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Madhya Pradesh High Court · body

2006 DIGILAW 1084 (MP)

Kapil Upadhyay v. Milan Auto

2006-09-11

S.C.VYAS

body2006
ORDER :- This is a petition filed under Section 482 of Cr. P. C., for quashment of the proceedings of a private complaint Cr. C. No. 2578/05, which is pending against the present petitioner in the Court of Judicial Magistrate First Class, Indore for trial of the offence punishable under Section 138 of the Negotiable Instruments Act (hereinafter referred to as "the N. I. Act"). 2. Short facts of the case as narrated in the complaint filed by the respondent are that present petitioner purchased a vehicle from the respondent /complainant and handed over a cheque of Rs. 36,073/- drawn in Transport Cooperative Bank Ltd., Branch Transport Nagar, Indore. Respondent /complainant presented that cheque for clearance in Unit Trust of India Bank Ltd., Branch-Indore, within the specified time. The cheque was dishonoured by the banker of the present petitioner with a note that "payment stopped by drawer". Then notice was given by the respondent to the present petitioner to make the payment, but he failed to pay the amount within one month from the date of receipt of the notice, so respondent filed the complaint against the present petitioner. 3. It has been contended in the petition that initially a notice under Section 138 of the N. I. Act was given by respondent to the petitioner on 13-4-2005, which was duly replied by him. Thereafter, again second notice was given on 3-6-2005, which was also duly replied by present petitioner on 17-6-2005 by registered post, which was served upon respondent on 20-6-2005. It has also been contended that as no complaint was filed within one month from the date of cause of action arisen to the respondent from the date of first notice, therefore, the complaint, which was filed by the respondent before learned Trial Court was clearly time barred and could not have been entertained by that Court, but the trial Court failed to take note of this irregularity and registered offence against the present petitioner, therefore, it has been prayed that complaint of the respondent be quashed on the ground that it was time barred. 4. Notice was issued to respondent M/s. Milan Auto, through authorized representative Shri Naveen Chouhan S/o Ramkrishna Chouhan. 4. Notice was issued to respondent M/s. Milan Auto, through authorized representative Shri Naveen Chouhan S/o Ramkrishna Chouhan. That notice was personally served on Naveen Chouhan on 23-4-2006, but neither the said Naveen Chouhan nor his authorized agent appeared before this Court on 11-5-2006, this Court adjourned the case to facilitate the respondent to appear before this Court. Matter was again listed on 27-6-2006 on that date also none appeared for the respondent and one more opportunity was granted, but on 5-7-2006 also none appeared for respondent, thereafter, SPC was issued to the respondent on directions of this Court for 20-7-2006, which was also served, but even then nobody appeared. In such circumstances arguments of learned counsel for the present petitioner were heard and the matter is being disposed of finally vide this order. 5. Learned counsel for the petitioner submitted that cause of action for filing complaint under Section 138 of the N. I. Act arises only once and not after every presentation of the cheque to the bank or on giving every notice to the drawer of the cheque. He submitted that in the present case also when first notice was given on 13-7-2005 and present petitioner was asked to make payment of amount of cheque within 15 days, then after expiry of that period of 15 days, cause of action for filing complaint under Section 138 of the N. I. Act arose to the respondent and, therefore, he should have filed complaint on or before 28-5-2005, whereas complaint was filed before Trial Court on 5-7-2005, which was clearly time barred, therefore, learned counsel for the petitioner submitted that the criminal case which is pending before Trial Court on the basis of complaint filed by the respondent be quashed. 6. I have given very serious consideration to the arguments advanced by learned counsel for the petitioner. Section 138 of the N. I. Act, which provides for punishment of the drawer on account of bouncing of cheque due to insufficiency of funds in the accounts or for the reason that it exceeds the amount arranged to be paid from that account by an agreement made with the bank by the drawer. This being a penal provision, therefore, its provisions are required to be construed very strictly and not lightly. This being a penal provision, therefore, its provisions are required to be construed very strictly and not lightly. It is always required to be kept in mind that provisions of Section 138 of N. I. Act should not be utilized as general provisions for recovery of debts and as certain specific procedure has been envisaged in Sections 138 and 142 of the N. I. Act, therefore, these two sections required proper and strict interpretation of their provisions. Section 138 of the N. I. Act reads as under :- "Section 138 :- 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 discharging, 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 insufficient 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." 7. A bare reading of this section shows that this provision creates an offence when a cheque is returned by bank unpaid on the reasons mentioned in the section namely that - first, because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank. 8. The analysis of this section also shows that the proviso added with this section lays down three conditions precedent to the applicability of the section itself they are : first that the cheque should have been presented to the bank within six months from the date on which it is drawn or within the period of its validity, which ever is earlier; secondly, the payee or the holder in due course of the cheque should have made a demand for payment by giving a notice in writing within 15 days from receipt of information from Bank after the cheque is returned unpaid; and thirdly which is most important that the drawer of such cheque should have failed to pay the amount within 15 days from the date of receipt of the notice. All these three conditions are required to be fulfilled for the purpose of providing a cause of action to prosecute a person for the offence punishable under Section 138 of N. I. Act. Mostly cheques are being presented in the bank within the period of their validity and thereafter, the most important part of this Section comes into operation and it was necessary for payee or holder in due course to make a demand for payment in the form of a notice send in writing demanding payment within 15 days from the receipt of notices. Such notices are also required to be given within 15 days from the date of receipt of information from the bank regarding return of cheque unpaid and thereafter, provisions of Section 142 (a) and (b) of the N. I. Act comes into operation, which provides that- "Section 142(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) complaint is made within one month of the date of which the cause of action arises under Clause (c) of the proviso to Section 138." 9. Therefore, mere reading of the provisions of Section 138 including its proviso and Section 142(a) and (b) of the N. I. Act makes it abundantly clear that, a competent Court can take cognizance of a written complaint of offences under Section 138 of the N. I. Act, only when such complaint is made within one month from the date of cause of action which arises on 15th day of sending notice to the drawer by the payee after receiving information from the bank regarding non-payment of the cheque and that too when amount of cheque is not paid within that period. Cause of action in such type of cases when once arose it cannot be stopped by any subsequent event and the nature of the offences clearly shows that such offences are not offences of that type for which continuous or recurring cause of action can arise. Because it is necessary as per the provisions of Section 142(a) and (b) to file a complaint within one month from the date of arising of cause of action, therefore, it is clear that when once cause of action arose to a payee and he fails to file a complaint under Section 138 of the N. I. Act. 10. Hon'ble Supreme Court has also considered this point in the case of Sadanandan Bhadran v. Madhavan Sunil Kumar ( AIR 1998 SC 3043 ) : (1998 Cri LJ 4066) and held in Paragraph No. 5 of the judgment that : "A cheque can be presented any number of times during the period of its validity by payee. On each presentation of the cheque and its dishonour a fresh right and not cause of action accrues in his favour. On each 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 his such right under Cl. (b) of S. 138, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But, once he gives a notice under Cl. (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 filing the complaint will arise. Needless to say, the period of one month for filing the complaint will be reckoned from the day immediately following the day on which the period of fifteen days from the date of the receipt of the notice by the drawer, expires." It has further been held in Paragraph No. 7 that :- "Consequently upon the failure of the drawer to pay the money within the period of 15 days as envisaged under Cl. (c) of the proviso to Section 138, the liability of the drawer for being prosecuted for the offence he has committed arises, and the period of one month from filing the complaint under Section 142 is to be reckoned accordingly. The combined reading of the above two sections of the Act leaves no room for doubt that cause of action within the meaning of Section 142 arises and can arise only once. In paragraph 8 of the same judgment it has further been held that :- "Besides the language of Sections 138 and 142 which clearly postulates only one cause of action there are other formidable impediments which negates the concept of successive cause of action. One of them is that for dishonour of one cheque there can be only one offence and such offence is committed by the drawer immediately on his failure to make the payment within fifteen days of the receipt of the notice served in accordance with Clause (b) of the proviso to Section 138. One of them is that for dishonour of one cheque there can be only one offence and such offence is committed by the drawer immediately on his failure to make the payment within fifteen days of the receipt of the notice served in accordance with Clause (b) of the proviso to Section 138. That necessarily means that for similar failure after service of fresh notice on subsequent dishonour the drawer cannot be liable for any offence nor can the first offence be treated as non est so as to give the payee a right to file a complaint treating the second offence as the first one." 11. In the case of Saketh India Ltd. v. India Securities Ltd. ( AIR 1999 SC 1090 ) : (1999 Cri LJ 1822) also it was held by Supreme Court that :- "Section 138 of the Negotiable Instruments Act inter alia provides that where any cheque drawn by a person is returned by the bank unpaid, such person shall be deemed to have committed an offence, however, it will apply, if conditions mentioned in Cls. (a), (b) and (c) are satisfied. Section 142 further provides that Court shall take cognizance of any offence punishable under Section 138 of the N. I. Act on a written complaint made by the payee or the holder in due course, if such complaint is filed within one month of the date on which the cause of action arises. A month is to be reckoned according to the British Calendar as defined in the General Clauses Act, 1897." 12. In paragraph 7 of the complaint it has been mentioned that the cheque was presented by the complainant in his bank earlier also and at that time also it was dishonoured by the bank thereafter, a notice was issued by the complainant to the petitioner and that petitioner assured him that if complainant would present the cheque in the bank after some time then he would get the payment. Thereafter, the cheque was presented before bank second time and when it was again dishonoured then again the notice was issued. Thereafter, the cheque was presented before bank second time and when it was again dishonoured then again the notice was issued. These averments when read along with the copy of the notice which was issued by complainant to the petitioner on first occasion then it becomes crystal clear that the cheque issued by the petitioner was presented by the complaint/respondent in his bank in the month of April and when the same was dishonoured then he demanded the payment by sending a notice in writing asking petitioner to clear the payment of cheque within 10 days otherwise he will be prosecuted under Section 138 of the N. I. Act. Therefore, these facts shows that the cheque was presented in the bank earlier as the same was returned dishonoured, then notice was issued even then payment was not made within 15 days from the date of receipt of that notice by the petitioner thereafter, complainant/respondent failed to file any complaint within one month from the date of cause of action, which has arisen to him from the date of sending of that first notice and non-payment within 15 days from the receipt of that notice by the petitioner. When he failed to file any complaint within one month from the date of cause of action then present complaint, which was filed in the month of July, 2005 is clearly time barred and learned Magistrate should not have taken cognizance of this offence against the present petitioner on the basis of time barred complaint, in view of the provisions of Section 142(a) and (b) of N. I. Act. 13. Therefore, as per aforesaid discussion the complaint filed by the respondent is time barred and learned Magistrate has committed a mistake of law in taking cognizance of the offence punishable under Section 138 of the N. I. Act against the present petitioner, over looking the provisions of Section 142(a) and (b) of the N. I. Act and, therefore, the prosecution which has started against the present petitioner on the basis of such complaint, is liable to be quashed. 14. Resultantly, the petition succeeds and is allowed. The proceedings of private complaint Criminal Case No. 2578/05, which is pending against present petitioner in the Court of Judicial Magistrate First Class, Indore, is hereby quashed. Petition allowed.