not disputed that the complainant/respondent has not chosen to file complaint for the first dishonoured cheque on 17.10.94. There is also

no dispute in the fact that the present complaint has been filed only with regard to the dishonour of the cheque on 3.1.95. Thus it is clear, the

complainant has not chosen to prosecute the petitioner/accused for the cause of action arose on non payment of the cheque amount which was

dishonoured on 17.10.94. The respondent/complainant has thought it fit to prosecute the petitioner/accused only on the basis of the second cause

of action which arose on the non payment of the cheque amount which was dishonoured on 3.1.95. In the light of these admitted facts, I shall now

consider whether the complaint is maintainable on a fresh cause of action, though there is no complaint filed by the respondent/complainant for the

first cause of action.

At this juncture, it is useful to refer S. 142 of the Negotiable Instruments Act which reads as under:

Cognisance of offences:

Notwithstanding anything contained in the Code of Criminal Procedure, 1973(2 of 1974)

(a) no Court shall take cognisance of any offence punishable under 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 S. 138;

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under S. 138.

The reading of the Section would make it clear that the court can take cognisance of a written complaint for an offence under S. 138 of the Act if it

is made within one month of the date on which the cause of action arises under clause(c) of the proviso to S. 138. In order to prosecute a person

for an offence under S. 138 of the Act, the following facts have to be proved:-

(1) that the cheque was drawn for payment of an amount of money for discharge of a debt or liability and the cheque was dishonored ;

(2) that the cheque was presented within the prescribed period;

(3) that the payee made a demand for payment of the money by giving a statutory notice in writing to the drawer within the stipulated period; and

(4) that the drawer failed to make the payment within stipulated period after service of notice.

It is manifest that each of the above facts would constitute a part of cause of action. However, S. 142(b) of the Act would refer to only one

fact which would give rise to the cause of action, that is the failure to make the payment within 15 days from the date of the receipt of the notice. In

other words, only consequent upon the failure of the drawer to pay the money within the period of 15 days as contemplated under clause (C) of

the proviso to S. 138, the liability of the drawer for being prosecuted arises. Once such a cause of action arises, the complaint has to be filed within

a period of one month under S. 142 of the Act. The combined reading of the Ss. 138 and 142 of the Act would go to show that the cause of

action within the meaning of S. 142(C) arises only once because thereafter the complaint has to be filed within a period of one month being the

period of limitation and if the said period is allowed to be expired, the court could not be empowered to take cognizance under S. 142 of the Act.

To reiterate, the Ss. 138 and 142 of the Act taken together clearly provide as to when the cause of action would arise. It arises only when

notice in writing is given within 15 days from the date of receipt of information of dishonour of the cheque as unpaid from the bank and non

compliance of the demand made within 15 days of the receipt of the notice. In other words, cause of action is not mere presentation of the cheque,

whereas the cause of action is the non compliance of the demand for cheque amount within the stipulated period.

To put it differently, it could be said, that there is no prohibition for the presentation of the cheque any number of times, within the period of

validity as there is no cause of action within a period of six months. The right to present the cheque within the said period on number of occasions

is not taken away, since the validity of the period of the limitation is six months. But the cause of action for preferring a complaint can arise only

once, after issue of statutory notice when there was non compliance of the demand within 15 days from the date of the receipt of the said notice.

So long as the period of statutory notice does not expire, there can be no cause of action for the payee to make the drawer liable for the

offence under S. 148 of the Act. The mere dishonour of cheque, and, if dishonoured, its intimation does not make out an offence because the

drawer can stall the cause of action being arisen by paying the amount of cheque within time. It is only the failure to make the payment gives rise to

the cause of action under Clause (C) of the proviso to S. 138.

Once cause of action has arisen, the limitation shall begin to run and then it cannot be stalled. It cannot also be stalled by presenting the cheque

again so as to have fresh cause of action and fresh limitation. Once the demand in pursuance of statutory notice was not complied with, within 15

days from the date of the receipt of the notice, the offence becomes complete. Then there cannot be any second cause of action by presentation of

the cheque again and issuance of second notice.

The reading of the section clearly reveals that more than one cause of action on the same cheque is not contemplated since the institution of the

prosecution is prohibited after one month of the cause of action. If more than one cause of action on the same cheque is visualized though there is

no such provision in the Act, its consequence would be that the same drawer of the cheque can be prosecuted again and again on the strength of

the same cheque.

The offence under S. 138 of the Act cannot be equated to an offence under IPC or any other Act. It is a new offence based on a cheque

returned unpaid and subject to certain conditions. The offender as per S. 138 of the Act is drawer of the cheque. The first condition to constitute

the offence as indicated earlier is that the cheque should have been presented to the bank within six months of its issue. Second condition is that the

payee should have made the demand for payment by registered notice after the cheque is returned unpaid. Third condition is that the drawer

should have failed to pay the amount within 15 days of the receipt of the said notice. Under S. 138 of the Act there is a presumption that the holder

of the cheque has received the same towards the discharge of liability. S. 140 of the Act precludes the drawer from stating that he has no reason to

believe that the cheque would be dishonoured. Under S. 142 of the Act, the complaint can be filed only by payee or holder in due course of the

cheque. The said section imposes further condition that no complaint can be filed after one month of the date on which the cause of action arose.

Thus these restrictions put in chapter XVII of the Act containing Ss. 138 of 142 clearly reveal that unless there is a cause of action which arises

after complying with all the conditions imposed in the relevant sections, the court is not competent to take cognizance of the offence under S. 138

of the Act. Thus it is clear, once the cause of action has arisen under Clause (C) of the proviso to S. 138 for lodging a complaint under S. 142 of

the Act in respect of any cheque the payee will have to proceed on the cause of action so arisen if he wants to prosecute the drawer of the cheque.

He has no option to create another artificial cause of action, subsequently for prosecuting the drawer of the cheque in respect of the same cheque

on which the cause of action has already matured under clause (c) of the proviso to S. 138, as there is no plurality of cause of action.

No doubt, it is true that this Court took a view reported in Shivsankar v. Shantha Kumari (1991 L.W.(Crl) 481), Jawahar v. Pillai (1994 1

Crime 602) and Viswanathan @ Visu v. Chandrasekaran (1995 1 L.W. (Crl.) 264), that even though there is no prosecution for the first cause of

action, there is no prohibition for filing a complaint for the initiation of the prosecution on a second and separate cause of action. However, the

Apex Court, in a recent decision reported in Sadanandan Bhadran Vs. Madhavan Sunil Kumar, held that cause of action would arise only once

when first notice is given and that the complaint for the non compliance of the demand on second notice was not maintainable, though it is

permissible for presentation of the cheque any number of times in the bank within a period of six months.

The relevant observation is as follows:-

The other impediment to the acceptance of the concept of successive causes of action is that it will make the period of limitation under clause(c) of

S. 142 otiose, for, a payee who failed to file his complaint within one month and thereby forfeited his right to prosecute the drawer, can circumvent

the above limitation clause by filing a complaint on the basis of a fresh presentation of the cheque and its dishonour. Since in the interpretation of

statutes the court always presumes that the legislature inserted every part thereof for a purpose and the legislative intention is that every part should

have effect the above conclusion cannot be drawn for, that will make the provision for limiting the period of making the complaint nugatory.

Now, the question is how the apparently conflicting provisions of the Act, one enabling the payee to repeatedly present the cheque and the other

giving him only one opportunity to file a complaint for its dishonour, and that too within one month from the date the cause of action arises, can be

reconciled. Having given our anxious consideration to this question, we are of the opinion that the above two provisions can be harmonised, with

the interpretation that 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 clause(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 clause(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.

Apparently, the Apex Court decision was rendered in the year 1998 whereas the decisions rendered by this Court giving contra view were in

the years 1991 to 1995. In that view of the matter I hold that conviction by the trial Court as confirmed by the appellate Court and the sentence

enhanced by the appellate Court on the basis of the said conviction are illegal and the same are liable to be set aside.

At this stage, both the parties have come to a settlement and filed a memo of compromise before this Court. Before these revisions has been

admitted by this Court, the petitioner have deposited Rs. 1,10,000/- (Rupees One lakh Ten thousand only) amount in the appellate Court. By

virtue of this memo of compromise it is agreed between the parties, out of the amount deposited in the Sessions Court, Villupuram, the

complainant/respondent herein would be permitted to take Rs. 75,000/- and the balance amount could be refunded to the petitioner. The following

is the relevant terms:

It is agreed between the parties that the amount deposited in the Sessions Court at Villupuram is to be taken in part of Rs. 75,000/- by the

respondent/complainant for which the petitioner/accused has no objection. The balance is to be taken by the petitioner/accused.

So, in view of the above memo of compromise, the appellate court is directed to refund the amount deposited in the appellate Court by the

petitioner, to the petitioner after permitting the respondent/complainant herein to receive Rs. 75,000/- out of the said amount.

With these observations the revisions are allowed. Conviction and sentence are set aside. Petitioner is acquitted.