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Case Number

Criminal Misc. No. 11080-M of 1991

Attorney(S)

For the Petitioners :- Mr. J.K. Sibal with Mr. Sanjeev Sharma
Advocate and Mr. Naresh K. Joshi
Advocate. For the Respondent :- Mr. M.L. Sarin with Miss Alka Sarin
Advocate.

Judges

S.S Grewal, J.

Acts

Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred
SECTION 141 NEGOTIABLE INSTRUMENTS ACT 1881
Section 138 read with Section 141

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Smart Summary

Opinion Summary — S.S. Grewal, J.

Factual and Procedural Background

This petition under Section 482 of the Code of Criminal Procedure, 1973 seeks quashment of a complaint (Annexure P/1) framed under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 and consequential proceedings pending before the Chief Judicial Magistrate, Sirsa.

The complainant company alleged that the accused-company (through its partners) purchased goods on credit and issued several cheques as payment. One cheque (No. QLK. 374956 dated 20-7-1990 for Rs. 1,00,000) drawn on Punjab National Bank, Coimbatore was presented for encashment by the complainant through its banker at Sirsa but was returned dishonoured with the remark "exceeds arrangements." The complainant gave notice to the accused and received a reply dated 30-9-1990 stating the cheque could not be encashed partly due to non-availability of accused No. 2 and consequent non-arrangement of funds. The accused later allegedly promised to resubmit the cheque for clearance; the cheque was again presented by the complainant on 9-2-1991 and again returned unpaid (bounced). A registered notice dated 11-2-1991 under Section 138(b) was served, payment was not made, and the present complaint followed.

The petition under Section 482 challenges the complaint and consequent proceedings on the ground that the complaint does not, in law, disclose an offence and that allowing proceedings to continue would amount to an abuse of process.

Legal Issues Presented

Whether the High Court, exercising jurisdiction under Section 482 CrPC, can quash the complaint at the stage when the Magistrate is to take cognizance, by examining whether the allegations in the complaint constitute an offence or amount to an abuse of process (as framed by the parties and the authorities relied upon).
Whether the complainant-company can maintain a prosecution based on a second presentation (and dishonour) of the same cheque when no complaint was filed after the first dishonour — i.e., whether more than one cause of action on the same cheque is permissible under Chapter XVII of the Negotiable Instruments Act.
Whether the complaint discloses in law any offence under Section 138 read with Section 141 of the Negotiable Instruments Act given the factual history of the cheque being presented and dishonoured twice and the absence of earlier complaint after the first dishonour.
Whether the availability of alternative remedies (such as revision) or interlocutory steps taken before the Magistrate preclude a petition under Section 482 CrPC (this was raised by the complainant).

Arguments of the Parties

Complainant's Arguments

The complainant contended that the petition under Section 482 was not maintainable because alternative remedies (such as revision) were available, or because the accused had moved an application before the Chief Judicial Magistrate for dismissal of the complaint, implying that the appropriate remedy was not Section 482.
The complainant relied on authorities (for example P.T.V. Ramanujachari v. Girdharilal Rathi) which, according to the complainant, indicate that factual questions such as whether the accused had issued the cheque and whether they were liable should be determined on evidence rather than at the quashing stage.

Accused-Petitioners' Arguments

The accused-petitioners argued that the complainant could not have a "second cause of action" on the same cheque because no complaint was filed after the cheque was first dishonoured; therefore the later complaint based on the second dishonour was barred as giving rise to repeated prosecutions on the same cheque.
They relied on the Division Bench decision in Kumaresan v. Ameerappa (1991) to submit that Chapter XVII of the Negotiable Instruments Act does not contemplate more than one cause of action arising from the same cheque and the legislature did not intend that a drawer be subjected to repeated prosecutions and convictions based on one cheque.
The accused-petitioners also pointed to the contents of their reply dated 30-9-1990 in which they asked the complainant to retain the cheque for sometime and which, they contended, did not amount to an admission in writing that the cheque was dishonoured due to insufficient funds or an assurance that a subsequent representation would be honoured.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
State of Bihar v. Murad Ali Khan, (1988) 4 SCC 655 : AIR 1989 SC 1	When the High Court is called upon to exercise jurisdiction to quash a proceeding at the stage of Magistrate taking cognizance, it should be guided by whether allegations in the complaint or charge sheet in law constitute an offence and whether proceeding would amount to an abuse of process.	The court relied on this authority to reject the complainant's contention that alternative remedies precluded the Section 482 petition and to justify examination of whether the complaint, on its face, disclosed an offence.
Kumaresan v. Ameerappa, 1991 (3) Recent Criminal Reports 172 (Kerala High Court, Division Bench)	Chapter XVII of the Negotiable Instruments Act does not contemplate more than one cause of action on the same cheque; institution of prosecution cannot be made after one month of the cause of action; permitting multiple causes of action would allow repeated prosecutions/convictions on the same cheque.	The court relied on this Division Bench authority as supporting the view that the complainant could not have a second cause of action on the same cheque and that a second prosecution on the same cheque would be impermissible and an abuse of process.
Sunil Kumar v. Bhadran, (1990) 1 KLT 651	Represents a contrary view (as per Balakrishnan, J.) regarding the possibility of more than one cause of action on the same cheque.	The court noted that the contrary view in Sunil Kumar was not regarded as correct by the Division Bench in Kumaresan's case and therefore did not accept the contrary view for the facts at hand.
M.V. Joshi v. M.U. Shimpi, AIR 1961 SC 1494	Principle that where two interpretations of a penal provision are possible, the interpretation less onerous to the accused should be preferred.	The court (via Kumaresan's reasoning) invoked this principle to favor the interpretation that avoids exposing a drawer to repeated prosecutions on the strength of the same cheque.
Truck and Sons v. Priester, (1887) 19 Q.B.D 629	Quoted authority supporting the rule that where two reasonable constructions exist for penal provisions, the more lenient construction should be given.	Referenced (through Kumaresan) in support of preferring the less onerous construction for offences under penal statutes, thereby supporting the view that multiple prosecutions on the same cheque should be avoided.
Chief Inspector of Mines v. K.C. Thapar, AIR 1961 LC 838	Indicates departure from the leniency principle is permitted where object and scheme of the statute would be defeated otherwise.	Noted as an exception to the leniency rule; the court acknowledged this principle in discussing interpretative approaches but did not find it applicable to defeat the lenient interpretation in the present case.
Maharaja Book Depot v. State of Gujarat, 1979 SCC (Crl.) 275	Another authority permitting departure from the rule of lenient interpretation if necessary to give effect to the object and scheme of the statute.	Referenced as part of the jurisprudential context regarding interpretation of penal statutes; the court did not treat the present circumstances as warranting departure from the lenient interpretation.
P.T.V. Ramanujachari v. Girdharilal Rathi, 1991 Civil Court Cases 337 (Andhra Pradesh)	Addresses that factual questions (whether accused had to pay the money, whether the cheque was issued, etc.) should be established on evidence; context dealt with a differently constituted factual matrix.	The court regarded this authority as distinguishable on facts and not applicable to the present case, because the present facts involved an admitted issuance and two presentations of the same cheque with no complaint after the first dishonour.

Court's Reasoning and Analysis

The court conducted a step-by-step analysis constrained by the allegations in the complaint and the authorities cited:

Procedural jurisdiction and scope: The court first addressed the complainant's contention that alternative remedies (such as revision) or interlocutory steps precluded a Section 482 petition. Citing State of Bihar v. Murad Ali Khan, the court held that when called upon to quash a proceeding at the stage of the Magistrate taking cognizance, the High Court may examine whether allegations in the complaint in law constitute an offence or whether continuing proceedings would be an abuse of process.
Factual substratum from the complaint: The complaint itself showed that the cheque was presented and dishonoured once (with intimation sent to the complainant), there was no complaint filed after that first dishonour, later the cheque was represented and again dishonoured on the second presentation. These facts were admitted in the complaint and its annexures.
Legal consequence of multiple presentations: The court accepted the accused-petitioners' contention (supported by the Division Bench in Kumaresan) that Chapter XVII of the Negotiable Instruments Act does not contemplate multiple causes of action on the same cheque. The court explained the legislative mischief that would result if multiple causes of action were permitted: the drawer could be subjected to repeated prosecutions and convictions on the strength of the same cheque.
Interpretive principle applied: The court noted and applied the settled principle of interpretation of penal statutes that where two reasonable constructions are possible the one less onerous to the accused should be preferred (as discussed in Kumaresan, and supported by M.V. Joshi and Truck and Sons v. Priester). Exceptions permitting departure from that principle (Chief Inspector of Mines v. K.C. Thapar and Maharaja Book Depot) were noted but found inapplicable to the facts here.
Distinguishing contrary authorities and inapposite precedents: The court observed that the contrary view expressed in Sunil Kumar v. Bhadran was not regarded as correct by the Division Bench in Kumaresan. The court also considered P.T.V. Ramanujachari v. Girdharilal Rathi (relied upon by the complainant) but held that that authority dealt with different factual questions requiring evidence; Ramanujachari was thus distinguishable on facts.
No written assurance to represent or honour the cheque before institution of complaint: The court examined the accused's reply dated 30-9-1990 and found it did not specifically admit that the cheque was dishonoured due to non-arrangement of funds nor did it in writing request the complainant to represent the already-dishonoured cheque or give an assurance that a re-presentation would be honoured. This absence of a written undertaking or admission weighed against the complainant's case to treat the second presentation as a fresh cause of action.
Conclusion on abuse of process: On the basis of the admitted facts in the complaint, the authorities cited, and the interpretive principles, the court concluded that the allegations in the complaint did not, in law, constitute an offence warranting the present prosecution and that continuation of proceedings would amount to an abuse of the process of the Court.

Holding and Implications

Holding: The complaint (Annexure P/1) and the consequent proceedings arising thereunder against the accused-petitioners are quashed and this petition under Section 482 CrPC is allowed.

Implications:

Direct effect: The complaint filed under Section 138 read with Section 141 of the Negotiable Instruments Act and all consequential criminal proceedings pending in the Court of the Chief Judicial Magistrate, Sirsa are quashed as an abuse of process in the circumstances of this case.
Scope of precedent: The court treated earlier authorities (notably Kumaresan) as authoritative on the proposition that more than one cause of action on the same cheque is not contemplated; the present decision rests on the application of those principles to the admitted facts. The opinion does not purport to lay down a novel or broader rule beyond the application of existing authorities and interpretive principles; no new overarching precedent beyond the quashment in this case is explicitly stated.

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K.P.V Textiles And Anr. v. Malook Chand Naresh Chand .

S.S Grewal, J.:— This petition under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as the Code, relates to quashment of complaint Annexure P/1, under Section 13 read with Section 141 of the Negotiable Instruments Act, 1881 as amended by the Act No 66 of 1988 (hereinafter referred to as the Act) and consequential proceedings taken thereunder pending in the Court of Chief Judicial Magistrate, Sirsa.

2. In brief facts relevant for the disposal of this petition as emerge from the complaint, are that complainant Company is engaged in its legitimate and lawful activities at Sirsa and at other places within India, and enjoys a great goodwill and high reputation amongst the men of similar trade and other persons The accused company through its partners accused No. 2 purchased goods from the complainant Company on credit basis and in this regard huge sums accumulated towards the price and other expenses concerning the goods to which the accused are liable to pay to the complainant company factually and legally. It was further alleged that a number of cheques were issued by the accused-Company in favour of the complainant Company as payment of price of goods supplied and one such cheque bearing No. QLK. 374956 dated 20-7-1990 in the turn of rupees one lac was issued by accused No. 2 on behalf of accused-company. The said cheque was drawn on Punjab National Bank, Coimbatore. The cheque was submitted by the complainant-company for encashing the same through its Banker at Sirsa, but this cheque could net be cleared and encashed and was returned unpaid and unsatisfied. The matter was brought to the notice of the accused telegraphically and it was followed by legal notice dated 11-9-1990 rent by Shri Rajesh Sethi, Advocate Sirsa on behalf of the complainant concern. The accused company in its reply dated 30-9-1990 through its counsel informed about the bouncing of the cheque and also its non encashment due to non-availablity of the accused No. 2 in the town and consequent non arrangement of the funds in the Bank account. Thereafter long discussions commenced between the complainant and the accused Company and the latter unequivocally promised and agreed to the complainant-concern for sending the aforesaid cheque again for clearance through their Banker at Sirsa in the second week of January, 1991 at any time. The complainant-firm resubmitted the said cheque to their Banker at Sirsa i.e State Bank of India, Sirsa on 9-2-1991 but the same was again return uncashed by the Banker of accused-Company with a letter dated 12-1-1941 wherein reasons for uncashing of the cheque was given as “exceeds arrangements”. The banker of the complainant concern forwarded the bounced cheque along with the cheque return memo dated 1-2-1991. Then the complainant-concern gave a legal registered notice dated 11.2.1991 under Section 138(b) of the Act through Shri S.S Goyal Advocate, Sirsa. The accused firm did not make the payment as demanded under legal notice. It is further alleged that the aforesaid cheque bounced on 12-1-1991 on account of gross negligence on the part of the accused firm, who, have Hot cared to rectify their defect despite the full knowledge. It was next pleaded that the period for making the payment under Section 138(c) of the Act had also expired and the accused in their reply dated 3-2-1991 to the aforesaid legal notice pleaded that they are trying to get rid of their criminal liability which otherwise may be fastened upon them on account of bouncing and dishonouring of the cheques. It was next pleaded that the accused who were incharge and responsible for functioning of the Company have made themselves liable for punishment under Section 138 read with Section 141 of the Act.

3. The learned counsel for the parties were heard.

4. The objection raised on behalf of the complainant-Company that alternative remedy by way of revision is available, or that the accused moved application before the Chief Judicial Magistrate that the complaint be dismissed and on this score no petition under Section 482 of the Code is maintainable is without any merit, in view of the authority of the apex Court in State of Bihar v. Murad Ali Khan, (1988) 4 SCC 655 : AIR 1989 SC 1, wherein it was held that when the High Court is called upon to exercise this jurisdiction to quash a proceeding at the stage of the Magistrate taking cognizance of an offence the High Court is guided by the allegations, whether those allegations, set out in the complaint or the charge sheet, do not in law constitute or spell out any offence and that resort to criminal proceedings, would, in the circumstances, amount to an abuse of the process of the Court or not.

5. The cheque dated 20th July, 1990 issued by accused-petitioner No. 2 on behalf of the accused-Company could not be encashed when the same was presented for encashment by the complainant-Company through its Banker State Bank of India, Sirsa Branch and the same was returned with the remaks “exceeds arrangements” by the banker of the accused Intimation in respect thereof was sent to the complainant-Company from its own Banker. Admittedly no complaint was filed by the complainant Company after it received intimation about the bouncing of the aforesaid cheque The allegation that the accused committed an offence under Sec. 138 read with Sec. 141 of the Act relates only to the bouncing of the cheque when it was presented by the complainant-Company for the second time for encashment on 9-2-1991 to its Banker at Sirsa and the same could not be got cleared and instead dishonoured and bounced again. On the basis, it was rightly contended on behalf of the accused-petitioners that the complainant-Company cannot have second cause of action on the same cheque as no complaint was filed when the cheque in question bounced for the first time constituting the first cause of action.

6. Reliance on behalf of the accused petitioners was rightly placed on Division Bench Authority of Kerala High Court in Kumaresan v. Ameerappa, 1991 (3) Recent Criminal Reports 172, wherein it was observed 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 subjected drawer of cheque to repeated prosecution and conviction on the strength of one cheque.”

7. The contrary view expressed by Balakrishnan, J. in Sunil Kumar v. Bhadran, (1990) 1 KLT 651, was not regarded as correct view by the Division Bench in Kumaresan's case (supra) with the following observations:—

“Even if such a view is possible, it is one of the settled principles of interpretation of statutes that when two interpretations are possible about a penal provision, only that which is less onerous to the accused should be preferred (vide Maxwell on the Interpretation of Statutes 12th edition at page 239): “The principle applied in construing a penal Act is that if, in construing the relevant provisions, there appears any reasonable doubt or ambiguity, it will be resolved in favour of the person who would be liable to the penality”. The learned author quoted Lord Esher M.R from the decision in Truck and Sons v. Priester, 1887) 19 Q.B.D 629, thus: “if there are two reasonable constructions we must give the more lenient one. That is the settled rule for the constructions of penal sections”. Supreme Court has adopted the same principle for interpretation of penal statutes vide M.V Joshi v. M.U Shimpi, AIR 1961 SC 1494). Departure from this principle is permitted if the object and scheme of the statute would be defeated otherwise (vide Chief Inspector of Mines V.K.C Thapar, AIR 1961 LC 838 and Maharaja Book Depot v. State Of Gujarat , 1979 SCC (Crl.) 275”.

8. While dealing with this aspect of the case, it was further observed in Kumaresan's case (supra) that the words in the relevant provisions of the Act are not so ambiguous as to afford scope for an interpretation which leads to disastrous consequences cited above. We have already indicated the possibility of ensuing such consequences if more causes of action than one are permitted to arise in respect of the same cheque.

9. In the authority of Andhra Pradesh High Court in P.T.V Ramanujachari v. Girdharilal Rathi reported as 1991 Civil Court Cases 337 Andhra Pradesh) relied upon by the complainant-Company, the main question involved was whether the accused had to pay the money to the complainant and whether the complainant (sic he) bad issued the cheque as well as all other questions of fact have to be established on evidence.

10. In view of the peculiar circumstances of the aforecited authority it was observed that it was for the complainant to establish the various allegations through evidence. The facts of the case in hand are entirely different where admittedly the accused had issued the cheque in favour of the complainant which could not be encashed even though the same was presented twice for encashment by the complainant Company. The afore cited authority in Ramanujachari's case is not applicable to the facts of the case in hand and is clearly distinguishable.

11. The argument advanced on behalf of the complainant-Company that the accused in their reply dated 30th September. 1990 mentioned that the aforesaid cheque could not be encashed because of non-availability of accused No 2 in the town and consequent non-arrangement of funds in the bank account would not help the case of the complainant. There is no specific mention in the aforesaid reply dated 30-9-1990 that the cheque was dishonoured because of non arrangement of funds. Rather it is specifically mentioned in the reply dated 30-9-1990 that the complainant-Company was asked to retain the cheque for sometime but the said company presented the cheque for collection all of a sudden. It is thus quite apparent that at no stage before the institution of the present complaint, the accused-petitioners had in writing requested the complainant-Company to represent the cheque which had already been dishonoured, or gave any assurance that in case any such cheque is represented the same would be encashed.

12. From the above discussion, it is quite obvious that the allegations set out in the complaint do not in law constitute or spell out any offence in respect of which the present complaint has been filed. Thus continuation of the proceedings on the aforesaid complaint would amount to abuse of the process of the Court.

13. For the foregoing reason, the complaint as well as the consequent proceedings taken thereunder against the accused-petitioners are hereby quashed and this petition is accordingly allowed.

K.P.V Textiles And Anr. v. Malook Chand Naresh Chand .

Opinion Summary — S.S. Grewal, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Complainant's Arguments

Accused-Petitioners' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

K.P.V Textiles And Anr. v. Malook Chand Naresh Chand .

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