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                    [REPORTABLE]

IN THE SUPREME COURT O F INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 2083/2013 (arising out of SLP(Criminal) No. 10056 of 2012)

Kamlesh Kumar        …..Appellant

Vs.

State of Bihar & Anr.     ….Respondents

J U D G M E N T

A.K.SIKRI,J.

1. Leave granted.

2. The appellant herein is facing trial in the complaint filed by  

respondent No.2 under Section 138 of the Negotiable Instruments  

Act  (N.I.  Act  for  short).   According  to  the  appellant,  criminal  

complaint is not maintainable and no such proceedings could be  

launched against him.  He, therefore, approached the High Court  

of Judicature at Patna in the form of a petition under Section 482  

of the Cr.P.C. for quashing of the order dated 28.10.2009 whereby  

the Court  of  Magistrate had taken cognizance of  the complaint

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filed by the respondent No.2 issued summons to the appellant.  

This petition, however, has been dismissed by the High Court vide  

impugned judgment dated 1.11.2012.  The solitary reason given  

by the High Court while dismissing the petition is that trial  has  

already  commenced  and  two  witnesses  have  already  been  

examined and discharged.  Hence, at this stage it would not be  

proper to interfere with the trial.  Various contentions which were  

raised by the appellant questioning the very maintainability of the  

complaint under Section 138 of the N.I. Act are not gone into by  

the High Court with the observations that those contentions would  

be available to the appellant before the trial court, subject to the  

rebuttal of respondent No.2.   

3. Mr.  Mishra,  learned  senior  counsel  appearing  for  the  

appellant  submitted  that  even on admitted  facts  the complaint  

was untenable as it was clearly time barred and not filed within  

the  stipulated  period  prescribed  in  law  and  therefore  the  High  

Court could not have scuttled the issue raised by the appellant by  

merely relegating the appellant to the trial court when the issue  

could be decided on the admitted facts on records.  He, further,  

submitted  that  the  appellant  had  approached  the  High  Court

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without loss of any time and if during the pendency of the petition  

filed by the appellant under Section 482, Cr.P.C., two witnesses  

had been examined in the meantime, that factor could not have  

weighed against the appellant.

4. In order to understand the controversy, we may give basic  

facts which are undisputed.

5. The complaint under Section 138 of the N.I.  Act is filed by  

respondent No.2 on the basis of cheque bearing No.003285 drawn  

on Bank of India, Mahua Branch where the appellant holds Bank  

Account  bearing  No.23371.   This  cheque  was  for  a  sum  of  

Rs.3,45,000/-.   The  complainant  had  presented  this  cheque  on  

25.10.2008 which was returned dishonoured by the Bank.   The  

defence on merits set up by the appellant is that he is a doctor by  

profession  who  is  having  his  private  practice.    He  found  that  

certain cheques, some signed and some unsigned, were missing  

from his clinic in December 2006 in respect to which he had even  

given  information  to  the  Sub-Divisional  Officer,  Mahua,  on  30 th  

December 2006.  Cheque No. 003285 was also one of those stolen  

cheques.  We have stated this defence of the appellant just for

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record and are not going into this explanation of the appellant or  

influenced  by  it.   We  only  tend  to  examine  as  to  whether  on  

admitted events, complaint is not maintainable.  

6. The cheque in question was presented on 25.10.2008.  After  

it was dishonoured, complainant issued notice dated 27.10.2008  

to the appellant.   The appellant did not accede to the demand  

contained in the said notice.  Even the complainant chose not to  

file any complaint under Section 138 of the N. I. Act at that time.  

Instead,  he presented same very cheque again for  encashment  

through his banker on 10.11.2008.  It bounced this time as well  

because  of  insufficient  funds.   Another  legal  notice  dated  

17.12.2008 was sent to the appellant.  As this legal notice also did  

not invoke any positive response from the appellant, this time the  

complainant filed the complaint dated 7.01.2009.  The summary of  

the aforesaid events, accordingly,  is as under:-

          Date Events

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          25.10.2008 Cheque presented            27.10.2008 Legal Notice            10.11.2008 2nd presentation             17.12.2008 Legal Notice             07.01.2009 Complaint filed

7. On the basis  of  the aforesaid  facts,  the submission of  Mr.  

Mishra was that the complaint was not filed within the limitation  

prescribed under Section 138 read with Section 142 of the N. I.  

Act.   To appreciate this contention,  we first  state the aforesaid  

provision which reads as under:

“138.  Dishonour  of  cheque  for  insufficiency,etc.  of  funds in the account.- 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  that  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  that  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  be  extended to two years, or with fine  which may  extend to  twice  the  amount  of  the  cheque,  or  with both:

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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, whoever 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  thirty  days]  of  the  receipt  of  information by him from the bank regarding the  return of the cheque as unpaid; and (c) the drawyer 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. 142.  Cognizance  of  offences.-  Notwithstanding  anything  contained  in  the  Code  of  Criminal  Procedure, 1973 (2 of 1974)- (a) no court shall take cognizance 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 (c) of the proviso to Section 138: [Provided that the cognizance of a complaint may  be  taken  by  the  Court  after  the  prescribed  period, if the complainant satisfies the Court that  he  had  sufficient  cause  for  not  making  a  complaint within such period.]

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(c)  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.]”

8. In  the  present  case,  the  complainant  had  not  filed  the  

complaint on the dishonor of the cheque in the first instance, but  

presented the said cheque again for encashment.  This right of the  

complainant in presenting the same very cheque for the second  

time is available to him under the aforesaid provision.  This aspect  

is  already  authoritatively  determined  by  this  Court  in  MSR  

Leathers vs. S.Palaniappan & Anr. (2013) 1 SCC 177.  Specific  

question which was formulated for consideration by the Court and  

referred to three Judge Bench in that case, the following question  

for determination was as under:

“Whether  the  payee  or  holder  of  a  cheque can initiate prosecution for an offence  under  Section  138  of  the  Negotiable  Instruments Act, 1881 for its dishonor for the  second time, if he had not initiated any action  on the earlier cause of action?”

This question was answered by the three Judge Bench in the  

aforesaid matter in the following manner:

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“What  is  important  is  that  neither  Section  138  nor  Section  142  or  any  other  provision  contained  in  the  Act  forbids  the  holder  or  payee  of  the  cheque  from  presenting the cheque for encashment on any  number  of  occasions  within  a  period  of  six  months of its issue or within the period of its  validity,  whichever  is  earlier.   That  such  presentation  will  be  perfectly  legal  and  justified was not disputed before us even at  the Bar by the learned counsel appearing for  the parties and rightly so in the light of the  judicial  pronouncements  on  that  question  which are all  unanimous.  Even Sadanandan  case,  the  correctness  whereof  we  are  examining, recognized that the holder or the  payee of the cheque has the right to present  the  same  any  number  of  times  for  encashment during the period of six months  or during the period of its validity, whichever  is earlier.”

9. To this extent, there cannot be any quarrel and the act of the  

complainant in presenting the cheque again cannot be questioned  

by the appellant.   However, we find that when the cheque was  

presented second time on 10.11.2008 and was returned unpaid,  

legal notice for demand was issued only on 17.12.2008 which was  

not within 30 days of the receipt of the information by him from  

the Bank regarding  the  return of  the  cheque as  unpaid.   Non-

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issuance of notice within the limitation prescribed has rendered  

the complaint as not maintainable.

10. In MSR Leathers (supra), this Court analyzed the provisions of  

Sections 138 and 142 of the N.I. Act in the following manner:

“The proviso to Section 138, however, is  all  important  and  stipulates  three  distinct  conditions precedent, which must be satisfied  before  the  dishonor  of  a  cheque  can  constitute an offence and become punishable.  The first condition is that the cheque ought to  have  been  presented  to  the  bank  within  a  period of six months from the date on which it  is drawn or within the period of of its validity,  whichever is earlier.   The second condition is  that the payee or the holder in due course of  the  cheque,  as  the  case  may  be,  ought  to  make a demand for the payment of the said  amount of money by giving a notice in writing,  to the drawer of the cheque, within thirty days  of the receipt of information by him from the  bank regarding the return of  the cheque as  unpaid. The third condition is that the drawer  of such a cheque should have failed to make  payment of the said amount of money to the  payee or  as the case may,  to  the holder  in  due course of the cheque within fifteen days  of the receipt of the said notice. It is only upon  the  satisfaction  of  all  the  three  conditions  mentioned above and enumerated under the  proviso to Section 138 as clauses (a), (b) and  (c) thereof that an offence under Section 138  can be said to have been committed by the  person issuing the cheque.

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Section  142  of  the  Negotiable  Instruments Act governs taking of cognizance  of the offence and starts with a non obstante  clause.  It  provides  that  no  court  shall  take  cognizance of  any offence punishable  under  Section  138  except  upon  a  complaint,  in  writing,  made by the payee or,  as the case  may be, by the holder in due course and such  complaint  is  made within  one month  of  the  date on which the cause of action arises under  clause (c) of the proviso to Section 138.  In  terms of clause (c) to Section 142, no count  inferior to that of a Metropolitan Magistrate or  a  Judicial  Magistrate  of  the  First  Class  is  competent  to  try  any  offence  punishable  under Section 138.

A  careful  reading  of  the  above  provisions makes it manifest that a complaint  under  Section  138  can  be  filed  only  after  cause of action to do so has accrued in terms  of  clause  (c)  of  the  proviso  to  Section  138  which, as noticed earlier, happens no sooner  than when the  drawer of the cheque fails to  make the payment of the cheque amount to  the payee or the holder of the cheque within  15 days of the receipt of the notice required  to be sent in terms of clause (b) of the proviso  to Section 138 of the Act.

The  presentation  of  the  cheque  and  dishonor  thereof  within  the  period  of  its  validity or a period of six months is just one of  the  three  requirements  that  constitutes  “cause  of  action”  within  the  meaning  of  Sections  138  and  142  (b)  of  the  Act,  an  expression  that  is  more  commonly  used  in  civil law than in penal statutes. For a dishonor

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to  culminate  into  the  commission  of  an  offence of which a court may take cognizance,  there are two other requirements, namely, (a)  service of a notice upon the drawer  of  the  cheque  to  make  payment  of  the  amount  covered by the cheque, and (b) failure of the  drawer to make any such payment within the  stipulated period of 15 days of the receipt of  such  a  notice.  It  is  only  when the  said  two  conditions are superadded to the dishonor of  the  cheque  that  the  holder/payee  of  the  cheque  acquires  the  right  to  institute  proceedings  for  prosecution  under  Section  138  of  the  Act, which  right  remains  legally  enforceable for a period of 30 days counted  from the date on which the cause of  action  accrued to him. Therefore, there is, nothing in  the proviso to Section 138 or Section 142 for  that matter,  to oblige the holder/payee of a  dishonoured  cheque  to  necessarily  file  a  complaint  even  when  he  has  acquired  an  indefeasible right to do so. The fact that an  offence is complete need not necessarily lead  to launch of prosecution especially when the  offence is not a cognizable one. It follows that  the complainant may, even when he has the  immediate  right  to  institute  criminal  proceedings  against  the  drawer  of  the  cheque,  either  at  the  request  of  the  holder/payee  of  the  cheque  or  on  his  own  volition,  refrain  from  instituting  the  proceedings based on the cause of action that  has accrued to him. Such a decision to defer  prosecution  may  be  impelled  by  several  considerations but more importantly it may be  induced  by  an  assurance  which  the  drawer  extends to the holder of the cheque that given  some  time  the  payment  covered  by  the  cheques  would  be  arranged,  in  the  process

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rendering  a  time-consuming  and  generally  expensive legal recourse unnecessary. It may  also  be  induced  by  a  belief  that  a  fresh  presentation  of  the  cheque  may  result  in  encashment for a variety of reasons including  the vicissitudes of trade and business dealings  where financial accommodation given by the  parties  to  each  other  is  not  an  unknown  phenomenon.  Suffice  it  to  say  that  there  is  nothing  in  the  provisions  of  the  Act  that  forbids  the  holder/payee  of  the  cheque  to  demand  by  service  of  a  fresh  notice  under  clause (b) of the proviso to Section 138 of the  Act,  the  amount  covered  by  the  cheque,  should  there  be  a  second  or  a  successive  dishonor of the cheque on its presentation.”

11. It is thus clear that period of limitation is not to be counted  

from the date when the cheque in question was presented in the  

first  instance  on  25.10.2008  or  the  legal  notice  was  issued  on  

27.10.2008,  inasmuch  as  the  cheque  was  presented  again  on  

10.11.2008.   For  the  purposes of   limitation,  in  so  far  as  legal  

notice  is  concerned,  it  is  to  be  served  within  30  days   of  the  

receipt of information by the drawyee from the bank regarding the  

return of the cheque as unpaid.  Therefore, after the cheque is  

returned unpaid,  notice has to be issued within 30 days of the  

receipt  of  information  in  this  behalf.   That  is  the  period  of  

limitation provided for  issuance of legal  notice calling upon the

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drawer of the cheque to make the payment.  After the sending of  

this notice 15 days time is to be given to the noticee, from the  

date of receipt of the said notice to make the payment, if that is  

already  not  done.   If  noticee  fails  to  make  the  payment,  the  

offence can be said to have been committed and in that event  

cause  of  action  for  filing  the  complaint  would  accrue  to  the  

complainant  and he is  given one month time from the date of  

cause of action to file the complaint.

12. Applying the aforesaid principles, in the present case, we find  

that  cheque  was  presented,  second  time,  on  10.11.2008.  The  

complainant,  however,  sent  the  legal  notice  on  17.12.2008  i.e.  

much  after  the  expiry  of  the  30  days.   It  is  clear  from  the  

complaint filed by the complainant himself that he had gone to the  

bank for encashment the cheque on 10.11.2008 but the cheque  

was not honoured due to the unavailability of the balance in the  

account.  13. The  crucial  question  is  as  to  on  which  date  the  

complainant received the information about the dishonour of the  

cheque.   As  per  the  appellant  the  complainant  received  the  

information  about  the  dishonour  of  the  cheque  on  10.11.2008.  

However,  the respondent  has disputed the same.  However,  we

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would  like  to  add that  at  the  time of  arguments  the  aforesaid  

submission of the appellant was not refuted.  After the judgment  

was  reserved,  the  complainant  has  filed  the  affidavit  alleging  

therein  that  he  received  the  bank  memo  of  the  bouncing  of  

cheque  on  17.11.2008  and  therefore  legal  notice  sent  on  

17.12.2008  is  within  the  period  30  days  from  the  date  of  

information.  Normally, we would have called upon the parties to  

prove their respective versions before the trial court by leading  

their evidence.  However, in the present case, as rightly pointed  

out  by  the  learned  senior  counsel  for  the  appellant,  the  

complainant has accepted in the complaint itself that he had gone  

to  the  bank for  encashment  of  cheque on  10.11.2008 and the  

cheque was  not  honoured due to  insufficient  of  funds,  thereby  

admitting that he came to know about the dishonor of the cheque  

on 10.11.2008 itself.  It is for this reason that appellant has filed  

reply  affidavit  stating  that  this  is  an  after  thought  plea  as  no  

material has been filed before the court below to show that the  

bank had issued memo about  the  return  of  cheque  which  was  

received  by  the  complainant  on  17.11.2008.   The  specific  

averment made in the complaint in this behalf is as under:

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“Subsequently the complainant again went to  encash  the  cheque  given  by  the  accused  on  10.11.2008  which  again  bounced  due  to  unavailability of balance in the accused account.”

It is,  thus, clear from the aforesaid averment made by the  

complainant himself that he had gone to the bank for encashing  

the  cheque  on  10.11.2008  and  found  that  because  of  

unavailability of sufficient balance in the account, the cheque was  

bounced.   Therefore,  it  becomes obvious  that  he  had come to  

know  about  the  same  on  10.11.2008  itself.   In  view  of  this  

admission  in  the  complaint  about  the  information  having  been  

received by the complainant about the bouncing of the cheque on  

10.11.2008 itself, no further enquiry is needed on this aspect.

14. It is, thus, apparent that he received the information about  

the dishonor of the cheque on 10.11.2008 itself.  However, he did  

not send the legal notice within 30 days therefrom.    We, thus,  

find that the complaint filed by him was not maintainable as it was  

filed without satisfying all the three conditions laid down in Section

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138 of the N. I. Act as explained in para 12 of the judgment in the  

case of MSR Leathers, extracted above.   

15. We  have,  thus,  no  hesitation  in  allowing  this  appeal  and  

setting  aside  the  impugned  order  of  the  High  Court.   As  a  

consequence, petition filed by the petitioner under Section 482,  

Cr.P.C.  is also allowed and the complaint of the complainant is  

dismissed.

……………………………..J. (K.S.Radhakrishnan)

……………………………..J. (A.K.Sikri)

 New Delhi, December 11, 2013