REPORTABLE

               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

Leave granted.

(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 whereunder 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 appellants.  

(6) The  said  cheque  was  again  presented  before  the  bank  on

30.8.2003, and was again dishonoured.  

(7) Respondents  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.

(11) Mrs.Desai,  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

Sadanand Bhadran Vs. Madhavan Sunil Kumar -1998 6 SCC 514,Prem Chand Vijay

Kumar Vs. Yashpal Singh and Anr.- 2005 4 SCC 417 and Krishna Exports and Ors.

Vs. Raju Das - 2004 13 SCC 498.

(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.

(16)  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 drawers."

(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 dishonoured.

-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 prescribed period.

-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 successive notices.  

(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.

(28) Sadanandan 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."

(29) Indisputably, 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 hereinbefeore, 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 impugned judgment.

(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 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/-.  

                                    ......................J.       [S.B. SINHA]

.....................J                                       [ CYRIAC JOSEPH ] New Delhi, October 23, 2008.

-11-