1998 (8) TMI 541 - SC - Indian Laws

Respondent given cheque to appellant - Cheque had bounced due to insufficient fund - appellant sent notice - Respondent took some time for payment - Later respondent had given no response - Second time same cheque dishonoured - Whether payee of cheque can initiate prosecution for offence under Section 138 for its dishonour for second time if he had not initiated such prosecution on earlier cause of action - appeal dismissed as appellant had earlier taken recourse to Section 138 (b) but did not avail of cause of action that arose in his favour.

Summary

Issues Involved:
1. Whether the payee of a cheque can initiate prosecution under Section 138 of the Negotiable Instruments Act for its dishonour on a second presentation if no action was taken on the first dishonour.

Issue-wise Detailed Analysis:

1. Multiple Presentations of a Cheque:
- The court examined whether a cheque can be presented for encashment multiple times within its validity period.
- It was concluded that a cheque can indeed be presented any number of times during its validity. This view aligns with the consistent stance of all High Courts except the Division Bench of the Kerala High Court in Kumaresan v. Ameerappa, which erroneously held that only the first dishonour could lead to prosecution.

2. Cause of Action for Prosecution:
- The core question was whether the dishonour of a cheque on each occasion of its presentation gives rise to a fresh cause of action under Section 142(b) of the Act.
- The court clarified that the cause of action within the meaning of Section 142(c) arises only once, specifically when the drawer fails to make the payment within 15 days of receiving the notice as per Clause (c) of the proviso to Section 138.
- The court emphasized that for dishonour of one cheque, there can be only one offence, which is committed by the drawer immediately upon failing to make the payment within the stipulated 15 days.

3. Limitation Period for Filing Complaint:
- The court noted that interpreting the Act to allow successive causes of action would render the limitation period under Section 142(c) meaningless.
- It was held that the payee forfeits the right to prosecute the drawer if they fail to file a complaint within one month of the cause of action arising.

4. Harmonizing Provisions:
- The court harmonized the provisions by stating that while the payee can present the cheque multiple times, a fresh right (not cause of action) accrues with each presentation.
- However, once the payee issues a notice under Clause (b) of Section 138 and the drawer fails to pay within 15 days, the cause of action arises, and the payee must file the complaint within one month from the expiry of the 15-day period.

Conclusion:
- The appeal was dismissed because the appellant had already taken recourse to Clause (b) of Section 138 but did not avail of the cause of action that arose under Section 142(b).
- The judgment appreciated the assistance of the amicus curiae in resolving the issue.

This comprehensive analysis ensures a detailed understanding of the judgment while maintaining the integrity of the legal terminology and significant phrases from the original text.