2014 (10) TMI 1057 - HC - Indian Laws

Dishonor of Cheque - whether such presentation of the cheque for the second time and then to lodge a complaint on dishonour, was permissible? - HELD THAT - There is no doubt what so ever that a prosecution based upon a second or successive dishonour of the cheque is permissible as long as the same satisfies the requirements stipulated in the proviso to Section 138 of the NI Act - Incidentally, a finding by the appellate court that the petitioner had suppressed the fact of the cheque having been dishonoured in the first instance, is also incorrect. As may be seen from the sworn statement of the petitioner before the trial court, this fact has been stated. Accordingly, in the present case on hand, as the complainant was well within his right to have made a second presentation of the cheque in question and the complaint filed upon dishonour and failure to meet the demand under a notice issued thereafter, cannot be said to be bad in law. The appeal is allowed.

Summary

Issues Involved: Permissibility of second presentation of a dishonoured cheque and subsequent filing of a complaint under Section 138 of the Negotiable Instruments Act, 1881.

Detailed Analysis:

1. Background and Initial Complaint:
The complainant, a tenant under the respondent, alleged that the respondent committed an offence under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). The complainant had paid a security deposit of Rs. 2.50 lakh, which was refunded by the respondent via a cheque dated 22.2.2007, after deducting Rs. 8,000/-. The cheque was dishonoured upon presentation, and the respondent failed to pay the demanded amount, leading to the filing of the complaint.

2. Proceedings Before the Magistrate:
During the trial, the accused did not contest the matter, did not cross-examine the complainant, nor tendered any evidence. Consequently, the court accepted the complainant's case, convicting the respondent and sentencing him to pay a fine of Rs. 2.45 lakh, with Rs. 2.44 lakh as compensation to the complainant.

3. Appeal to the Lower Appellate Court:
The accused appealed, tendering evidence under Section 391 of the Code of Criminal Procedure, 1973 (Cr.P.C.). The accused demonstrated that the cheque was first dishonoured on 25.4.2007, leading to a demand notice (Exhibit-D1). The complainant did not file a complaint after this initial dishonour. Instead, the cheque was presented again on 28.6.2007, dishonoured again, and a second demand notice was issued on 10.7.2007. The lower appellate court held that the second presentation and subsequent complaint were impermissible, acquitting the accused.

4. Controversy on Second Presentation:
The central issue was whether the second presentation of the cheque and subsequent complaint were permissible. The respondent's counsel argued, based on the Supreme Court's decision in Dashrath Rupsingh Rathod v. State of Maharashtra, that a second presentation does not give a fresh cause of action.

5. Legal Precedents and Interpretation:
The court examined the precedents, including Sadanandan Bhadran v. Madhavan Sunil Kumar and MSR Leathers v. S. Palaniappan. Sadanandan Bhadran held that successive presentations during the cheque's validity period were permissible, but once a notice was issued, the right to re-present was forfeited. MSR Leathers overruled this, stating that each dishonour followed by a statutory notice could create a fresh cause of action.

6. Court's Analysis:
The court clarified that Section 138 of the NI Act is a penal provision requiring strict interpretation. The offence is complete upon dishonour, but prosecution is deferred until the drawer fails to pay within the statutory period after a notice. The proviso to Section 138 stipulates conditions precedent for prosecution, not the ingredients of the offence. Thus, successive dishonours followed by statutory notices can give rise to fresh causes of action.

7. Decision:
The court found that the complainant's second presentation of the cheque and subsequent complaint were valid and permissible under the law. The lower appellate court's judgment was set aside, and the trial court's judgment was restored, allowing the appeal.

Conclusion:
The appeal was allowed, affirming that a prosecution based on successive dishonours of a cheque is permissible if it meets the requirements of the NI Act. The judgment of the lower appellate court was set aside, and the trial court's judgment was restored.