2022 (4) TMI 511 - HC - Indian Laws

Dishonor of Cheque - insufficiency of funds - second and successive presentation of a cheque - legality and judicial propriety of order of cognizance - maintainability of the complaint for a cause of action, when the cheque could not be honoured for insufficient funds on an earlier occasion - HELD THAT - When a cheque is presented for encashment and stands dishonoured, the payee is required to issue a notice to the drawer demanding payment of the amount and in case, such request is not obliged, complaint under Section 138 of the N.I. Act is filed for the drawer having committed the offence. The question is, whether on the basis of a statutory notice issued by OP No.1 subsequent to dishonour of cheque about five months before, the learned court below could have entertained the complaint and taken cognizance of offence under Section 138 of the N.I. Act as against the petitioner? More or less a similar question was before the Supreme Court in M/S. SICAGEN INDIA LTD. VERSUS MAHINDRA VADINENI ORS. 2019 (2) TMI 545 - SUPREME COURT , wherein, it has been held that even a second statutory notice after re-representation of cheque is maintainable in law. In fact, the issue before the Supreme Court was, whether, a criminal complaint based on a subsequent or successive statutory notice filed under Section 138 of the N.I. Act is maintainable. In the decision, the Supreme Court observed that such an issue is no longer res integra and referred to one of its earlier judgment in SADANANDAN BHADRAN VERSUS MADHAVAN SUNIL KUMAR 1998 (8) TMI 541 - SUPREME COURT , where it was held to the extent that second and successive presentation of a cheque is legally permissible as long as it is within six months or validity of the cheque, whichever is earlier. The Court in the present case finds that OP No.1 did not send any statutory notice after the cheque was dishonoured in the month of May, 2010 but once again presented it within the validity period of the cheque and thereafter, issued the statutory notice as required under law and under such circumstances, it cannot be said that the complaint is invalid. With the above conclusion, the Court holds that the contention of the petitioner vis- -vis maintainability of the complaint on the ground raised is misconceived and therefore, cannot be sustained. The other grounds which have been raised challenging the filing of criminal complaint need no discussion which may be agitated by the petitioner during and in course of trial as a means of defence before the learned court below. Application dismissed.

Summary

Issues:
Validity of order of cognizance under Section 138 of the Negotiable Instruments Act, 1881 based on dishonored cheque and subsequent statutory notice.

Analysis:
The petitioner challenged the legality of the order of cognizance dated 2nd February 2011 passed by the learned S.D.J.M., Khurda, under Section 138 of the Negotiable Instruments Act, 1881. The complaint alleged that the petitioner, an accused, had taken a hand loan and issued a cheque which was dishonored twice due to insufficient funds. The petitioner contended that the court could not have taken cognizance of the offence after the cheque was presented for encashment again after about five months. The key issue raised was the maintainability of the complaint based on the cause of action when the cheque was dishonored previously.

The Standing Counsel for the Opposite Party argued that there was no illegality in the impugned order as presenting cheques more than once is permissible. The court considered whether the complaint could be entertained based on a subsequent statutory notice issued after the dishonor of the cheque. The Supreme Court precedent in M/s. Sicagen India Ltd. v. Mahindra Vadideni clarified that a second statutory notice after re-representation of the cheque is maintainable in law. The Court referred to earlier judgments emphasizing that no prohibition exists against subsequent presentation of the cheque and institution of a criminal complaint based on its dishonor. The purpose of Section 138 of the N.I. Act is to compel drawers to honor their commitments, and delay in prosecution does not render a complaint invalid. In this case, the Court found that the statutory notice was issued within the validity period of the cheque, making the complaint valid. The petitioner's contention regarding the maintainability of the complaint was deemed misconceived, and the application under Section 482 Cr.P.C was dismissed.

In conclusion, the High Court upheld the legality of the order of cognizance under Section 138 of the Negotiable Instruments Act, 1881, based on the dishonored cheque and subsequent statutory notice. The Court clarified the permissibility of presenting cheques multiple times and emphasized the importance of honoring commitments under the Act. The judgment serves as a reminder of the statutory requirements for filing complaints under Section 138 and the validity of subsequent statutory notices in maintaining criminal complaints.