Supreme Court of India
S.L. CONSTRUCTION & ANR.versusALAPATI SRINIVASA RAO & ANR.
- Citation
- 2008 INSC 1216
- Decided
- 23 October 2008
- Disposal
- Dismissed
Holding
A cause of action under Section 138 arises only once; multiple presentations within the statutory period do not constitute separate offences, and the High Court was correct in dismissing the petition.
Summary
The appellants issued a Rs.2 lakh cheque to the respondents on 22 June 2003, which was presented and dishonoured three times within the six‑month period prescribed by Section 138 of the Negotiable Instruments Act. Notices were issued after each presentation, but the first notice was not served and the second was withdrawn at the appellants' request. A criminal complaint under Sections 138 and 142 was filed on 23 January 2004, and the appellants sought quashal of the proceedings under CrPC Section 482, which the High Court dismissed. The Supreme Court examined whether multiple presentations and notices gave rise to successive causes of action, and held that the cause of action arises only once and the number of presentations is immaterial provided the cheque is presented within six months. Consequently, the Court found no error in the High Court’s dismissal and dismissed the appeal with costs.
Issues considered
- Whether the presentation of a cheque for the third time within the six‑month period violates Section 138 of the Negotiable Instruments Act.
- Whether successive notices and multiple presentations create multiple causes of action under Sections 138 and 142.
- Whether the High Court erred in dismissing the petition under CrPC Section 482 seeking quashal of the criminal complaint.
Legislation cited
- Code of Criminal Procedure, 1973s. 482
- Negotiable Instruments Act, 1881s. 138, s. 139, s. 142
Subjects
Negotiable Instruments ActSection 138Section 142Cheque bounceCause of actionCriminal complaintSection 482Multiple presentationsLimitation period
Judgment
[2008) 15 S.C.R. 51
'(
S.L. CONSTRUCTION & ANR. A
v.
ALAPATI SRINIVASA RAO & ANR.
(Criminal Appeal No.1761 of 2008)
OCTOBER 23, 2008
B
[S.B. SINHA AND CYRIAC JOSEPH, JJ.]
Code of Criminal Procedure, 1973:
s.482 - Petition seeking to quash criminal proceedings c
ulss 138 and 142 of Negotiable Instruments Act - Dismissed
by High Court - HELD: Cheque was presented for third time
within the stipulated .oeriod - What is prohibited is presentation
of cheque after the prescribed period and not the number of
times it is presented- The term 'cause of action' would mean
D
each of the facts required to be proved - The first notice
having not been served and the second notice having been
withdrawn in terms of the reply of the defaulters themselves,
the complainant cannot be said to have committed any
illegality in presenting the cheque for the third time and issuing
the third notice upon the defaulters - As per issuance of the E
cheque, non-payment thereof on presentation, issuance of
a valid notice calling upon the drawer of the cheque to pay
the amount in question and his failure to pay the complainant
the amount within a period of 15 days from the date of receipt
of a copy of the said notice, a cause of action arose for filing F
a complaint petition - Cause of action for filing a complaint
arose only once and not more than once - High Court cannot
be said to be have committed any error in dismissing the
petition - There is no merit in the appeal, which is dismissed
- Negotiable Instruments Act, 1881 - ss. 138 and 142 - G
Cause of action. [Para 21-22, 29-30, 32-33 and 35) [58-
C,D; 60-C,D,E,F,G; 61-C)
Sadanand Bhadran v. Madhavan Sunil Kumar, [1998) 6
sec 514, referred to.
51 H
52 SUPREME .COURT REPORTS [2008] 15 S.C.R.
A Prem Chand Vijay Kumar v. Yashpal Singh and Anr.,
[2005] 4 SCC 417 and Krishna Exports and Ors. v. Raju Das,
[2004] 13 sec 498, cited. ~·
Case La1w Reference :
[1998] 6 sec 514 referred to Para 12
B
[2005] 4 sec 417 Cited Para 12
[2004] 13 sec 498 Cited Para 12
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 1761 of 2008.
c
From the final Judgment and Order dated 7.6:2006 of the
High Court of Judicature of Andhra P·radesh at Hyderabad in
Criminal. Petition No. 1365 of 2004.
Anagha S. Desai, Satyajit A Desai and Venkateswara
D Rao Anumolu for the Appellants.
G. Ramakrishna Prasad, Suyodhan Byrapaneni, Sidharth
Patnaik and D. Bh.arathi Reddy for the Respondents.
The following Order of the Court was delivered :
E ORDER
Leave granted.
1. Appellants before us are aggrieved by and dissatisfied
with the judgment and order dated 7.6.2006 passed by a
F learned Single Judge of the High Court of Judicature of Andhra
Pradesh at Hyderabad whereby and whereunder a petition
under Section 482 of t.he Code of Criminal Procedure Code,
1973 praying for quashing the complaint proceedings under
Section 138 and Section 142 of the Negotiable Instrument Act
G before the IV Additional Munsif Magistrate, Guntur taking
cognizance against them under Section 138 of the Negotiable
Instruments Act, 1881, was dismissed.
2. The factual matrix involved herein is hot in dispute.
3. Appellants had entered into some business transactions
H in regard to supply of certain materials with Respondent No.1.
S.L.CONSTRUCTION & ANR. v. ALAPATI SRINIVASA 53
RAO & ANR.
~
Appellant No.2 as a proprietor of appellant No.1 issued a A
cheque for a sum of Rs. 2 lacs in favour of the complainant-
respondent on or about 22.6.2003. Appellants contend that the
said cheque was issued by way of security.
4. The said cheque was presented in the bank on
B
23.6.2003. It was returned un-paid by the banker of the
appellants on the ground of insufficient funds.
5. Another notice was sent for service on the proprietor of
S.L. Structures and Engineers on or about 8.7.2003. However,
admittedly, the said notice was not served upon the appellants. c
6. The said cheque was again presented before the bank
on 30.8.2003, and was again dishonoured.
7. Respondents served another notice upon the appellant
No.2 describing him as a proprietor of S.L. Structures and
. Engineers and calling upon him to pay the said amount of Rs .
D
" 2 lacs within 15 days from the date of receipt thereof.
8. However, in response thereto the appellants' advocate
by a letter dated 19.9.2003 pointed out that in stead and place
of S.L. Structures and Engineers, the notice should have been E
sent to S.L. Constructions. It was stated thds:
"That instead of sending the notice to S.L.
constructions you send the notice to my client Shri K.P.
:._
Raju Proprietor of S.L. Structures and Engineers, Nagpur
which is illegal. That by issuing such wrong and illegal F
notice your.client lower down the status of my client in the
eyes of gene·ral people and bankers and for which my
client instructed me to take the appropriate action either
Civil or Criminal in the Court of Law against your client."
G
9. It is in the aforementioned situation, the respondents
presented the cheque for the third time before the bank on
""
11.12.2003 which having been dishonoured, another notice was
sent and served on 17.12.2003. The chequewas dishonoured
for the third time also.
H
54 SUPREME COURT REPORTS [2008] 15 S.C.R.
A 10. Indisputably, as no payment was received from the
appellant pursuant to the said notice, a complaint petition was
filed on 23.1.2004. Upon receipt of summons, appellants
moved the High Court under Section 482 of the Code of
Criminal Procedure which, as noticed hereinbefore, by reason
s of the impugned judgment has been dismissed.
11. Mrs. Desai, learned counsel appearing on behalf of the
appellants raised the following contentions before us in support
.of this appeal; .
C (i) Having regard to the provisions contained in
Section 138 of the Negotiable Instruments Act and
in particular the proviso appended thereto, the
cheque could not have been presented for the third
time;
D
(ii) The complainant respondent having suppressed the I •
fact of issuance of earlier notices, no order taking
cognizance of the offence under Section 138 of the
Negotiable Instruments Act should have been
passed;
E
(iii) The High Court failed to take into consideration that
the cheque having been deposited after three
months and three notices having been issued one
after the other, no cause of action survived, as
F earlier, two notices for presenting the cheque
before the banker had been issued which had
already been dishonoured.
12. Strong reliance has been placed by Mrs. Desai in this
behalf on Sadanand Bhadran v. Madhavan Sunil Kumar,
G [1998] 6 SCC 514; Prem Chand Vijay Kumar v. Yashpal
Singh and Anr., [2005] 4 SCC 417 and Krishna Exports and
Ors. v. Raju Das, [2004] 13 SCC 498.
13. Learned counsel appearing on behalf of the
H respondent, on the other hand, contented;
S.L.CONSTRUCTION & ANR. v. ALAPATI SRINIVASA 55
RAO & ANR.
1\
(i) The cheque having been presented within a period A
of six months, the order taking cognizance was not
barred in terms of the proviso appended to Section
138 of the Negotiable Instruments Act;
(ii) The first notice having not been served and the
appellants themselves having called upon the B
respondents to withdraw the second notice, cannot
now be permitted to urge that the deposit of the
cheque for the third time and issuance of third
notice was illegal and without jurisdiction.
c
14. The Negotiable Instruments Act, 1881 was enacted to
define and amend the law relating to Promissory Notes, Bills
of Exchange and Cheques.
15. Chapter XVII of the Act provides for penalties in case
of dishonour of cheques for insufficiency of funds in the D
accounts of the drawer thereof.
16. Indisputably, Chapter XVII, which was inserted by the
Banking Public Financial Institutions and Negotiable
Instruments Laws (Amendment) Act, 1988 (66 of 1988) and E
came into force on 1.4.1989, was incorporated to "enhance the
..
acceptability of cheques in settlement of liabilities by making
the drawer liable for penalties in case of bouncing of cheques
..(,_ due to insufficiency of funds in the accounts or for the reason
that it exceeds the arrangements made by the drawer, with F
adequate safeguards to prevent harassment of honest
drawers."
17. It is in the aforementioned backdrop we may notice the
provisions of Sections 138, 139 and 142 of the said Act:
G
"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 discharge in whole or in part of H
#
56 SUPREME COURT REPORTS [2008] 15 S.C.R.
A any debt or other liability is returned by the bank unpaid,
either because of the amount of money standing to t_he
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
B 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:
c · Provided that nothing contained 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 d~awn
D 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
E
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
F the case may be, to the holder in due course of the cheque
within fifteen days of the receipt of the said notice.
Explanation:- For the purposes of this section/debt
or other liability" means a legally enforceable debt or other
liability.
G
)_
139. Presumption in favour of holder-It shall be
presumed, unless the contrary is proved, that the holder
of a cheque received the cheque, of the nature referred to
in section 138, for the discharge, in while or in part, of any
H debt or other liability.
S.L.CONSTRUCTION & ANR. v. ALAPATI SRINIVASA 57
~
RAO & ANR.
142. Cognizance of offences: Notwithstanding A
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 B
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: c
"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. D
(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:"
18. Indisputably, by reason of Section 138 of the Act a E
penal provision has been laid down that the issuer of any
cheque would commit an offence if the cheque when presented
is dishonoured .
....
19. For the said purpose a legal fiction was created. The
F
proviso appended to the said provision, however, restricts the
application of the main provision by laY.ing down the conditions
•
which are required to be complied with before any order taking
cognizance can be passed which are; (i) that the cheque must
be presented within a period of six months from the date on
which it is drawn; (ii) on the cheque being returned un-paid by
G
,4
the banker, a notice has to be issued within thirty days from the
date of receipt of information by him from the bank regarding
the cheque being unpaid; (iii) in the event, the drawer of the
cheque fails to make payment of the said amount of money to
be paid within 15 days from the receipt thereof, a complaint H
58 SUPREME COURT REPORTS [2008] 15 S.C.R.
y-
A petition can be filed within the period prescribed in terms of
Section 142 thereof.
20. The question which arises for our consideration is as
to whether the aforementioned legal requirements have been
complied with by the respondent herein so as to enable him to
B
maintain the complaint petition or not.
)<
21. The cheque is dated 22.6.2003. In terms of the afore-
mentioned provisions it could have been presented within six
months thereafter, namely, by 22.12.2003. Indisputably, the
c cheque was presented for the third time on 11.12.2003 i.e.
within the prescribed period~
22. What is prohibited is presentation of the cheque within
the afore-mentioned period and not the number of times it is
D presented. It is, therefore, immaterial whether for one reason
. or the other the complainant had to present the cheque for the
third time or not.
23. We may now consider the submission of Ms. Desai,
learned counsel as regards the issuance of successive notices.
E
24. The first notice purported to have been issued by the
complainant-respondent on 8.7.2003 is not on record.
Admittedly appellants have not received the same.
>-
25. As regards notice dated 9.9.2003 which is said to be
F
the second notice, it is evident that the same had not been
served upon the appellants having been returned. If that be so,
the presentation of the cheque for the second time and issuance
of the second notice in our opinion would not be invalid.
G 26. We have, however, noticed hereinbefore that the
appellant No.2 through his Advocate raised the question as
regards the validity and/or legality thereof as the said notice
was addressed in stead and place of S.L. Constructions and
was issued in the name of and served on S. L. Structures and
H Engineers.
S.L.CONSTRUCTION & ANR. v. ALAPATI SRINIVASA 59
--; RAO & ANR.
27. Appellants in our opinion having themseives raised the A
contention with regard to the legality and validity of the said
notice and, furthermore, having called upon the complainant-
respondent to withdraw the same, no exception can be taken
to the step taken Abundanti Cautela by the complainant-
respondent to present the cheque for the third time and issue B
another notice on 17.12.2003.
28. Sadanandan Bhadran (Supra) whereupon strong
reliance has been placed by Mrs. Desai, learned counsel lays
down the law in the following terms:
c
"7. Besides the language of Sections 138 and 142
which clearly postulates only one cause of action, there are
other formidable impediments which negate the concept
of successive causes of action. One of them is that for
dishonour of one cheque, there can be only one offence D
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 E
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. At that stage, it will not
be a question of waiver of the right of the payee to F
prosecute the drawer but of absolution of the drawer of an
offence, which stands already committed by him and which
cannot be committed by him again."
It was further held:
G
"8. The other impediment to the acceptance of the
concept of successive causes of action is that it will make
the period of limitation under clause(c) of Section 142
otiose, for, a payee who failed to file his complaint within
one month and thereby forfeited his right to prosecute the H
1,.-
t-
60 SUPREME COURT REPORTS [2008] 15 S.C.R. fi
'r
,.;
.A drawer, can circumvent the above !imitative clause by filing ...
a complaint on the basis of a fresh presentation of the
cheque and its dishonour. Since in the interpretation of
statutes, the court always presumes that the legislature
inserted every part thereof for a purpose and the legislative
B intention is that every part should have effect, the above
~
conclusion cannot be drawn for that will make the provision 1-
for limiting the period of making the complaint nugatory."
29. Indisputably, the term cause of action would mean each
of the facts required to be facts required to be proved.
c Successive issuance of notices having been made under
Section 138 of. the Act as laid down· under the proviso
appended thereto, the respondent merely made all attempts to
comply with the legal requirements.
D 30. In this case, as indicated her~inbefore, the first notice .__
having not been served and the second notice having been
withdrawn in terms of the reply issued by the learned advocate
for the appellants themselves, the complainant cannot be said
to have committed any illegality in presenting the cheque for
E the third time and issuing the third notice upon the defaulter.
31. We need not refer to the other decisions relied upon .._
by Mrs. Desai, learned counsel as the same had merely t
followed the dicta laid down in Sadanandan Bhadran (supra). )o..
F 32. As the issuance of cheque, non-payment thereof on
presentation, issuance of a valid notice calling on the drawer
\.
of the cheque to pay the amount in question and the appellants'
failure to pay to the complainant the amount in question within
a period of 15 days from the date of receipt of a copy of the
G said notice 1,.1pon them, a cause of action arose for filing a
}.
complaint petition, irr our opinion, the High Court cannot be said
to have committed any error in passing the impugned
judgment.
33. In view of the findings aforementioned we have no
H
i
S.L.CONSTRUCTION & ANR. v. ALAPATI SRINIVASA 61
RAO & ANR.
hesitation to hold that the cause of action for filing a complaint A
arose only once and not more than once as contended by Mrs.
Desai, learned counsel.
34. It may be true that the High Court has not elaborately
dealt with this aspect of the matter, but the same would not
8
mean that we should remit the matter back to the High Court
for consideratlor: of the matter afresh as we have gone into the
question raised by the parties ourselves.
35. For the reasons aforementioned, there is no merit in
this appeal and it is dismissed accordingly with costs. Counsel's C
fee quantified at Rs. 10,000/-.
R.P. Appeal dismissed.
:-:
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Negotiable Instruments Act"Sign in to search