(Prayer: This Criminal Appeal filed under Section 378(4) of the code of Criminal Procedure, 1973, by the advocate for the appellant/accused praying to set aside the judgment dated 26.10.2011 passed by the Presiding Officer, Fast Track Court-I, Bangalore in Criminal Appeal No.610/2008 - acquitting the respondent/accused for the offence punishable under Section 138 of N.I.Act and confirm the order dated 28.5.2008 passed by the XV Additional Chief Metropolitan Magistrate, Bangalore in C.C.No.26483/2007.)
1. This is a complainant's appeal. The complainant had alleged that the respondent had committed an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, (Hereinafter referred to as 'the NI Act', for brevity) The complainant was said to be a tenant under the respondent.
It is stated that he had paid a security deposit under the lease agreement. This sum of Rs.2.50 lakh was said to have been refunded by the respondent after deducting Rs.8,000/-, by way of a cheque dated 22.2.2007. The cheque having been dishonoured on being presented for collection and when the respondent failed to make payment against a demand made in terms of Section 138 of the NI Act, the complaint came to be filed.
2. In the proceedings before the Magistrate, though the accused had entered appearance, the matter was not contested.
In that, the complainant was not cross-examined to test his evidence by way of his examination-in-chief, nor did the accused tender any evidence in spite of opportunity. The case of the complainant was therefore accepted by the court and the respondent was convicted and sentenced to pay a fine of Rs.2.45 lakh of which Rs.2.44 lakh was to be paid as compensation to the complainant.
The accused had challenged the judgment of the trial court by way of an appeal before the lower appellate court. He was permitted to tender evidence under Section 391 of the Code of Criminal Procedure, 1973, (Hereinafter referred to as 'the Cr.P.C.', for brevity). The accused had then demonstrated that the actual sequence of events were as follows, that in terms of Exhibit P6, the endorsement issued by the banker, of dishonour of the cheque was on 25.4.2007, pursuant to which the complainant is said to have issued a notice of demand, Exhibit-D1, hence the cause of action to file a complaint, when the accused failed to meet the demand, arose on 9.5.2007.
However, no complaint was preferred . The complainant chose to present the cheque again on 28.6.2007 for encashment.
When it was again dishonoured, the complainant is shown to have issued a second notice of demand under Section 138 of the NI Act, dated 10.7.2007 and since the accused had again failed to respond that the complaint came to be filed. This, the lower appellate court has held, was impermissible and has acquitted the accused . It was opined that on issuing the first notice dated 25.4.2007, the complainant had exercised the right to proceed against the accused. If no complaint was filed, the complainant forfeited his right to do so and could not issue a second notice and file a complaint on a re-presentation of the cheque in question. It is this which is sought to be questioned in this appeal.
3. After having heard the learned counsel for the parties, the only controversy is whether such presentation of the cheque for the second time and then to lodge a complaint on dishonour, was permissible. Notwithstanding that the apex court has ruled on this issue and that the question is no longer res integra, the counsel for the respondent has sought to canvas that the opinion expressed in a recent decision of the Apex court, in Dashrath Rupsingh Rathod v. State of Maharashtra and Another, 2014 SAR (Criminal) 966 Supreme Court, a three judge bench judgment, is to the effect that a second presentation of the cheque on an initial dishonour, would not give a fresh cause of action to file a complaint.
4. The learned counsel for the respondent seeks to draw attention to the following passages to contend that though the decision in Sadanandan Bhadran v. Madhavan Sunil Kumar (1998) 6 SCC 514, was overruled in the case of MSR Leathers v. S. Palaniappan (2013 ) 1 SCC 177, the highlighted portion of the observations hereunder, according to the counsel for the respondent, restore the legal position as spelt out by Sadanandan Bhadran.
"28. We may at this stage refer to two other decisions of this Court which bear some relevance to the question that falls for our determination. In Sadanandan Bhadran v. Madhavan Sunil Kumar (1998) 6 SCC 514 a two-judge bench of this Court held that clause (a) of proviso to Section 138 does not disentitle the payee to successively present cheque for payment during the period of its validity. On each such presentation of the cheque and its dishonour a fresh right - and not cause of action -accrues in his favour. He may, therefore, without taking pre-emptory action in exercise of such right under clause (b) of Section 138 go on presenting the cheque so long as the cheque is valid for payment. But once he gives a notice under clause (b) of Section 138 he forfeits such right for in case of failure of the drawer to pay the money within the stipulated time he would be liable for the offence and the cause of action for prosecution will arise. The correctness of this view was questioned in MSR Leathers v. S. Palaniappan and Anr. (2013) 1 SCC 177 before a bench comprising of Markandey Katju and B. Sudershan Reddy, J.J. who referred the issue to a larger bench. The larger bench in MSR Leathers case (supra) overruled Sadanandan Bhadran (supra) holding that there was no reason why a fresh cause of action within the meaning of Section 142 (b) read with section 138 should not be deemed to have arisen to the complainant every time the cheque was presented but dishonoured and the drawer of cheque failed to pay the amount within the stipulated period in terms of proviso to 138. This Court said:
"In the result, we overrule the decision in Sadanandan Bhadran's case (supra) and hold that 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 light of the observations made above."
29. What is important is that in Sadanandan Bhadran (supra) this Court had, on a careful analysis of Section 138, held that an offence is created when a cheque is returned by the bank unpaid for any reasons mentioned therein, although the proviso to Section 138 stipulates three conditions for the applicability of the section. It is only upon satisfaction of the three conditions that prosecution can be launched for an offence under Section 138. This Court observed:
"On a careful analysis of the above section, it is seen that its main part creates an offence when a cheque is returned by the bank unpaid for any of the reasons mentioned therein. The significant fact, however, is that the proviso lays down three conditions precedent to the applicability of the above section and, for that matter, creation of such offence and the conditions are: (i) the cheque should have been presented to the bank within six months of its issue or within the period of its validity, whichever is earlier; (ii) the payee should have made a demand for payment by registered notice after the cheque is returned unpaid; and (iii) that the drawer should have failed to pay the amount within 15 days of the receipt of the notice. It is only when all the above three conditions are satisfied that a prosecution can be launched for the offence under Section 138. So far as the first condition is concerned, clause (a) of the proviso to Section 138 does not put any embargo upon the payee to successively present a dishonoured cheque during the period of its validity. This apart, in the course of business transactions it is not uncommon for a cheque being returned due to insufficient funds or similar such reasons and being presented again by the payee after sometime, on his own volition or at the request of the drawer, in expectation that it would be encashed. Needless to say, the primary interest of the payee is to get his money and not prosecution of the drawer, recourse to which, normally, is taken out of compulsion and not choice. For the above reasons it must be held that a cheque can be presented any number of times during the period of its validity. Indeed that is also the consistent view of all the High Courts except that of the Division Bench of the Kerala High Court in Kumaresan1 which struck a discordant note with the observation that for the first dishonour of the cheque, only a prosecution can be launched for there cannot be more than one cause of action for prosecution.
30. MSR Leathers (supra) also looked at Section 138 and held that a complaint could be filed under Section 138 after cause of action to do so had accrued in terms of clause (c) of the proviso to Section 138 which happens no sooner the drawer of the cheque fails to make the payment of the cheque amount to the payee within fifteen days in terms of clause (b) to proviso to Section 138. MSR Leathers was not so much concerned with the question whether the proviso stipulated ingredients of the offence or conditions precedent for filing a complaint. It was primarily concerned with the question whether the second or successive dishonour followed by statutory notices and failure of the drawer to make payment could be made a basis for launching prosecution against the drawer. That question, as noticed above, was answered in the affirmative holding that successive cause of action could arise if there were successive dishonours followed by statutory notices as required under the law and successive failure of the drawer to make the payment. MSR Leathers cannot, therefore, be taken as an authority for determining whether the proviso stipulates conditions precedent for launching a prosecution or ingredients of the offence punishable under Section 138. Sadanandan Bhadran may have been overruled to the extent it held that successive causes of action cannot be made a basis for prosecution, but the distinction between the ingredient of the offence, on the one hand, and conditions precedent for launching prosecution, on the other, drawn in the said judgement has not been faulted. That distinction permeates the pronouncements of this Court in Sadanandan Bhadran and MSR Leathers. "
(emphasis supplied) From a plain reading of the above, it is not possible to accept the contention of the counsel for the respondent. The observation of the Court is only to point out the similarity in views while analyzing the ingredients of Section 138 of the NI Act, which has been addressed by the court in the earlier part of the judgment, thus :
"10. Section 138 is a penal provision that prescribes imprisonment upto two years and fine upto twice the cheque amount. It must, therefore, be interpreted strictly, for it is one of the accepted rules of interpretation that in a penal statute, the Courts would hesitate to ascribe a meaning, broader than what the phrase would ordinarily bear. Section 138 is in two parts. The enacting part of the provision makes it abundantly clear that what constitutes an offence punishable with imprisonment and/or fine is the dishonour of a cheque for insufficiency of funds etc. in the account maintained by the drawer with a bank for discharge of a debt or other liability whether in full or part. The language used in the provision is unambiguous and the ingredients of the offence clearly discernible viz. (a) Cheque is drawn by the accused on an account maintained by him with a banker. (b) The cheque amount is in discharge of a debt or liability and (c) The cheque is returned unpaid for insufficiency of funds or that the amount exceeds the arrangement made with the bank. But for the proviso that comprises the second part of the provision, any dishonour falling within the four corners of the enacting provision would be punishable without much ado. The proviso, however, draws an exception to the generality of the enacting part of the provision, by stipulating two steps that ought to be taken by the complainant holder of the cheque before the failure of the drawer gives to the former the cause of action to file a complaint and the competent Court to take cognizance of the offence.
These steps are distinct from the ingredients of the offence which the enacting provision creates and makes punishable. It follows that an offence within the contemplation of Section 138 is complete with the dishonour of the cheque but taking cognizance of the same by any Court is forbidden so long as the complainant does not have the cause of action to file a complaint in terms of clause (c) of the proviso read with Section 142 which runs as under:
"Section 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.]
(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."
11. The following would constitute 'cause of action' referred to in sub clause (b) above:
a) The complainant has presented the cheque for payment within the period of six months from the date of the issue thereof.
b) The complainant has demanded the payment of the cheque amount from the drawer by issuing a written notice within thirty days of receipt of information by him from the bank regarding the dishonour.
d) The drawer has failed to pay the cheque amount within fifteen days of the receipt of the notice.
12. A proper understanding of the scheme underlying the provision would thus make it abundantly clear that while the offence is complete upon dishonour, prosecution for such offence is deferred till the time the cause of action for such prosecution accrues to the complainant. The proviso in that sense, simply postpones the actual prosecution of the offender till such time he fails to pay the amount within the statutory period prescribed for such payment. There is, in our opinion, a plausible reason why this was done. The Parliament in its wisdom considered it just and proper to give to the drawer of a dishonoured cheque an opportunity to pay up the amount, before permitting his prosecution no matter the offence is complete, the moment the cheque was dishonoured. The law has to that extent granted a concession and prescribed a scheme under which dishonour need not necessarily lead to penal consequence if the drawer makes amends by making payment within the time stipulated once the dishonour is notified to him. Payment of the cheque amount within the stipulated period will in such cases diffuse the element of criminality that Section 138 attributes to dishonour by way of a legal fiction implicit in the use of the words "shall be deemed to have committed an offence." The drawer would by such payment stand absolved by the penal consequences of dishonour. This scheme may be unique to Section 138 NI Act, but there is hardly any doubt that the Parliament is competent to legislate so to provide for situations where a cheque is dishonoured even without any criminal intention on the part of the drawer.
13. The scheme of Section 138 thus not only saves the honest drawer but gives a chance to even the dishonest ones to make amends and escape prosecution. Compliance with the provision is, in that view, a mandatory requirement. (See C.C. Alavi Haji v. Palapetty Muhammed and Another (2007) 6 SCC
555).
14. Harman in that view correctly held that what would constitute an offence is stated in the main provision. The proviso appended thereto however imposes certain further conditions which are required to be fulfilled before cognizance of the offence can be taken. If the Parliament intended to make the conditions stipulated in the proviso, also as ingredients of the offence, the provision would have read differently. It would then have specifically added the words and the drawer has despite receipt of a notice demanding the payment of the amount, failed to pay the same within a period of fifteen days from the date of such demand made in writing by a notice. That, however, is not how the enacting provision of Section 138 reads. The legislature has, it is obvious, made a clear distinction between what would constitute an offence and what would give to the complainant the cause of action to file a complaint for the court competent to take cognizance. That a proviso is an exception to the general rule is well settled. A proviso is added to an enactment to qualify or create an exception to what is contained in the enactment. It does not by itself state a general rule. It simply qualifies the generality of the main enactment, a portion which but for the proviso would fall within the main enactment."
There is no doubt what so ever that a prosecution based upon a second or successive dishonour of the cheque is permissible as long as the same satisfies the requirements stipulated in the proviso to Section 138 of the NI Act.
Incidentally, a finding by the appellate court that the petitioner had suppressed the fact of the cheque having been dishonoured in the first instance, is also incorrect. As may be seen from the sworn statement of the petitioner before the trial court, this fact has been stated.
5. Accordingly, in the present case on hand, as the complainant was well within his right to have made a second presentation of the cheque in question and the complaint filed upon dishonour and failure to meet the demand under a notice issued thereafter, cannot be said to be bad in law.
The appeal is allowed. The judgment of the lower appellate court is set aside, the judgment of the trial is restored.