& ANR. Vs. Alapati Srinivasa Rao & ANR.  INSC 1826 (23 October
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1761 OF 2008
(Arising out of S.L.P. (Crl) No.6417/2008) S.L.Construction & Anr.
...Appellants Versus Alapati Srinivasa Rao & Anr. ...Respondents O R D E R
(1) Appellants before
us are aggrieved by and dissatisfied with the judgment and order dated 7.6.2006
passed by a learned Single Judge of the High Court of Judicature of Andhra
Pradesh at Hyderabad whereby and where under a petition under Section 482 of
the Code of Criminal Procedure Code, 1973 praying for quashing the complaint
proceedings under Section 138 and Section 142 of the Negotiable Instrument Act
before the IV Additional Munsif Magistrate,Guntur taking cognizance against
them under Section 138 of the Negotiable Instruments Act, 1881, was dismissed.
(2) The factual
matrix involved herein is not in dispute.
(3) Appellants had
entered into some business transactions in regard to supply of certain
materials with Respondent No.1. Appellant No.2 as a proprietor of appellant
No.1 issued a cheque for a sum of Rs. 2 lacs in favour of the -1-
complainant-respondent on or about 22.6.2003. Appellants contend that the said
cheque was issued by way of security.
(4) The said cheque
was presented in the bank on 23.6.2003. It was returned un-paid by the banker
of the appellants on the ground of insufficient funds.
(5) Another notice
was sent for service on the proprietor of S.L. Structures and Engineers on or
about 8.7.2003. However, admittedly, the said notice was not served upon the
(6) The said cheque
was again presented before the bank on 30.8.2003, and was again dishonoured.
served another notice upon the appellant No.2 describing him as a proprietor of
S.L. Structures and Engineers and calling upon him to pay the said amount of
Rs. 2 lacs within 15 days from the date of receipt thereof.
(8) However, in
response thereto the appellants' advocate by a letter dated 19.9.2003 pointed
out that in stead and place of S.L.Structures and Engineers, the notice should
have been sent to S.L.Constructions. It was stated thus:
" That instead
of sending the notice to S.L. constructions you send the notice to my client
Shri K.P.Raju Proprietor of S.L.Structures and Engineers, Nagpur which is
illegal. That by issuing such wrong and illegal notice your client lower down
the status of my client in the eyes of general people and bankers and for which
my client instructed me to take the appropriate action either Civil or Criminal
in the Court of Law against your client."
-2- (9) It is in the
aforementioned situation, the respondents presented the cheque for the third
time before the bank on 11.12.2003 which having been dishonoured, another
notice was sent and served on 17.12.2003. The cheque was dishonoured for the
third time also.
(10) Indisputably, as
no payment was received from the appellant pursuant to the said notice, a
complaint petition was filed on 23.1.2004. Upon receipt of summons, appellants
moved the High Court under Section 482 of the Code of Criminal Procedure which,
as noticed hereinbefore, by reason of the impugned judgment has been dismissed.
learned counsel appearing on behalf of the appellants raised the following
contentions before us in support of this appeal;
(i) Having regard to
the provisions contained in Section 138 of the Negotiable Instruments Act and
in particular the proviso appended thereto, the cheque could not have been
presented for the third time;
(ii) The complainant
respondent having suppressed the fact of issuance of earlier notices, no order
taking cognizance of the offence under Section 138 of the Negotiable
Instruments Act should have been passed;
(iii) The High Court
failed to take into consideration that the cheque having been deposited after
-3- three months and three notices having been issued one after the other, no
cause of action survived, as earlier, two notices for presenting the cheque
before the banker had been issued which had already been dishonoured.
(12) Strong reliance
has been placed by Mrs. Desai in this behalf on (13) Learned counsel appearing
on behalf of the respondent, on the other hand, contented;
(i) The cheque
having been presented within a period of six months, the order taking
cognizance was not barred in terms of the proviso appended to Section 138 of
the Negotiable Instruments Act;
(ii) The first notice
having not been served and the appellants themselves having called upon the
respondents to withdraw the second notice, cannot now be permitted to urge that
the deposit of the cheque for the third time and issuance of third notice was
illegal and without jurisdiction.
(14) The Negotiable
Instruments Act, 1881 was enacted to define and amend the law relating to
Promissory Notes, Bills of Exchange and Cheques.
-4- (15) Chapter XVII
of the Act provides for penalties in case of dishonour of cheques for
insufficiency of funds in the accounts of the drawer thereof.
Indisputably,Chapter XVII, which was inserted by the Banking Public Financial
Institutions and Negotiable Instruments Laws(Amendment) Act, 1988( 66 of 1988)
and came into force on 1.4.1989, was incorporated to "enhance the
acceptability of cheques in settlement of liabilities by making the drawer
liable for penalties in case of bouncing of cheques due to insufficiency of
funds in the accounts or for the reason that it exceeds the arrangements made
by the drawer, with adequate safeguards to prevent harassment of honest
(17) It is in the
aforementioned backdrop we may notice the provisions of Sections 138, 139 and
142 of the said Act:
" 138. 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 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 both:
Provided that nothing
contained 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;
-5- (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 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 (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.
139. Presumption in
favour of holder- It shall be presumed, unless the contrary is proved, that the
holder of a cheque received the cheque, of the nature referred to in section
138, for the discharge, in while or in part, of any debt or other liability.
142. 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
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;
(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: " Provided 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.
(c) no Court inferior
to that of a Metropolitan Magistrate or a Judicial Magistrate of the first
class shall try any offence punishable under Section 138 "
(18) Indisputably, by
reason of Section 138 of the Act a penal provision has been laid down that the
issuer of any cheque would commit an offence if the cheque when presented is dishonored.
-6- (19) For the said
purpose a legal fiction was created. The proviso appended to the said
provision, however, restricts the application of the main provision by laying
down the conditions which are required to be complied with before any order
taking cognizance can be passed which are; (i) that the cheque must be
presented within a period of six months from the date on which it is drawn;
(ii) on the cheque being returned un-paid by the banker, a notice has to be
issued within thirty days from the date of receipt of information by him from
the bank regarding the cheque being unpaid; (iii) in the event, the drawer of
the cheque fails to make payment of the said amount of money to be paid within
15 days from the receipt thereof, a complaint petition can be filed within the
period prescribed in terms of Section 142 thereof.
(20) The question
which arises for our consideration is as to whether the aforementioned legal
requirements have been complied with by the respondent herein so as to enable
him to maintain the complaint petition or not.
(21) The cheque is
dated 22.6.2003. In terms of the afore-mentioned provisions it could have been
presented within six months thereafter, namely, by 22.12.2003. Indisputably,
the cheque was presented for the third time on 11.12.2003 i.e. within the
-7- (22) What is
prohibited is presentation of the cheque within the afore-mentioned period and
not the number of times it is presented. It is, therefore, immaterial whether
for one reason or the other the complainant had to present the cheque for the
third time or not.
(23) We may now
consider the submission of Ms.Desai, learned counsel as regards the issuance of
(24) The first notice
purported to have been issued by the complainant-respondent on 8.7.2003 is not
on record. Admittedly appellants have not received the same.
(25) As regards
notice dated 9.9.2003 which is said to be the second notice, it is evident that
the same had not been served upon the appellants having been returned. If that
be so, the presentation of the cheque for the second time and issuance of the
second notice in our opinion would not be invalid.
(26) We have,
however, noticed hereinbefore that the appellant No.2 through his Advocate
raised the question as regards the validity and/or legality thereof as the said
notice was addressed in stead and place of S.L.Constructions and was issued in
the name of and served on S.L.Structures and Engineers.
-8- (27) Appellants
in our opinion having themselves raised the contention with regard to the
legality and validity of the said notice and, furthermore, having called upon
the complainant-respondent to withdraw the same, no exception can be taken to
the step taken Abundanti Cautela by the complainant-respondent to present the
cheque for the third time and issue another notice on 17.12.2003.
Bhadran (Supra) whereupon strong reliance has been placed by Mrs.Desai, learned
counsel lays down the law in the following terms:
" 7. Besides the
language of Sections 138 and 142 which clearly postulates only one cause of
action, there are other formidable impediments which negate the concept of
successive causes of action. One of them is that for dishonour of one cheque,
there can be only one offence and such offence is committed by the drawer
immediately on his failure to make the payment within fifteen days of the
receipt of the notice served in accordance with clause(b) of the proviso to
Section 138. That necessarily means that for similar failure after service of
fresh notice on subsequent dishonour, the drawer cannot be liable for any
offence nor can the first offence be treated as non est so as to give the payee
a right to file a complaint treating the second offence as the first one. At
that stage, it will not be a question of waiver of the right of the payee to
prosecute the drawer but of absolution of the drawer of an offence, which stands
already committed by him and which cannot be committed by him again." It
was further held:
" 8. 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 Section 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
limitative clause by filing a complaint on the basis of a fresh presentation of
the -9- 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."
the term cause of action would mean each of the facts required to be proved.
Successive issuance of notices having been made under Section 138 of the Act as
laid down under the proviso appended thereto, the respondent merely made all
attempts to comply with the legal requirements.
(30) In this case, as
indicated herein before, the first notice having not been served and the second
notice having been withdrawn in terms of the reply issued by the learned
advocate for the appellants themselves, the complainant cannot be said to have
committed any illegality in presenting the cheque for the third time and
issuing the third notice upon the defaulter.
(31) We need not
refer to the other decisions relied upon by Mrs.Desai, learned counsel as the
same had merely followed the dicta laid down in Sadanandan Bhadran(supra).
(32) As the issuance
of cheque, non-payment thereof on presentation, issuance of a valid notice
calling -10- upon the drawer of the cheque to pay the amount in question and
the appellants' failure to pay to the complainant the amount in question within
a period of 15 days from the date of receipt of a copy of the said notice upon
them, a cause of action arose for filing a complaint petition, in our opinion,
the High Court cannot be said to have committed any error in passing the
(33) In view of the
findings aforementioned we have no hesitation to hold that the cause of action
for filing a complaint arose only once and not more than once as contented by
Mrs. Desai, learned counsel.
(34) It may be true
that the High Court has not elaborately dealt with this aspect of the matter,
but the same would not mean that we should remit the matter back to the High
Court for consideration of the matter afresh as we have gone into the question
raised by the parties ourselves.
(35) For the reasons
aforementioned, there is no merit in this appeal and it is dismissed
accordingly with costs. Counsel's fee quantified at Rs. 10,000/-.
[ CYRIAC JOSEPH ]
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