Citation Codes

Equivalent Citations

citation codes

Case Number

Crl.M.C.No. 1371 of 1993

Advocates

Jose J. Matheikal
for Petitioner.

Judges

Mr. Justice K.T. Thomas

Acts

Sec.138 of the Negotiable Instruments Act, 1881 (for short the Act).

See more information ...

Smart Summary

Structured Summary of the Provided Opinion

Factual and Procedural Background

This opinion concerns an application seeking special leave to appeal an order of acquittal in a criminal prosecution under Section 138 of the Negotiable Instruments Act, 1881. The learned magistrate had acquitted the accused on the ground that the complaint was based on a second cause of action with respect to the same cheque and therefore was not maintainable, relying on the Division Bench decision in Kumaresan v. Ameerappa ((1991) 1 K.L.T. 893).

Facts (brief): A cheque issued in favour of the complainant was dishonoured on 6.4.1990 for insufficiency of funds. The complainant sent a demand notice on 7.4.1990. The accused allegedly assured the complainant that funds would be made up within four months. The cheque was presented again on 20.8.1990 and dishonoured again. A second demand notice was sent on 11.9.1990. The complaint was filed after the accused did not make payment within the prescribed period following the second notice. The accused disputed that any such assurance was given and contended that a complaint under Section 142 (sic; provision referenced in the opinion) could not be founded on a second cause of action with the same cheque. The trial magistrate accepted that contention and acquitted the accused.

Legal Issues Presented

Whether a complaint under Section 138 of the Negotiable Instruments Act can be founded on a "second cause of action" arising from a subsequent presentation of the same cheque.
Whether the dictum in Kumaresan v. Ameerappa ((1991) 1 K.L.T. 893) — which held that more than one cause of action on the same cheque is not contemplated and that prosecution must be initiated within the statutory period after the cause of action arises — requires reconsideration by a Division Bench in light of contrary decisions from other High Courts.

Arguments of the Parties

Accused / Defence Arguments

Counsel for the accused relied on decisions of the Andhra Pradesh High Court (Syed Rasool and Sons v. Alidas and Company, 1992 Crl.L.J. 4048) and the Bombay High Court (Rakesh Porwal v. Narayan Joglekar, 1993 Crl.L.J. 680) which took views different from Kumaresan, to contend that a complaint under Section 138 could be founded on a subsequent dishonour/presentation of the same cheque.
On the facts, the accused disputed the complainant's assertion that any assurance was given to make good the account within four months.
The primary contention adopted by the trial court (and advanced by the defence) was that Section 142 of the Act (as applied in the opinion) bars taking cognizance where the complaint is not within the prescribed time based on the original cause of action, and consequently no complaint can be founded on a second cause of action.

Complainant / Appellant Arguments

Learned counsel for the complainant/appellant asked the court to refer the matter to a Division Bench to reconsider the dictum in Kumaresan’s case in light of the Andhra Pradesh and Bombay High Court decisions that adopted a different view.
Implicitly, the complainant argued that presentation of a cheque more than once during its validity could give rise to distinct cause(s) of action and that the trial court’s reliance on Kumaresan should be re-examined.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kumaresan v. Ameerappa, (1991) 1 K.L.T. 893	Holds that Section 138 creates a new offence completed when its conditions are met; Chapter XVII scheme indicates more than one cause of action on the same cheque is not envisaged; prosecution must be by complaint within prescribed period (Section 142 proviso).	Adopted as the correct ratio. The court held that Kumaresan's reasoning does not require reconsideration and forms the basis for upholding non-maintainability of a complaint based on a second cause of action.
Syed Rasool and Sons v. Alidas and Company, 1992 Crl.L.J. 4048 (A.P. High Court)	Advocated that presentation of a cheque any number of times within its validity means a second presentation need not be barred; rejected the theory that repeated prosecutions would arise.	The opinion found that the Andhra Pradesh Division Bench proceeded on a mistaken premise about conflicting Kerala decisions and that its reasoning (emphasizing multiple presentations) was not persuasive in light of Kumaresan's scheme-based approach. The court disagreed with Syed Rasool's reasoning.
Rakesh Porwal v. Narayan Joglekar, 1993 Crl.L.J. 680 (Bombay High Court)	Included an observation (attributed supportively to a Calcutta decision) that a fresh cause of action accrues every time a cheque is dishonoured.	The court held that the Bombay Bench's quotation from the Calcutta decision (Voltas) was mistaken because Voltas did not make such a finding; thus the Bombay observation did not justify overruling Kumaresan.
Mahadevan Sunil Kumar v. Bhadran, (1991) 1 K.L.T. 651 (single Judge)	Referenced by others as having held there can be no second cause of action on the same cheque (as cited in Syed Rasool paragraph).	The opinion notes that Mahadevan Sunil Kumar was a single-judge decision and that the Andhra Pradesh bench mischaracterized the types of conflicting decisions; this undermined Syed Rasool's premise of conflicting Division Bench authorities in Kerala.
Voltas Limited v. Hiralal Agarwalla, 1991 Crl.L.J. 609 (Calcutta)	Quoted by others as supporting the view that a fresh cause of action accrues on each dishonour (as cited in Rakesh Porwal).	The court observed that Voltas did not in fact hold that a fresh cause of action accrues every time; therefore it could not be correctly relied upon to repudiate Kumaresan.
Baranagar Jute Factory v. A.D. Chowdhury, 1993 Crl.L.J. 2165 (Calcutta single Judge)	Referred to Kumaresan and mentioned a single-judge Calcutta decision (Sekhar Gupta) that dissented from Kumaresan on the ground that a payee can present a cheque within six months.	The opinion notes Baranagar's mention but rejects the view that presentation rights alone decide the maintainability issue; reiterates Kumaresan’s focus on completion of offence after demand and failure to pay.
Sekhar Gupta v. Subhash Chandra Mandal, 1992 Crl.L.R. (Cal.) 14 (Calcutta single Judge)	Was said to dissent from Kumaresan because clause (a) of proviso to Sec.138 allows presentation within six months.	The court observed that the right to present the cheque multiple times during validity is not decisive for whether an offence has been completed; thus Sekhar Gupta's premise does not undermine Kumaresan's ratio.

Court's Reasoning and Analysis

The court proceeded primarily by examining the ratio in Kumaresan v. Ameerappa and contrasting it with the contrary views advanced by other High Courts. The analytical steps were:

Recitation of Kumaresan’s core reasoning: Section 138 creates a new offence completed when statutorily required conditions (presentation, dishonour, demand and failure to pay within the prescribed period) are satisfied; Section 142 bars cognizance except upon a written complaint filed within the statutory period after the cause of action arises. The legislative scheme in Chapter XVII indicates that multiple causes of action on the same cheque are not contemplated.
Examination of Syed Rasool (A.P.) which emphasized commercial practice that a cheque may be presented multiple times and concluded that multiple presentations do not entail multiplication of offences. The court found that Syed Rasool proceeded on an incorrect factual premise (mischaracterising the Kerala decisions as conflicting Division Bench authorities) and that its reasoning gave undue weight to the right of repeated presentation rather than to the statutory scheme culminating in the offence.
Clarification that the right to present a cheque multiple times during its validity is not the decisive criterion for completion of the offence under Section 138. Instead, the court emphasized that the offence culminates when the holder makes demand in writing and the drawer fails to pay within the prescribed period — that is the point at which the cause of action is completed for purposes of Section 142.
Consideration of Rakesh Porwal (Bombay) and its reliance on a Calcutta decision (Voltas). The court held that the Bombay court had misquoted or mistakenly attributed a principle to Voltas which in fact did not hold that a fresh cause of action accrues upon every dishonour; thus Rakesh Porwal did not undermine Kumaresan.
Reference to Calcutta single-judge decisions (Baranagar Jute Factory; Sekhar Gupta) that were said to dissent from Kumaresan on the basis of the payee's right to present within six months. The court rejected the view that presentation rights alone control the question of whether the offence is complete or whether a new cause of action arises.
Conclusion from cumulative analysis: the scheme-based reasoning in Kumaresan stands; allowing successive prosecutions on the basis of subsequent presentations of the same cheque would permit repeated prosecutions and convictions contrary to the legislative intent as understood in Kumaresan.

Holding and Implications

Holding: The court held that the ratio in Kumaresan v. Ameerappa ((1991) 1 K.L.T. 893) does not require reconsideration and that the learned magistrate was correct in finding the complaint based on the second cause of action not maintainable. Accordingly, the court dismissed the criminal miscellaneous case.

Implications:

Direct effect on the parties: The complaint founded on the second presentation/dishonour of the same cheque was held not maintainable and the criminal miscellaneous application was dismissed; the magistrate's finding of non-maintainability stands as applied in this matter.
No re-opening or overruling of Kumaresan: The court declined to refer the matter for reconsideration by a Division Bench and expressly upheld Kumaresan’s scheme-based rule that more than one cause of action on the same cheque is not contemplated for successive prosecutions under Section 138 as interpreted in that decision.
No broader change in law was announced; the decision reaffirms the existing ratio from Kumaresan rather than creating a new precedent to the contrary.

Show full summary ...

Chellakkannu Nadar v. Simon

Special leave is being sought for filing an appeal against the order of acquittal in a criminal prosecution for the offence under Sec.138 of the Negotiable Instruments Act, 1881 (for short ‘the Act’). Learned magistrate, who acquitted the accused, relied on the decision of this court in Kumaresan v. Ameerappa, (1991) 1 K.L.T. 893 and found that the complaint filed on a second cause of action with the cheque is not maintainable.

2. In the trial court counsel for the accused cited a decision of Andhra Pradesh High Court in Syed Rasool and Sons v. Alidas and Company, 1992 Crl.L.J. 4048 and another decision of the Bombay High Court in Rakesh Porwall v. Narayan Joglekar, 1993 Crl.L.J. 680 in which a different view has been adopted from that of Kumaresan’s case, (1991)1 K.L.T. 893. But learned magistrate expressed his difficulty to follow those two decisions since Kumaresan’s decision has been rendered, by the High Court of Kerala.

3. Learned counsel for the appellant/complainant, therefore, addressed arguments for persuading me to refer this case to a Division Bench for reconsideration of the dictum laid down in Kumaresan’s case, (1991) 1 K.L.T. 893, in the light of the aforementioned two decisions.

4. Facts of this case, in brief, are the following: A cheque issued in favour of the complainant was dishonoured by the drawee bank on 6.4.1990 on the ground of insufficiency of amount in the account of the accused. Complainant thereupon sent a notice in writing to the accused on 7.4.1990 demanding the amount. But the accused, on receipt of the notice, met the complainant and assured him that the amount would be made up in the account within four months. So, the complainant presented the cheque again on 20.8.1990, but was again dishonoured by the bank on the same ground. On 11.9.1990 the complainant sent another notice to the accused demanding payment. As the accused did not make the payment within the prescribed period even after receiving the second notice, the complaint was filed in the lower court. Accused disputes the stand of the complainant that an assurance was given to make up the amount within four months. How ever, the main contention raised in the trial court was that no complaint can be filed under Sec.142 of the Act on the strength of a second cause of; action. That contention was upheld and the learned magistrate acquitted the accused.

5. In Kumaresan’s case, (1991) 1 K.L.T. 893, a Division Bench of this Court has considered the legal position on similar facts. The Bench pointed out that Sec.138 of the Act created a new offence based on a cheque returned unpaid subject to certain conditions. The offence is complete when all the conditions have been completed. When the offence is complete there is a completed cause of action, Sec.142 of the Act contains an inviolableban that no court shall take cognizance of the offence, notwithstanding anything contained in the Code of Criminal Procedure, except upon a complaint in writing made within one month off the date on which the cause of action arose under clause (c) of the proviso to Sec. 138 of the Act. (Of course, there are certain other postulates also but they are not relevant in this case). The scheme of the legislature in creating a new offence under Sec. 138 of the Act is reflected in the fascicle of provisions contained in Chapter 17 of the Act all of which were brought together through the same legislative exercise in act 66 of 1988. It was after considering the a foresaid scheme that the division bench of the court has made the following observations in paragraph five of the decision in Kumaresan’s case, (1991) 1 K.L.T. 893:

"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 subject a drawer of cheque to repeated prosecutions and convictions on the strength of one cheque"

6. After carefully considering the reasons adverted to in the above decisions of the High Courts of Bombay and Andhra Pradesh, I may observe, with great respect to the learned Judges that the ratio laid down by the Division Bench of this Court in Kumaresan’s case, (1991) 1 K.L.T. 893, does not require reconsideration. I shall state the reasons below.

7. In Syed Rasool and Sons v. Alidas and Company, 1992 Crl.L.J. 4048, the division bench of Andhra Pradesh High Court made a reference to Kumaresan’s case, (1991) 1 K.L.T. 893, in para. 23 of the judgment. It seems that by some mistake their Lordships thought that another division bench of the Kerala High Court has taken a contrary view. It is apposite to refer to the following passage in the said paragraph:

"Another division bench of the Kerala High Court differed from the view expressed by the division bench of the same High Court referred to above in Mahadevan Sunil Kumar v. Bhadran, ( 1991) 1 K.L.T. 651: (1991) 1 K.L.J. 335 and held that there can be no second cause of action on the same cheque"

. As a matter of fact, the decision in Mahadevan Sunil Kumar’s case, was rendered by a single Judge of; this Court and not by a division bench and the question raised in Kumaresan’s case, ( 1991) 1 K.L.T. 893, really before the division bench on a reference made to it by another single Judge in the light of a different view adopted by Padmanabhan, J. in another case. These facts are mentioned in Kumaresan’s case. Hence, the division bench of Andhra Pradesh High Court had proceeded on a faulty premise that there were two conflicting views between two Division Benches of Kerala High Court on this question.

8. That a part, it is difficult to accept the reasoning adopted by the Andhra Pradesh High Court in Syed Rasool’s case, 1992 Crl.L.J. 4048. The said reasoning has been summarised in paragraph twenty-five of the decision as follows:

"It is common knowledge that in commercial practice a cheque may be presented any number of times within the period of its validity. The principle of autrefois acquiror autrefois convict will also come into play and the drawer of the cheque cannot be subjected to repeated prosecutions and convictions on the strength of one cheque. So we feel that as there is no restriction with regard to the presentation of the cheque any number of times within its validity period, and it is not open to the court by adding anything more that the cheque cannot be presented for a second time. The theory of double prosecution on the same cheque does not arise."

Right to present a cheque on any number of times appears to be the hub on which the Division Bench of A.P. High Court differed from the decision in Kumaresan’s case, (1991) 1 K.L.T. 893. There is no doubt that a payee or a holder in due course has the right to present the same cheque on any number of times, within the period of validity of the cheques. In Kumaresan’s case, (1991) 1 K.L.T. 893, it was pointed out by this Court that after completion of the cause of action, another cause of action cannot be created with the same cheque. Right to present the cheque more than once is not the decisive criterion for determining whether there was completion of offence. It has been pointed out in Kumaresan’s case, (1991) 1 K.L.T. 893, that failure of payment within 15 days of receipt of notice is the culmination of the events which completes the cause of action through it had its genesis in drawing the cheque. Even after completion of a cause of action. Sec. 142 of the Act debars a court from taking cognizance of the offence unless a written complaint is filed within one month from the date of such cause of action. It was the cumulative result of all such events that a completed offence comes to the surface. Once an offence was committed by the drawer of the Cheque, a second offence cannot be fastened on him by using the same cheque. It is not contemplated in the scheme covered by the provisions contained in Chapter 17 of the Act.

9. In the other decision Rakesh Porwal v. Narayanan Joglekar, 1993 Crl.L.J. 680 of the Bombay High Court the question whether more than one cause of action is contemplated in Sec.138 of the Act was not considered. Such a question never even arose on the facts of that case. However, one observation made by Saldanha, J. in the decision has been highlighted by the learned counsel here to support his contentions that Bombay High Court has dissented from this Court’s decision in Kumaresan’s case, (1991) 1 K.L.T. 893. That observation is in the passage extracted below:

"The Division Bench (of the Kerala High Court) has proceeded on the reasoning that the legislature never intended multiplication of the offences in relation to the number of times that the same cheque was dishonoured. In contrast to this view, the Calcutta High Court in the decision referred to supra ( Voltas Limited v. Hiralal Agarwalla, 1991 Crl.L.J. 609) and in our considered view very correctly held that the fresh cause Of action accrues every time the cheque is dishonoured."

With very great respect to the learned Judges of the Division Bench in Rakesh Porwal’s case, 1993 Crl.L.J. 680, I may point out that it was a mistaken quotation from the Calcutta decision because Voltas’s case, 1991 Crl.L.J. 609 did not arrive at any such finding. There was not even an observation in Voltas’s case, 1991 Crl.L.J. 609, that fresh cause of action accrues every time the cheque is dishonoured, nor was there any occasion to consider that aspect in the said case.

10. Though the counsel did not cite, I have come across another later decision of a single Judge of the Calcutta High Court reported in Baranagar Jute Factory v. A.D. Chowdhury, 1993 Crl.L.J. 2165 in which Kumaresan’s case, (1991) 1 K.L.T. 893 was referred to. Learned judge has mentioned one decision rendered by another single Judge of the same High Court Sekhar Gupta v. Subhash Chandra Mandal, 1992 Crl.L.R. (Cal.) 14, in which the ratio in Kumaresan’s case was dissented from on the ground that

"the prima facie reason for holding such a view was that Clause (a) of the proviso to Sec. 138 a payee is entitled to present the cheque to the bank within a period of six months at the latest"

. I have already pointed out that the right to present the cheque at any number of times during the validity period is not the sole criterion to decide this question. In Kumaresan’s case, the Division Bench of this Court has never said that the cheque can be presented only once. It can, of course, be presented on any number of times during the period of validity. But once the offence was complete with the failure to pay the amount within the prescribed period after making demand in writing, a subsequent presentation of the cheque for encashment is of no use so far as Sec. 38 of the Act is concerned. That is. precisely the ratio in Kumaresan’s case.

11. The upshot is, the considered view adopted by the Division Bench of this Court in Kumaresan v. Ameerappa, (1991) 1 K.L.T. 893, does not require reconsideration.

Learned Magistrate was therefore correct in finding, on the facts of this case, that the complaint is not maintainable. Accordingly, this criminal miscellaneous case is dismissed.

Chellakkannu Nadar v. Simon

Structured Summary of the Provided Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Accused / Defence Arguments

Complainant / Appellant Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Chellakkannu Nadar v. Simon

Comments