Vijay Kumar Vs. Yashpal Singh and Anr  Insc 296 (2 May 2005)
Pasayat & S.H. Kapadia
out of SLP(Crl.) No. 1507 of 2004) ARIJIT PASAYAT, J.
in this appeal is to the legality of the judgment rendered by a learned Single
Judge of the Punjab and Haryana High Court holding that the proceedings
initiated on the basis of a complaint alleging infraction of Section 138 of the
Negotiable Instrument Act, 1881 (in short the 'Act') was not maintainable.
Therefore, the proceedings were quashed, allowing the petition filed under
Section 482 of the Code of Criminal Procedure, 1973 (in short 'the Code').
facts filtering out unnecessary details are as under:
complaint was filed by the appellant alleging that in the year 1995 respondent
no.1 had issued a cheque for a sum of Rs.5,15,053.72 representing balance
amount payable to the appellant for supply of goods to a partnership firm of
which respondents are partners. It was indicated that the total amount payable
was Rs.49,21,482.72 as against which the accused persons had paid
Rs.44,06,429/-, leaving balance of Rs.5,15,053.72. A cheque [drawn on Oriental
Bank of Commerce, Ladwa branch (Account no.954)]was issued for the same amount
on 27.1.1995. The cheque was signed by respondent no.1 Yashpal Singh, for the
firm and respondent no.2 Nirpal Singh, was a partner of the partnership firm,
namely, M/s Sat Guru Rice Traders, New Delhi. The cheque was dishonoured due to inadequacy of funds in the account.
was given on 6.2.1995. Notice was issued by the appellant demanding payment by
lawyer's notice dated 17.2.1995. The amount was not paid. The respondents
requested the appellant for some time to make the payment.
request of the respondents, the cheque was again presented on 6.7.1995 and it
was again dishonoured due to inadequacy of funds. Intimation in this regard was
sent to the appellant on 10.7.1995. Again, lawyer's notice was sent on
24.7.1995. Reply was sent by the respondents on 16.8.1995 refuting the
allegations contained in the legal notice. The complaint was lodged on
28.8.1995. Charges were framed.
filed an application for discharge which was dismissed by the trial court by
order dated 29.1.2002. The order was challenged before the High Court which by
the impugned judgment held that the requirements of Section 142 of the Act were
support of the appeal, learned counsel for the appellant submitted that the
High Court was not right in entertaining the petition under Section 482 of the
High Court lost sight of the fact that the application was filed by the
respondents long after the charges were framed. High Court has erroneously
placed reliance on this Court's decision in Sadanandan Bhadran v. Madhavan Sunil
Kumar (1998 (6) SCC 514). On the contrary, the decision in Dalmia Cement (Bharat)
Ltd. v. Galaxy Traders & Agencies Ltd. and Ors. (2001 (6) SCC 463) is
applicable. The period of limitation has to be reckoned from 10.8.1995 i.e. the
date on which the respondents-accused persons replied to the legal notice dated
24.7.1995. As the complaint was filed on 28.8.1995 the same was well within
time. It was submitted that the respondent-accused persons categorically stated
in their reply dated 10.8.1995 that the first notice had not been served on
counsel for the respondent-accused persons on the other hand, submitted that
the High Court had rightly taken the view that the requirements of Section 142
were not met. It was pointed out that the effect of the first notice was lost
in view of the fact that the second notice was given. The High Court has
rightly applied the ratio in Sadanandan Bhadran's case (supra). It is not in
dispute that there was issuance and receipt of the lawyer's notices on both the
occasions. In fact, the acknowledgement of service of first notice has been
filed by the complainant-appellant himself and at all stages the case proceeded
on the footing that the first notice had been issued and served. The High Court
has categorically noted that the first notice had been served on the
respondent. With reference to the complaint it was submitted that the appellant
himself accepted that the first notice had been served. Therefore, he cannot be
permitted to take the different stand that the notice was not served and in any
event the second notice did not provide the cause of action.
resolution of the controversy Sections 138 and 142 of the Act are relevant.
They read as follows:
138: Dishonour of cheque for insufficiency, etc.
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 extend to one
year, or with fine which may extend to twice the amount of the cheque, or with
that nothing contained in this section shall apply unless –
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
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 fifteen days of the receipt of
information by him from the bank regarding the return of the cheque as unpaid;
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.
- For the purposes
of this section, "debt or other liability" means a legally
enforceable debt or other liability.
142: Cognizance of offences - Notwithstanding anything contained in the Code of
Criminal Procedure, 1973 (2 of 1974), -
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;
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;
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.)
court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of
the first class shall try any offence punishable under Section 138."
Clause (a) of the proviso to Section 138 does not put any embargo upon the
payee to successively present a dishonoured cheque during the period of its
validity. This apart, in the course of business transactions it is not uncommon
for a cheque being returned due to insufficient funds or similar such reasons
and being presented again by the payee after sometime, on his own volition or
at the request of the drawer, in expectation that it would be encashed. The
primary interest of the payee is to get his money and not prosecution of the
drawer, recourse to which, normally, is taken out of compulsion and not choice.
On each presentation of the cheque and its dishonour, a fresh right-and not a
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 Section 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.
once he gives a notice under clause (b) of Section 138, he forfeits such right
in case of failure of the drawer to pay the money within the stipulated time,
he would be liable for offence and the cause of action for filing the complaint
generic and wide sense (as in Section 20 of the Civil Procedure Code, 1908 (in
short 'CPC') "cause of action" means every fact which it is necessary
to establish to support a right or obtain a judgment. Viewed in that context,
the following facts are required to be proved to successfully prosecute the
drawer for an offence under Section 138 of the Act:
the cheque was drawn for payment of an amount of money for discharge of a
debt/liability and the cheque was dishonoured;
the cheque was presented within the prescribed period;
the payee made a demand for payment of the money by giving a notice in writing
to the drawer within the stipulated period; and
the drawer failed to make the payment within 15 days of the receipt of the
on the basis of the generic meaning of the term "cause of action",
certainly each of the above facts would constitute a part of the cause of
action but clause (b) of Section 142 gives it a restrictive meaning, in that,
it refers to only one fact which will give rise to the cause of action and that
is the failure to make the payment within 15 days from the date of the receipt
of the notice. A combined reading of Sections 138 and 142 makes it clear that
cause of action 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 Section 142(c) arises - and can arise - only once.
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.
noted in Sadanandan Bhadran's case (supra) once a notice under clause (b) of
Section 138 of the Act is "received" by the drawer of the cheque, the
payee or holder of the cheque forfeits his right to again present the cheque as
cause of action has accrued when there was failure to pay the amount within the
prescribed period and the period of limitation starts to run which cannot be
stopped on any account.
the indispensable factors to form the cause of action envisaged in Section 138
of the Act is contained in clause (b) of the proviso to that section. It
involves the making of a demand 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". If no such notice
is given within the said period of 15 days, no cause of action could have been
created at all.
it is well settled that if dishonour of a cheque has once snowballed into a
cause of action it is not permissible for a payee to create another cause of
action with the same cheque.
Import, USA v. Exim Aides Silk Exporters, Bangalore (1999 (4) SCC 567), it was
held that the language used in Section 142 admits of no doubt that the
magistrate is forbidden from taking cognizance of the offence if the complaint
was not filed within one month of the date on which the cause of action arose.
Completion of the offence is the immediate forerunner of rising of the cause of
action. In other words, cause of action would arise soonafter completion of the
offence and period of limitation for filing of the application starts
to be noted that though a somewhat confusing statement was made by the
respondents regarding the receipt of the first lawyer's notice. Therefore, what
was kept alive was a fresh right and not cause of action. Therefore, Sadanandan
Bhadran's case (supra) was rightly applied. The impugned judgment does not
suffer from any infirmity to warrant interference.
appeal is dismissed.