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PETITIONER: SADANANDAN BHADRAN

       Vs.

RESPONDENT: MADHAVAN SUNIL KUMAR

DATE OF JUDGMENT:       28/08/1998

BENCH: M.K. MUKHERJEE, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T M.K. MUKHERJEE, J.      This appeal  is directed against the judgment and order dated February  26, 1992  rendered by a learned single Judge of the  Kerala High Court in Criminal Misc. Case No. 1373 of 1991. Facts  relevant for  disposal of  this appeal  are  as under.      On January  4, 19991,  the  respondent  handed  over  a cheque for  Rs. 30,000/-  to the appellant in liquidation of the loan  he  obtained  from  the  latter.  The  cheque  was presented in  the bank for encashment on January 5, 1991 but was returned  for want of sufficient funds in the account of the respondent. The appellant then sent a lawyer’s notice to the respondent  on January  15, 1991 calling upon him to pay the  aforesaid   amount.  On   receipt  of  the  notice  the respondent approached  the appellant  and requested for some time tp  pay the  amount. In  view of the assurance so given the appellant did not initiate any further proceeding but as the respondent  did not  keep his  promise he  presented the cheque in the bank once again on May 4, 1991. This time also the cheque  was dishonoured  for want  of sufficient  funds. Another notice  dated May  9, 1991  was then served upon the respondent demanding  payment of the amount but he failed to make the  payment. The  appellant  then  filed  a  complaint against the respondent on June 30, 1991 under Section 138 of the negotiable  Instruments Act,  1881 (’Act’ for short). On that complaint  cognizance was  taken and the respondent was summoned to  face the  trial. After  entering appearance the respondent filed  an application stating that in view of the Division  Bench   judgment  of  the  Kerala  High  Court  in Kumaresan Vs. Ameerappa [ 1991 (1) K.L.T. 893], (since over- ruled by  a  Full  Bench  of  that  Court  in  M/s  S.K.D.L. Fireworks  Industries   Vs.  K.V.   Sivarama  Krishnan  1995 Crl.L.J. 1384)  wherein it  was held that there could not be more than one cause of action in respect of a single cheque, the complaint  was not  maintainable. The  trying magistrate accepted the contention of the respondent and acquitted him.      Against the  order of acquittal the appellant moved the High Court but relying upon the judgment in Kumaresan’s case (supra), it upheld the order the Magistrate.

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    In the  context of  the above  facts the  question that requires to  be answered in this appeal is whether the payee or holder  (hereinafter referred  to as ’payee’ for the sake of brevity)  of a  cheque can  initiate prosecution  for  an offence under  Section 138  of the Act for its dishonour for the second time, if he had not initiated such prosecution on the earlier  cause of action. The above question came up for consideration before different High Courts in several cases, besides those of Kumaresan and Fireworks Industries (supra); and culling  the judgments rendered therein we find that the following three  different propositions  have been laid down by one or the other High Court: i)   a cheque  can be presented for encashment on any number      of occasions  within the  period of its validity and it      dishonour on every occasion will give rise to a fresh ’      cause of  action’ within  the meaning  of clause (b) of      Section 142  of the  Act so  as to entitle the payee to      institute prosecution under section 138 on the basis of      the last cause of action; ii)  a cheque  can be presented for encashment on any number      of occasions  within the  period of  its  validity  but      there can  be only  one cause  of action  under Section      142(b) arising from its last dishonour; and iii) only for  the first  dishonour  -  and  not  subsequent      dishonours -  can a  prosecution under  section 138  be      instituted as  Section 138@  read with  Section  142(b)      envisages only  one cause  of action  in respect of one      and the same cheque.      To ascertain  which, if  any, of the above propositions dovetails into the Scheme of the Act it will be necessary at this stage to refer to its relevant provisions.      Chapter XVII  of the  Act containing  the fascicule  of Section 138  to 142  was brought  into the statute book with effect from April 1, 1989 by Section 4 of the Banking Public Financial  Institutions   and  Negotiable  Instruments  laws (Amendment) Act,  1988. The  ’objects and reasons’ clause of the Bill  which introduced  the Amending  Act indicates that the  new   chapter   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. Section 138 of the Act reads as under:      "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 there  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      theat 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

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    which  may   extend  to  twice  the      amount of the cheque, or with both:      provided that  nothing contained in      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;      (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      @ 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."      On a  careful analysis  of the above Section it is seen that its  main part  creates an  offence when  a  cheque  is returned by the bank unpaid for any of the reasons mentioned therein. The  significant fact, however, is that the proviso lays down three conditions precedent to the applicability of the above  Section and,  for that  matter, creation  of such offence and  the conditions  are: (i) the cheque should have been presented to the bank within six months of its issue or within the period of its validity whichever is earlier; (ii) payee should  have made  a demand  for payment by registered notice after  the cheque  is returned unpaid; and (iii) that the drawer  should have  failed to  pay the amount within 15 days of the receipt of notice. it is only when all the above three conditions  are satisfied  that a  prosecution can  be launched for  the offence  under section  138. So far as the first condition  is concerned  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  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. Needless  to say,  the  primary interest  of   the  payee  is  to  get  his  money  and  not prosecution of  the drawer,  recourse to  which normally, it taken out  of compulsion  and  not  choice.  For  the  above reasons it  must be  held that a cheque can be presented any number of  times during  the period  of its validity. Indeed that is  also the  consistent view  of all  the High  Courts except that  of the  Division Bench of the Kerala High Court in Kumaresan (supra) which struck a discordant note with the observation that  for the first dishonour of the cheque only a prosecution  can be launched for there cannot be more than one cause of action for prosecution.      The next  question that  falls for our determination is whether dishonour  of the  cheque on  each occasion  of  its presentation gives  rise to  a fresh  cause of action within the meaning  of Section 142(b) of the Act. Section 142 reads

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as under:      "Notwithstanding anything contained      in the  Code of Criminal Procedure,      1973      (a) no court shall take congnizance      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      @ of the proviso to Section 138;      @ 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."      From a  plain  reading  of  the  above  Section  it  is manifest that  a competent  Court can  take cognizance  of a written complaint  of an  offence under section 138 if it is made within  one month  of the  date on  which the  cause of action arises under clause @ of the proviso to Section 138.                     (emphasis supplied)      In a  generic and  wide sense  (as in Section 20 of the Civil Procedure  Code, 1908)  ’cause of  action’ means every fact which  it si  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: (a)  that the  cheque was  drawn for payment of an amount of      money for  discharge of a debt/liability and the cheque      was dishonoured; (b)  that the  cheque was  presented within  the  prescribed      period; (c)  that the  payee made  a demand for payment of the money      by giving  a notice in writing to the drawer within the      stipulated period; and (d)  that the  drawer failed  to make  the payment within 15      days of the receipt of the notice.      If we  were to  proceed 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 then  it is  significant to  note  that  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. The reason behind giving such a restrictive meaning is not far to seek. Consequent upon  the failure  of the drawer to pay the money within the  period of 15 days as envisaged under clause @ of the proviso  to Section 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 section 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 Section 142@ arises - and can arise - only once.      Besides the  language of  Sections 138  and  142  which clearly postulates  only one cause of action there are other formidable  impediments   which  negates   the  concept   of successive causes  of  action.  One  of  them  is  that  for dishonour of  one cheque  there cane be only one offence and such offence  is committed  by the drawer immediately in his

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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.      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 @ 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 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  the very  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 an 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 this  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.  But, once  he gives  a notice under  clause (b)  of Section  138 he  forfeits  such right for  in case of failure of the drawer to pay the money and the cause of action for filing the complaint will arise. Needless to  say, the  period of  one month  fro 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.      For  the   foregoing  discussion   this  appeal  stands dismissed as  the appellant  had earlier  taken recourse  to clause (b)  of Section  138 of  the Act but did not avail of the cause  of action  that arose in his favour under Section 142(b) of the Act.      Before parting  with this  judgment we  must  place  on record our  deep appreciation  for the invaluable assistance rendered by  Mr. T.S.  Arunachalam, senior  counsel and  Mr. Shiv  Kumar  Suri,  who  appeared  as  amicus  curiae,  (the respondent did  not appear in spite of service of notice) in deciding the  short but  interesting question raised in this appeal.