Full Judgment Text
1
®
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 28 DAY OF APRIL, 2015
BEFORE
THE HON’BLE MR. JUSTICE A.N.VENUGOPALA GOWDA
CRIMINAL PETITION NO.2550/2015
BETWEEN:
P. SURENDRA KUMAR
S/O. PARUCHURI
AGED ABOUT 49 YEARS
M/s. PARUCHURI GLOBAL FOUNDATION
TH
NO.252, 14 CROSS
ND
2 BLOCK, R.T. NAGAR
BENGALURU – 560 032.
... PETITIONER
(BY SRI H.SHANTHI BHUSHAN, ADV.)
AND:
M/s. VARKEYS RETAIL VENTURES PVT. LTD.,
REPRESENTED BY ITS DIRECTOR
Mr. P.I. DENNIS
NO.32/1188, CHATHANGATTU ROAD
PALARIVATTOM, KOCHI - 25
KERALA.
... RESPONDENT
THIS CRL.P. IS FILED UNDER S.482 CR.P.C., PRAYING TO
QUASH THE ENTIRE PROCEEDINGS PENDING ON THE FILE OF
XXVII ADDL. C.M.M., BENGALURU IN PCR NO.15347/2014
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REGISTERED ON 16.10.2014 AGAINST THE PETITIONER FOR
THE OFFENCE PUNISHABLE UNDER Ss.138 AND 142 OF
NEGOTIABLE INSTRUMENTS ACT.
THIS CRL.P. COMING ON FOR ADMISSION THIS DAY, THE
COURT MADE THE FOLLOWING:
O R D E R
The petitioner, shown as an accused, in a private
complaint filed by the respondent, alleging commission of
an offence under S.138 of the Negotiable Instruments Act,
1881 (for short, ‘the Act’ ), filed this petition by contending
that the complaint is not maintainable and no such
proceeding could be launched against him. This petition
was filed under S.482 of Cr.P.C., to quash the entire
proceedings in PCR No.15347/2014 pending on the file of
the XXVII ACMM, Bengaluru.
2. Background facts, sans unnecessary details are
as under:
In the complaint, the respondent herein has alleged
that the petitioner had received from him ` 20,67,000/-, in
the matter of arranging a loan of ` 15,00,00,000/- and as
the loan could not be arranged, when the said amount was
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sought to be returned, issued four cheques of ` 4,00,000/-
each, drawn on Corporation Bank, R.T. Nagar, Bengaluru –
32 and agreed to pay in due course, the balance of
` 4,67,000/- in cash or by cheque. The cheque when
presented for encashment were dishonoured by the said
bank and a demand notice dated 05.04.2011 was given, to
pay the amount. It was alleged that in view of the request
made by the petitioner to re-present the cheque again for
encashment by assuring that the cheque will be honoured
by his Bank, the cheque was again re-presented for
encashment. The cheque was again dishonoured on
20.05.2011, for the reason ‘funds insufficient’. After
causing a demand notice dated 03.06.2011 and payment
of the cheque amount having not been made, complaint
was filed before the Judicial Magistrate at Ernakulam. The
complaint having been returned by making reference to
the decision in DASHRATH RUPSINGH RATHOD Vs. STATE OF
MAHARASHTRA AND OTHERS, 2014 AIR SCW 4798 and the
complaint having been presented before the XXVII ACMM,
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Bengaluru and registered as PCR No.15374/2014, this
petition was filed, for grant of the aforesaid relief.
3. Sri H. Shanthi Bhushan, learned advocate,
contended that the respondent having given a legal notice
on 05.04.2011, demanding payment of the amount shown
in the bounced cheque and having not filed a complaint
and having caused another notice on 3.06.2011
demanding payment of the bounced cheque, is debarred
from filing the complaint i.e., based on the notice issued
on 03.06.2011. He submitted that a complaint having not
been filed pursuant to the notice given on 05.04.2011, it is
not open to initiate prosecution for offence under S.138 /
S.142 of the Act, in respect of dishonour of the cheque for
the second time. He placed reliance on the decisions in (i)
SADANANDAN BHADRAN Vs. MADHAVAN SUNIL KUMAR, (1998)
6 SCC 514 and (ii) S.L. CONSTRUCTION AND ANOTHER Vs.
ALAPATI SRINIVASA RAO AND ANOTHER, AIR 2009 SC 1538
and (iii) V. VENKATESA SUBBU Vs. M/s. JAYA BHASKARAN
AND CO. AND ANOTHER, 2004 CRL.L.J. 855.
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4. The cheque in question having been
dishonoured by the petitioner’s bank, with remark ‘funds
insufficient’, a demand notice was given on 05.04.2011.
According to the complainant, the petitioner requested to
re-present the cheque again for encashment and assured
that the cheque will be honoured on such re-presentation.
The cheque having been re-presented and having been
again returned on 20.05.2011, for the reason ‘funds
insufficient’, demand notice dated 03.06.2011, to pay the
amount covered under the cheque was given. Payment
having not been made, private complaint was lodged on
18.07.2011, before the Magistrate at Ernakulam. The
complaint having been returned, in view of the decision in
DASHRATH RUPSINGH RATHOD (supra), was presented
before the XXVII ACMM, Bengaluru.
5 In SADANANDAN BHADRAN (supra), the
complainant, had, after dishonour of a cheque issued in his
favour, taken steps to serve upon the accused, the drawer
of the cheque, a notice under clause (b) of proviso to
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S.138 of the Act. No complaint, however, was filed by the
complainant, upon failure of the accused to arrange the
payment of the amount covered by the cheque. Instead,
the complainant, payee of the cheque, had presented the
cheque for collection once again, which was dishonoured
for the second time, for want of sufficient funds. Another
notice was served on the drawer of the cheque to arrange
payment within 15 days of the receipt of the notice. After
failure of the drawer to do so, payee filed complaint
against the drawer, under S.138 of the Act. Accused filed
an application, seeking discharge, on the ground that the
complainant cannot create more than one cause of action
in respect of a single cheque and the complaint in question
having been filed on the basis of the second presentation
and resultant second cause of action, was not
maintainable. Accepting the contention, complaint having
been dismissed, was questioned in the High Court and the
impugned order having been upheld, the matter, when
eventually was taken up before the Apex Court, the point
formulated for determination was whether the payee or
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holder of a cheque can initiate prosecution for offence under
S.138 of the NI Act, 1881, for its dishonour for the second time,
even if he had not initiated any action on the earlier cause of
action? Q uestion was answered in the negative and the
appeal was dismissed.
6. Following the decision rendered in
SADANANDAN BHADRAN (supra), in S.L.CONSTRUCTION
(supra), it was held that, cause of action for filing of
complaint would be deemed to have arisen only once and
not more than once.
7. In V. VENKATESA SUBBU (supra), following the
decision in SADANANDAN BHADRAN’s case , it was held that
the cause of action having already arisen in respect of
dishonour of the cheque and consequent receipt of notice
demanding cheque amount, complaint filed after second
dishonour of cheque is laible to be dismissed, as no cause
of action would arise.
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8. The decision in SADANANDAN BHADRAN (supra),
was followed in several subsequent decisions, by the
various High Courts and the Apex Court, including in PREM
CHAND VIJAY KUMAR Vs. YASHPAL SINGH AND ANOTHER,
(2005) 4 SCC 417
9. In MSR LEATHERS Vs. S. PALANIAPPAN, (2013) 1
SCC 177, four cheques issued in favour of the appellant,
were presented for collection. The cheques were
dishonoured for ‘insufficiency of funds’. A notice
demanding payment of the amount covered by the
cheques was issued. Despite receipt of notice, drawer did
not arrange the payment. The cheques were presented for
the second time on the assurance that the funds necessary
for encashment of the cheques shall be made available.
The cheques presented for the second time were
dishonoured on the ground of ‘insufficiency of funds’.
Notice under Clause (b) of proviso to S.138 of the Act was
given demanding payment by the drawer within 15 days.
Despite service of notice, payment having not been made,
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complaint was filed for the offence punishable under S.138
of the Act. The Magistrate took cognizance and issued
summons. Accused having entered appearance, sought
discharge, primarily on the ground that the complaint had not
been filed within 30 days of expiry of notice, based on the first
dishonour of the cheque/s . Application having been
dismissed and the High Court having been approached,
revision petition was allowed, by relying upon the decision
in SADANANDAN BHADRAN ’s case. Apex Court having been
approached for relief by the complainant and the Division
Bench having expressed its reservation about the
correctness of the view taken in SADANANDAN BHADRAN’S
case (supra), referred the matter to a Larger Bench.
Considering the rival contentions and also the fact that the
decision in SADANANDAN BHADRAN’s case had been followed
in several subsequent decisions, without disturbing or
making any addition to the rationale behind the decision in
SADANANDAN BHADRAN’S case, the reference was answered
as follows:
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“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 a
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 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.
34. The controversy, in our opinion, can be seen from another
angle also. If the decision in Sadanandan Bhadran’s case is correct,
there is no option for the holder to defer institution of judicial
proceedings even when he may like to do so for so simple and
innocuous a reason as to extend certain accommodation to the
drawer to arrange the payment of the amount. Apart from the fact
that an interpretation which curtails the right of the parties to
negotiate a possible settlement without prejudice to the right of
holder to institute proceedings within the outer period of limitation
stipulated by law should be avoided we see no reason why parties
should, by a process of interpretation, be forced to launch
complaints where they can or may like to defer such action for
good and valid reasons. After all, neither the courts nor the parties
stand to gain by institution of proceedings which may become
unnecessary if cheque amount is paid by the drawer. The
Magistracy in this country is overburdened by an avalanche of
cases under Section 138 of Negotiable Instruments Act. If the first
default itself must in terms of the decision in Sadanandan
Bhadran’s case result in filing of prosecution, avoidable litigation
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would become an inevitable bane of the legislation that was
intended only to bring solemnity to cheques without forcing parties
to resort to proceedings in the courts of law. While there is no
empirical data to suggest that the problems of overburdened
Magistracy and judicial system at the district level is entirely
because of the compulsions arising out of the decisions in
Sadanandan Bhadran’s case, it is difficult to say that the law
declared in that decision has not added to court congestion.
35. In the result, we overrule the decision in Sadanandan case
and hold that the prosecution based upon second or successive
dishonour of the cheque is also permissible so long as the same
satisfies the requirements stipulated in the proviso to Section 138
of the Negotiable Instruments Act. The reference is answered
accordingly. The appeals shall now be listed before the regular
Bench for hearing and disposal in the light of the observations
made above.”
(emphasis supplied)
10. As already noticed, in the cases of (1) S.L.
CONSTRUCTION and (2) V. VENKATESA SUBBU (SUPRA), the
decision rendered in SADANANDAN BHADRAN’ s case was
followed, without disturbing or making any addition to the
rationale behind the decision in SADANANDAN BHADRAN’ s
case. In view of the authoritative pronouncement by the
Larger Bench, in MSR LEATHERS (supra), the decision
rendered in S.L. CONSTRUCTION (supra) is impliedly
overruled, on the question relating to multiple presentation
of cheque and multiple notices given.
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11. In KAMLESH KUMAR Vs. STATE OF BIHAR AND
ANOTHER, (2014) 2 SCC 424 , on dishonour of the cheque in
question on 25.10.2008, although a legal notice dated
27.10.2008 was issued to the drawer of the cheque –
appellant, by making a demand for payment of the amount
of the said cheque in terms of S.138 of the Act, but no
complaint was filed under S.138 of the Act, on the basis of
that notice. Thereafter, the cheque was again presented
before the Bank, on 10.11.2008, for encashment, but it
was again dishonoured. Consequently, another legal
notice dated 17.12.2008 was issued to the drawer of the
cheque – appellant, on the basis of the said dishonour of
the cheque on 10.11.2008. Finding no response to the
said notice dated 17.12.2008, a complaint under Section
138 of N.I. Act was filed by the payee of the cheque –
respondent No.2, against the drawer of the cheque –
appellant. The accused/appellant filed petition under
Section 482 Cr.P.C. for quashing of the complaint, on the
ground that it was untenable, as it was clearly time barred
and not filed within the stipulated period prescribed in law.
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The criminal petition filed under Section 482 Cr.P.C. having
been dismissed, Apex Court was approached for relief.
Considering the factual background, rival contentions and
the relevant statutory provisions, it has been held as
follows:
“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 . The
Specific question which was formulated for consideration by the
Court and referred to three Judge Bench in that case, was as
under:
“3. ‘2. … 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?’ ( Sadanandan Case, SCC p.516, para 2 )”
This question was answered by the three Judge Bench in the
aforesaid matter in the following manner: ( MSR Leathers vs.
S.Palaniappan & Anr. (2013) 1 SCC 177, SCC pp.188-89, para
15)
“15. 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
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encashment during the period of six months or during the period
of its validity, whichever is earlier.”
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.”
(emphasis is supplied)
12. An identical issue raised by an accused person,
in Crl.P.No.3774/2013 (SRI R. LAKSHMINARASIMHA Vs. SRI
GOUTHAMCHAND), was negated and the petition was
dismissed on 16.04.2015.
13. Since the decision in SADANANDAN BHADRAN’S
case has been overruled in MSR LEATHERS ( supra ) and as it
has been held, that the prosecution based on the second
or successive dishonour of cheque is permissible, so long
as cheque is valid, as specified in S.138 of the Act, I do
not find any merit in the contention urged by the learned
advocate for the petitioner.
In the result, petition is dismissed. However, learned
Magistrate shall decide the case with expedition.
Sd/-
JUDGE
sac*