2023 (7) TMI 1169 - HC - Indian Laws

Dishonour of Cheque - prosecution based upon second or successive dishonour of the cheque - HELD THAT - As per settled law and proviso (a) of Section 138 of the 1881 Act, successive presentation of cheque is permissible within the period of its validity. The issue whether the prosecution based upon second or successive dishonour of the cheque is permissible or not, is no longer res integra and a three-Judges Bench of Hon'ble Apex Court in MSR LEATHERS VERSUS S PALANIAPPAN ANR 2012 (10) TMI 232 - SUPREME COURT , held that there is nothing in the provisions of Section 138 of the Act that forbids the holder of the cheque to make successive presentation of the cheque and institute the criminal complaint based on the second or successive dishonour of the cheque on its presentation. Admittedly, successive presentation within the validity period of cheque is permissible. Another proviso (138(b)) requires that demand for payment by notice in writing has to be made within 30 days after information is received about return of cheque as unpaid. Thus once, successive presentation is permissible and cheque can be presented any number of times during its validity period, as a natural corollary of the same, drawee is required to be bound by successive information received about encashment or return, and demand for payment within 30 days from any fresh information can be raised. However, clause (c) makes it mandatory to file complaint in case drawer fails to make payment within 15 days of receipt of notice which means once demand notice is issued, thereafter no presentation is permitted. Reliance placed on the judgment of MSR Leathers is misconceived on two counts. Firstly, it is required to be noticed that in paras 4 and 5 of the complaint, the respondent-complainant has mentioned that the cheque was presented again on an assurance given by the petitioner, while this was not the case in D.V. VANITHA VERSUS S.L. VEZHAVENDHAN 2022 (2) TMI 1381 - MADRAS HIGH COURT and additionally this scenario is specifically covered by the reasoning given in MSR's case - Secondly, in Vanitha's case, Division Bench was exercising revisional jurisdiction after trial has completed and thus was having the benefit of observing and examining all the aspects of the case, while in the present case the trial is at very initial stage only and this Court does not have the benefit of examining the evidence and submissions made from both the sides. When the cheque has been successively presented within its validity period and demand notice in writing has been issued within 30 days of the receipt of information from the bank regarding the return of cheque as unpaid; no ground is made out for any intervention by this Court and accordingly, present petition is dismissed.

Summary

Issues Involved:
1. Quashing of complaint and summoning order under Section 138 of the Negotiable Instruments Act, 1881.
2. Permissibility of successive presentation of the cheque.
3. Validity of demand notice and subsequent legal proceedings.

Summary:

1. Quashing of Complaint and Summoning Order:
The petitioner sought to quash complaint No. NACT/1291/2017 and the summoning order dated 07.12.2017 issued by the Additional Chief Judicial Magistrate, Panchkula, under Section 138 of the Negotiable Instruments Act, 1881. The complaint arose due to the dishonour of cheque No. 419539 dated 18.07.2017 amounting to Rs. 2 lakhs, with the reason "other reason-bank is merged."

2. Permissibility of Successive Presentation of the Cheque:
The petitioner argued that since the cheque was dishonoured initially on 11.09.2017 for the reason "other reason-bank is merged," its successive presentation was not permissible. However, the court referred to the settled law and the judgment in "MSR Leathers vs. S. Palaniappan and Another" (2013 (1) SCC 177), which allows successive presentation of a cheque within its validity period. The court emphasized that "a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible."

3. Validity of Demand Notice and Subsequent Legal Proceedings:
The petitioner contended that the demand notice served post the second dishonour was barred in law. However, the court clarified that as per proviso (a) of Section 138, successive presentation within the validity period is permissible, and the demand notice must be issued within 30 days of the receipt of information about the return of the cheque as unpaid. The court highlighted that once a demand notice is issued, no further presentation of the cheque is allowed.

The court also distinguished the present case from "D.V. Vanitha vs. S.L. Vezhavendhan" (2022(2) MLJ (Criminal)(286)), noting that in the current case, the cheque was presented again based on an assurance by the petitioner, which was not the scenario in Vanitha's case.

Conclusion:
The court concluded that the successive presentation of the cheque within its validity period and the issuance of the demand notice within 30 days of receiving the information from the bank were in accordance with the law. Thus, no grounds for intervention were found, and the petition was dismissed. Pending miscellaneous applications, if any, were also disposed of.