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NON-REPORTABLE

   IN THE SUPREME COURT OF INDIA     CRIMINAL APPELLATE JURISDICTION

    CRIMINAL APPEAL Nos. 26-27 OF 2019    (@ SPECIAL LEAVE PETITION (CRL.)NOS. 6789-6790 OF 2015)

M/S. SICAGEN INDIA LTD.                           ...APPELLANT(S)

                               VERSUS

MAHINDRA VADINENI & ORS.                          ...RESPONDENT(S)

J U D G M E N T

R. BANUMATHI,J.

Leave granted.

2. These  appeals  arise  out  of  the  judgment  and  orders  dated

14.11.2011  in  Crl.O.P.No.  20401  of  2011  and  15.12.2014  in

Crl.O.P.S.R.No.  55782  of  2014  passed  by  the  High  Court  of

Judicature at Madras in and by which the High Court has quashed the

criminal  complaints  filed  by  the  appellant  -  complainant  under

Section 138 of the Negotiable Instruments Act.

3.  For convenience, the facts in C.C.No. 4029/2010 (Crl.O.P. No.

20401 of 2011) are referred to. Case of the appellant-complainant

is that they had business dealings with the respondents and in the

course  of  business  dealings,  the  respondents  had  issued  three

cheques viz.

1. Cheque 316693 dated 20.07.2009 for Rs.1,44,362/-

2. Cheque 316663 dated 30.07.2009 for Rs.4,26,400/-

3. Cheque 316692 dated 10.08.2000 for Rs.4,48,656/-

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The three cheques were presented for collection and the same were

dishonoured  and  returned  with  the  endorsement   “insufficient

funds”. The appellant-complainant had issued first notice to the

respondent(s) on 31.08.2009 demanding the repayment of the amount.

The cheques were again presented and returned with the endorsement

“insufficient funds”. The appellant had issued a statutory notice

on 25.01.2010 to the respondent(s). Since the cheque amount was not

being paid, the appellant-complainant had filed the complaint under

Section 138 of the Negotiable Instruments Act based on the second

statutory notice dated 25.01.2010.

4. The respondent(s)-accused filed petition before the High Court

under Section 482 Cr.P.C. seeking to quash the criminal complaint

filed by the appellant-complainant on the ground that the complaint

was not filed based on the first statutory notice  dated 31.08.2009

and the complaint filed based on the second statutory notice dated

25.01.2010  is  not  maintainable.  The  High  Court  quashed  the

complaint  by  holding  that  “the  amount  has  been  specifically

mentioned  in  the  first  notice  and,  thereafter,  the  complainant

himself has postponed the matter and issued the second notice on

25.01.2010 and the complaint filed on the same cause of action was

not maintainable .

5. We  have  heard  Mr.  K.K.  Mani,  learned  counsel  appearing  on

behalf of the appellant as well as Mr. B. Karunakaran, learned

counsel appearing on behalf of the respondents.

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6. The issue involved whether the prosecution based upon second

or successive dishonour of the cheque is permissible or not, is no

longer  res integra.   In  Sadanandan’s  case it was held that while

second  and  successive  presentation  of  the  cheque  is  legally

permissible so long as such presentation is within the period of

six months or the validity of the cheque whichever is earlier, the

second or subsequent dishonour of the cheque would not entitle the

holder/payee to issue a statutory notice to the drawer nor would it

entitle him to institute legal proceedings against the drawer in

the event he fails to arrange the payment. The correctness of the

decision  in  Sadanandan’s case  was  doubted  and  referred  to  the

larger bench.

7. Three-Judge  Bench  of  this  Court  in  2013  ((1)  SCC  177  MSR

Leathers vs. S. Palaniappan and Another 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.  In

paragraphs 29 and 33 this Court held as under:

29 It  is  trite  that  the  object  underlying Section  138  of  the  Act  is  to  promote  and inculcate faith in the efficacy of banking system and  its  operations  giving  creditability  to negotiable instruments  in business  transactions and to create an atmosphere of faith and reliance by  discouraging  people  from  dishonouring  their commitments  which  are  implicit  when  they  pay their  dues  through  cheques.  The  provision  was intended to punish those unscrupulous persons who issued cheques for discharging their liabilities without really intending to honour the promise that  goes  with  the  drawing  up  of  such  a negotiable instrument. It was intended to enhance the  acceptability  of  cheques  in  settlement  of

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liabilities  by  making  the  drawer  liable  for penalties in case the cheque was dishonoured and to  safeguard  and  prevent  harassment  of  honest drawers.   (See  Mosaraf  Hossain  Khan  V. Bhagheeratha Engg. Ltd. Reported in (2006) 3 SCC 658;  C.  C.  Alavi  Haji  v.  Palapetty  Muhammed reported  in  (2007)  6  SCC  555  and  Damodar  S. Prabhu v. Sayed Babalal H. reported in (2010) 5 SCC 663. Having said that, we must add that one of the salutary principles of interpretation of statues  is  to  adopt  an  interpretation  which promotes  and  advances  the  object  sought  to  be achieved by the legislation, in preference to an interpretation which defeats such object.  This Court has in a lonh line of decisions recognized purposive interpretation as a sound principle for the courts to adopt while interpreting statutory provisions.  We may only refer to the decision of this Court in New India Sugar Mills Ltd. v. CST reported in 1963(2) Suppl. SCR 459 = 1963 AIR 1207 wherein this Court observed:  

“8.  …  It  is  a  recognized  rule  of interpretation of statutes that the expressions used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statue, and which effectuate the object of the legislature.  If an expression is susceptible of narrow or technical meaning, as well as a popular meaning the court  would be justified in assuming that the legislature used the expression in the sense which would carry out its object and reject that which renders the exercise of its power invalid”

……………………………………………………..

33. Applying the above rule of interpretation and the  provisions  of  Section  138,  we  have  no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which   was  followed  by  statutory  notice  and  a failure  to  pay  had  not  been  launched.  If  the entire  purpose  underlying  Section  138  of  the Negotiable  Instruments  Act  is  to  compel  the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of

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the  cheque  has  not  rushed  to  the  court  with  a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for  funds or for any other similar reason.  There is in our opinion no real or qualitative difference between a case where  default  is  committed  and  prosecution immediately  launched  and  another  where  the prosecution is deferred till the cheque presented again  gets  dishonoured  for  the  second  or successive time. (underlining added)

8. In the present case as pointed out earlier that cheques were

presented  twice  and  notices  were  issued  on  31.08.2009  and

25.01.2010.  Applying  the  ratio  of  MSR  Leathers  (supra)  the

complaint filed based on the second statutory notice is not barred

and the High Court, in our view, ought not to have quashed the

criminal complaint and the impugned judgment is liable to be set

aside.

9.  Learned counsel appearing on behalf of the respondent(s),

inter  alia,  raised  various  points  including,  that  :-  (i)  the

cheques  were  not  issued;  (ii)  that  the  amount  payable  is  not

legally enforceable debt and (iii) the person who issued cheques

whether  was  in  effective  control  of  the  management  of  the

respondent(s).  All the  contentions raised by the respondent are

refuted by the learned counsel for the appellant. Since the matter

is remitted back to the Trial Court, all contentions raised by the

parties are left open to be raised before the Trial Court. The

impugned judgment of the High Court is set aside and the appeals

are allowed.

10. The Complaint CC No. 4029 of 2010 before the Court of XVIII,

Metropolitan Magistrate at Saidapet, Chennai is restored to the

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file of the Trial Court and the Trial Court shall proceed with the

matter  in  accordance  with  law  after  affording  sufficient

opportunity to both the parties.

11. The respondents are at liberty to make appropriate application

before the Trial Court for dispensing with personal appearance and

the same be considered by the Trial Court in accordance with law.

…………………………………………………………...J. [R. BANUMATHI]

NEW DELHI …………………………………………………………….J. 8TH JANUARY, 2019 [INDIRA BANERJEE]