1998(1) ALL MR (JOURNAL) 18
IN THE HIGH OF JUDICATURE AT RAJASTHAN (JAIPUR BENCH)
M.A.A. KHAN, J.
Lallu Lal Agarwal Vs. Damodar Prasad Gupta.
Criminal Misc. Petn. 527 of 1996
2nd January, 1997
Petitioner Counsel: R.K. DAGA
Respondent Counsel: MAHESH GUPTA
(A) Negotiable Instruments Act (1881) S.138 - Dishonour of cheque - Cause of action for filing complaint - Does not arise until after expiry of 15 days from delivery of notice to Drawer and non-payment within that period. (Para 5)
(B) Negotiable Instruments Act (1881) S. 138 - Dishonour of Cheque - whether obligatory on Holder to issue notice only after dishonour of the cheque on the first occasion - No - Notice issued on subsequent presentments - Is legal & valid. (Para 5)
(C) Criminal P.C. (1973), S. 204 - Negotiable Instruments Act (1881) S. 138 - Process - Recall of - Complaint for dishonour of cheque - Application for recall of process - Contention that amount of subject cheque was paid by issuing another cheque subsequently, which was encashed - Issue to be decided on the basis of evidence at trial; application for recall of process not maintenable. (Para 9)
(D) Criminal P.C. (1973), S. 311 - Negotiable Instruments Act (1881) S. 138 - Application for recalling the complainant for further cross examination - Alleged admission of receipt of payment - No evidence produced by Accused in support of contention - Directions of Magistrate to decide the issue at the trial - Are justified. (Para 10)
(1992) 3 Crimes 594 (Punj & Hary) [Para 3]
(1995) 1 Cur Cri R 521 (Punj & Hary) [Para 3]
(1996) 2 WLC 215 [Para 3,9]
(1996) 2 SCC 739 : (1996 Cri LJ 1692) [Para 6,7]
(1996) 6 SCC 369 [Para 7]
2. Briefly stated the facts of the present case are that the petitioner had delivered a cheque for Rs. 10,000/- to non-petitioner Damodar Prasad Gupta on 15-1-1994. The said cheque was presented by Damodar Prasad in the Bank for encashment but the same could not be got encashed for in-sufficiency of amount in the account of the petitioner. Damodar Prasad Gupta non-petitioner thereafter again presented the cheque in the Bank for encashment on 30-3-94 and 22-4-94 but the same could not be encashed for the same reason. Thereafter he delivered statutory notice under Section 138 of the Negotiable Instruments Act on 29-4-94 but since the petitioner made no payment to him of the amount of the cheque, he filed a complaint on 31-5-94 against the petitioner in the Court of the Learned Magistrate. After putting in appearance the complainant moved an application before the learned Magistrate requiring him to cancel the order of taking cognizance of the offence under Section 138 Cr.P.C. against him and summoning him as accused. His contention was that he had delivered a second cheque to Damodar Prasad Gupta on 20-1-1994 which was got encashed by him and, therefore, the complainant had no cause of action against him. His another contention was that the cause of action to file a complaint against the petitioner arose and accrued to the non-petitioner when the cheque was dishonoured or not encashed on 15-1-94 but since the non-petitioner did not file a complaint against the petitioner after the rejection of cheque on 15-1-1994 this complaint was not maintainable on the basis of subsequent refusals by the Bank made on 30-3-94 and 22-4-94 to encash the cheque. By his impugned order dated 23-9-1995 the learned Magistrate rejected petitioner's said application. Hence this petition under Section 482 Cr.P.C.
3. The main contentions of the learned counsel for the petitioner are those as mentioned above and they are sought to be supported by two decisions of the Punjab and Haryana High Court reported in (1992) 3 Crimes 594 and (1995) 1 Cur Cri R 521 wherein it seems to have been held that if a notice was not issued within 15 days of the intimation of the dishonour of the cheque for the first time and thereafter a complaint was not filed, no complaint would be competent on the basis of refusal of the cheque by the Bank on the second or subsequent times. The learned counsel for the petitioner has further referred to a Division Bench decision of this Court in the case of Niraj Kumar v. State of Rajasthan (1996) 2 WLC 215, in support of his contention that the learned Magistrate must have decided the issue raised before him and should not have made his decision thereupon dependent upon further proceedings in the case. The contention of the learned counsel was that the issue relating to the effect of refusal by the Bank to dishonour the cheque for the second and third time as also the effect of making payment by the petitioner to the non-petitioner through cheque dated 20-1-94 should have been decided by the learned Magistrate at that stage of the proceedings.
" 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 sufficient 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 extend to one year or with fine which may extend to twice the amount of the cheque, or with both.
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 whichever 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer 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."
5. It may be noted that a part of cause of action to the person in whose favour the cheque has been issued arises when the cheque is not honoured by the Bank. Another part of cause of action arises when a notice by the holder of the cheque to the drawer of the cheque is served upon the latter and no payment is made within 15 days of the service of the notice upon him. On the basis of the part of cause of action which arises to the holder of the cheque on Bank's not honouring the cheque THE holder of the cheque cannot file a complaint. In fact until and unless a notice is delivered to the drawer of the cheque after the refusal by the Bank to honour the cheque and a period of 15 days expires without bringing any result to the holder of the cheque no cause of filing a complaint under Section 138 of the Act would arise to him. None of the three clauses (a), (b) and (c) of Section 138 Of the Act obliges the holder of the cheque to deliver a notice to the drawer after the refusal of the bank to honour the same for the first time. A holder of the cheque instead of under going the process of issuing notice and thereafter going to the Courts may in his discretion choose to repeatedly present the cheque to the Bank for encashment as such attempts not only may save his time and money but also save him from entering into litigation in courts. Therefore, the provisions contained in Clause (a), (b) and (c) of Section 138 cannot be interpreted in a way as may cause harm to the right of the holder of the cheque to approach the Court if the cheque given to him by the drawer has not been honoured by the Bank even after presenting for the second or third time. The delivery of the notice by him to the drawer after refusal for the second or third time would not be invalid in law.
6. An issue relating to the working of Section 138 of the Act came up for the consideration of the Apex Court in the case of Electronics Trade and Technology Development Corporation Ltd. Secunderabad v. Indian Technologists and Engineers (Electronics) (P) Ltd., (1996) 2 SCC 739 : (1996 Cri L.J. 1692). In that case the drawer of the cheque having insufficient funds to his credit had after issuing the cheque issued" stop payment" instructions to his bank. Further he had failed to make payment within 15 days of the receipt of notice under clause (c) of Section 138 of the Act. The learned counsel for the drawer of the cheque inter alia contended that stoppage of payment due to instructions did not amount to an offence under Section 138 and therefore, the ingredients under Section 138 had not been satisfied. Rejecting this contention their Lordships observed in para 6 of the report as under :-
"The object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Despite Civil remedy. Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induced the payee or holder in due curse to act upon it. Section 138 draws presumption that one commits the offence if he issues the cheque dishonestly. It is seen that once the cheque has been drawn and issued to the payee and the payee has presented the cheque and thereafter if any instructions are issued to the bank for non-payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of Section 138. Suppose after the cheque is issued to the payee or to the holder in due course and before it is presented for encashment, notice is issued to him not to present the same for encashment and yet the payee or holder in due course presents the cheque to the bank for payment and when it is returned on instructions. Section 138 does not get attracted. Under these circumstances since the accused has not made the payment within 15 days from the date of the receipt of the notice issued by the payee or the holder in due course the dishonest intention is inferable from those facts. Accordingly, the ingredients as contained in Section 138 have been prima facie made out in the complaint. The High Court, therefore, was wholly incorrect in its conclusion that the ingredients have not been made out in the complaint. The orders of the High Court quashing the complaints are illegal. They are accordingly set aside and the trial Court is directed to dispose of the matter as expeditiously as possible. It is made clear that we do not intend to express any opinion on merits."
7. It is thus clear that once a cheque has been drawn and issued to the payee and the payee has presented the cheque for encashment but the bank has not encashed it for insufficiency of funds in drawer's account an offence under Section 138 would stand committed. It may be observed that the decision of the Apex Court in fact attracts the subterfuge being adopted by drawers of cheque by issuing cheques having no or insufficient amounts in their accounts. Issuing supervening instruction of 'stop payment' by the drawer to the Bank before the drawee presents the cheque to the Bank for encashment and the drawee having knowledge of such instructions presents the cheque to the Bank but gets its refusal to encash the same would altogether be a different matter not attracting Section 138 (see K.K Sidharthan v. T.P. Praveena Chandran (1996) 6 SCC 369). But, that is not the position in the instant case. This case is squarely covered by Electronics Trade's case (1996 Cri LJ 1692) (supra). The ratio decidendi of this decision clearly speaks that section 138 draws a presumption to the effect that one commits an offence if he issues a cheque dishonestly. Issuing a cheque having no and or insufficient amount in one's account may attribute a dishonest intention on the part of the drawer. This decision does not contemplate that the very right of the holder of the cheque to prosecute the drawer in a case where the cheque has been dishonoured by the Bank and the drawer has also failed to make payment of the amount despite delivery of the statutory notice would get frustrated by his making a second attempt to get the cheque honoured. The provisions contained in Section 138 of Clauses (a), (b) and (c) shall have to be read in the larger interest of the trade practice prevailing in commercial activities so as to promote and advance industry and commerce.
9. In the case of Niraj Kumar (1996(2) WLC 215) (supra) this Court was mainly concerned as to whether an order taking cognizance of the offence was an interlocutory order so as to be challenged before the Court under Section 482 Cr.P.C. or was final order against which a revision petition under Section 397 Cr.P.C. was maintainable. On the basis of the authority of the Apex Court it took the view that an order summoning a person as accused in a case after having taken cognizance of an offence against him was an interlocutary order and therefore, a petition under Section 482 Cr.P.C. was maintainable in such a case. The Court also observed that where a challenge to the cognizance taken by the Magistrate is made by the accused person he should in the first instance approach the Magistrate who has the jurisdiction to hear him decide such objection and in appropriate case even to recall his order of taking cognizance. In the impugned order the Learned Magistrate. has directed that the issue raised by the petitioner regarding the making of a payment of Rs. 10,000/- to the non-petitioner through a cheque issued on 20-1-1994 may be decided on the basis of evidence to be placed on his record at the trial. Such direction cannot be claimed to be bad in law.
10. Incidentally it was also brought to my notice that the petitioner has moved an application under Section 311 requesting the recall of the non-petitioner for further cross-examination as in his earlier examination he appears to have stated that in his account a receipt of Rs. 10,000/- is reflected. It is for the Magistrate to decide such application by an appropriate order. Since the non-petitioner denied to have received any payment for the cheque issued to him it is yet to be established whether the alleged entry of Rupees 10,000/- in the account of the non-petitioner relates to the liability sought to have been discharged by the petitioner by issuing cheque dated 15-1-1994 to the non-petitioner. Payment of cheque dated 20-1-1994 also is stated to be a disputed fact. No evidence in that behalf appears to have been placed by the petitioner before the learned Magistrate. Under such circumstances the Magistrate was justified in not recalling the order of cognizance and to have directed the decision on that issue to be given after recording evidence at the trial.
11. For the reasons mentioned herein above I am in respectful disagreement with their Lordships of the Punjab and Haryana High Court on the issue of accrual of cause of action to the holder of a dishonoured cheque and loss of his right to prosecute the drawer if notice is not delivered after first refusal and complaint is not based on such first refusal.