Criminal Misc. Appln. No. 3000 of 1996

4th August, 1998

Petitioner Counsel: M/s. C. P. UPADHYAY and V. P. SRIVASTAVA
Respondent Counsel: Mr. TARUN AGARWAL

Cases Cited:
1995 All Cri. C 239 [Para 1,10]
1992 (1) Crimes 23 [Para 2,7]
1996 AAC (Cri.) 22 [Para 1,6]
1991 (3) RCR (Crl.) 172 [Para 7]
1995 (84) Company Cases 447 [Para 7]
1994 (1) Crimes 845 [Para 8]

JUDGMENT

GIRDHAR MALAVIYA, J.:- In view of the diversion of opinion in two cases decided by learned single Judge viz., the case of Smt. Kamla Sharma Vs. State of U.P., 1995 All Cri. C 239, and in the case of Mirza Mansoor Beg Vs. Riyazuddin, 1996 ACC (Cri.) 22, Hon'ble J.C. Mishra, J. has referred the matter to the Division Bench to resolve the conflict between the two decisions of learned single Judge of this Court.

2. The controversy is in respect of Section 138 of the Negotiable Instruments Act. The question involved is that if a party has issued a cheque to the other party and the cheque has been returned by the Bank without obtaining payment with the request to send the cheque for encashment again and then the cheque is presented and still the payment is not obtained the notice under Section 138 of the Negotiable Instruments Act would be necessary within 15 days from the return of the cheque for the first time or whether limitation would start running from the subsequent dishonour of the cheque without obtaining payment. While Hon'ble Rahim, J. of this Court in the case of Smt. Kamal Sharma Vs. State of U.P., held that the cheque if presented and dishonoured on each occasion enables the drawee of the cheque to issue notice within 15 days from the date of last presentation to launch prosecution under section 138 of the Negotiable Instruments Act, Hon'ble N.B. Ashthana, J., relying upon a Division Bench judgment of the Kerala High Court in the case of Kumaresan Vs. Ameerappa, 1992(1) Crimes 23, held that cause of action arose only on first representation and the limitation started running from that date which could not be stopped by presenting cheque again so as to have fresh cause of action and fresh limitation.

3. The question was initially referred in case of Nagdev Sons and others Vs. State of U.P. and others, (Cri. Misc. Application No. 3000 of 1996) connected with DCM Sri Ram Industries Ltd. Vs. Nagdev Sons and others (Crl. Revision No. 636 of 1996). Subsequently one more Crl. Misc. application No. 120 of 1998 of Ram Babu Gupta came up before Hon'ble J. C. Mishra, J., involving the same question and he while admitting this criminal misc. Application of Ram Babu Gupta directed this case also to be listed before this Bench along with t he first case mentioned earlier. The earlier two cases arose out of common orders passed by the Courts below whereas the matter of Ram Babu Gupta arose from a different case and from a different district. That is why both the cases are before us.

4. Before embarking on the controversy it would be proper to give gist of the facts relating to the case of M/s. Nagdev Sons.

5. D.C.M. Sri Ram Industries Ltd. unit Dawrala Sugar Works, Daurala is engaged in the manufacture and sale of sugar. M/s. Nagdev Sons were appointed as Agent of the Sugar Company who used to collect payment from the authorised dealers for supply of sugar. M/s. Nagdev Sons used to make payment of price of sugar delivered by them to various dealers by their own cheques, bank drafts to Daurala Sugar Works. It appears that in pursuance of this scheme Nagdev Sons issued one cheque for Rs. 1,21,596/- dated 25-2-1993 in favour of DCM Sri Ram Industries Ltd., Unit Dawrala Sugar Works on Canara Bank, Ballimaran Chandni Chowk, Delhi. The Canara Bank returned the cheque on 16-3-1993 with the remarks 'Funds expected. Present again.' It appears that the D.C.M. Sugar Mills sent a letter dated 7-4-1994 informing M/s. Nagdev Sons about the cheque being not cashed. M/s. Nagdev Sons by their letter dated 22-4-1993 informed the D.C.M. Industries Ltd. that on 16-3-1993 their two cheques, each of a sum of Rs. 1,21,596/- had been presented in the Bank. Out of the two, one cheque had been cashed but the other cheque was returned by the Bank with the endorsement 'Funds expected. Present again'. The said letter dated 22-4-1993 of Nagdev Sons further mentions that from 17-3-1993 upto 31-3-1993 their bank account had always sufficient funds to meet the amount of the cheque viz. Rs. 1,21,596/- and had the cheque been presented during that period, their bankers would have made the payment positively to the DCM Ltd. However the letter further said that their agency stood terminated on 31-3-1998 and including the commission and the security deposit of Rs. 50,000/- Nagdev Sons were entitled to receive a sum of Rs. 1,31,000/- from DCM Ltd. and as such it was stated that after adjusting the sum of Rs. 1,21,596/- the balance should be sent to Nagdev Sons within three days from receipt of the said letter. However, thereafter the same cheque of Rs. 1,21,596/- was presented again for encashment on 14-5-1993 which was returned by the Bank with endorsement 'Funds insufficient'. Consequently on 19-6-1993 notice under Section 138 of the Negotiable Instruments Act was sent to Nagdev Sons which was received by them on 22-6-1993. By their reply dated 25-6-1993 Nagdev Sons reiterated their stand taken in their letter dated 22-4-1993 and demanded the balance of amount to be received by them within a week by a bank draft, failing which they proposed to take legal action for the recovery of the said amount. Having failed to recover the amount of Rs. 1,21,596/- a complaint was filed by DCM Ltd. before the Chief Judicial Magistrate, Meerut on 22-7-1993. After recording the statement under Section 200, Cr. P.C. on 31-7-1993 the Magistrate summoned Nagdev Sons, Sri Madho Das Nagdev and Sri Lalit Nagdev on 12-8-1993. The summoned accused challenged the summoning order and also took the plea that complaint under Section 138 of the Negotiable Instruments Act was barred by time. The Addl. Chief Judicial Magistrate, Meerut by his order dated 26-9-1995 rejected the plea of the accused and held the complaint to be within time. The accused preferred revision against the said order. The Additional District and Sessions Judge by his order dated 20-3-1996 partly allowed the revision and held that the complaint under the Negotiable Instruments Act was barred by limitation as the cause of action arose from the date when t he cheque was dishonoured for the first time which was on 16-3-1993, with the result that the complaint ought to have been filed by 15-3-1993. However he held that the complaint under Section 409 IPC was maintainable and the summoning order in respect of the said section was justified.

6. The DCM Ltd. challenged the order of the Addl. District and Sessions Jugde dated 20-3-1996 by preferring Crl. Revision No. 636 of 1996 and Nagdev Sons challenged the same order so far as the complaint under Section 409, IPC was held to be maintainable by preferring Crl. Misc. Application No. 3000 of 1996. Both these matters were heard by the learned single Judge and as indicated earlier on 19-12-1997 learned single Judge referred this matter to the Division Bench to resolve the conflict in the judgments reported in 1995 All Cri. 239 and 1996 AAC (Cri) 22. We have set out the facts of this case as the referring order of the learned single Judge did not give the facts comprehensively. However since we have to decide only the controversy whether the limitation would start from the date when the cheque was dishonoured for the first time or whether it would start running from the successive dates on which the cheques were dishonoured, we need not go into the merit of the case at all.

7. The judgment of Hon'ble N. B. Asthana, J. in Mirza Manzoor Beg's case was primarily based on a Division Bench Judgment of Kerala High Court in the case of Kumaresan Vs. Ameerappa, 1991 (3) RCR (Crl.) 172, which held as follows :

"From the scheme of the provisions in Chapter XVII of the Act two features loom large. First is that more than one cause of action on the same cheque is not contemplated or envisaged. Second is, institution of prosecution cannot be made after one month of the cause of action. If more than one cause of action on the same cheque can be created, its consequence would be that the same drawer of the cheque can be prosecuted and even convicted again and again on the strength of the same cheque. Legislature cannot be imputed with the intention to subject a drawer of cheque to repeated prosecution and convictions on the strength of one cheque."

It may be noticed that all the correctness of this judgment of the Division Bench of Kerala High Court was doubted by another Division Bench of the same High Court with the result that the question was referred to a Full Bench of the Kerala High Court. The Full Bench of the Kerala High Court in the case of S.K.D. Lakshmanan Fireworks Industries V. K. V. Sivarama Krishnan, 1995 (84) Company Cases 447, took the view that decision in Kumaresan's case, 1992(1) Crimes 23, cannot be approved as correct and had categorically observed at page 465 as follows:

"Summarising our conclusion we would hold that N.C. Kumaresan's case, (1992) 74 Com cas 848 (Ker), has not been correctly decided. There is nothing in the provisions in Chapter XVII of the Act which will preclude the creation of successive causes of action on the basis of one and the same cheque. Section 142(b) only prescribes a period of limitation for filing a complaint with reference to a cause of action already accrued. The effect of the provisions is only to bar complaint filed on the basis of a cause of action which arose one month prior to the date of filing of the complaint. It cannot be construed as a provision barring the payee or holder in due course from taking necessary actions to complete a fresh cause of action in accordance with law so long as the cheque remains unpaid and filing a complaint on the basis of the fresh cause of action so created notwithstanding the bar against filing a complaint on the basis of the earlier cause of action."

8. We are in complete agreement with the observations of the Full Bench of the Kerala High Court. It may also be mentioned that except the view of the Punjab High Court in the case of M/s. Chahal Engineering and Construction Ltd. Vs. M/s. Verma Private Co., 1994(1) Crimes 845, various other High Courts of this country have taken the view that presentation of returned cheque to Bank for payment more than once was permissible.

9. We are of the view that the object of giving notice under Section 138 of the Negotiable Instruments Act before prosecuting the drawer is to enable him to make payment of the cheque which he had issued. It is expected that on getting the notice the drawer would immediately either make available the funds or can negotiate with the payee to give him some more time so that he may arrange the funds to enable the cheque being cashed. It can be so that there may be a genuine problem for a drawee who might have expected to receive some payment within a stipulated time as in the course of business every party expects constant flow of payments in pursuance of supplies made by them. Accordingly there may be a real genuine and valid request in such cases to wait for short period so that money is received by the drawer and the cheque cashed. This may suit both the drawer of the cheque as also the drawee and without any fuss or further legal action the matter may be amicably settled by arranging the payment made in a short while. However there may be cases and cases where a cunning party knowing very well that it was impossible for that party to get any funds in near future it may just seek extension on the plea to arrange the funds meanwhile. The payee may feel that the time asked for was genuine and may accordingly resubmit the cheque for encashment again on the advice of the drawer. In such a case if it may be accepted that after the first presentation the cheque being dishonoured no action under Section 138 of the Negotiable Instrument Act can be taken on subsequent presentation and dishonouring of the cheque, that would not only be unjust but would prove to be a lacuna in the scheme of this Act, which could never be the intention of the Legislature. Consequently it has to be held that on a cheque being dishonoured once, if the payee is asked to present the cheque again, and still the cheque is not cashed then the payee would be entitled to give to the drawer of cheque a notice under Section 138 after the subsequent presentation of cheque and the limitation would start running not from the date when the cheque was dishonoured for the first time but from the date it was dishonoured subsequently. Hence we find ourselves in agreement with the views of different High Courts that the successive presentation of cheque is permissible and the period of limitation would start running from the date of last presentation and dishonouring of cheque.

10. Accordingly it is held that the view taken in the case of Mirza Manzoor Beg Vs. Riyazuddin, (supra), does not lay down the correct law. The view taken in the case of Smt. Kamla Sharma Vs. State of U.P., 1995 All Cri. C 239, is hereby approved.

Order accordingly.