CRIMINAL REVISION NO.230 OF 2011 :{ 1 }: THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH DATE OF DECISION: DECEMBER 15, 2011 M/s Gopal Krishan Enterprises, Ambala Cantt. and another .....Petitioners VERSUS The Patiala District Co-operative Milk Producers Union Ltd., Patiala and others ....Respondents CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH 1. Whether Reporters of local papers may be allowed to see the judgement? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? PRESENT: Mr. Aman Bansal, Advocate, for the petitioners. Mr. Rahul Sharma, Advocate. **** RANJIT SINGH, J. This order will dispose of three Criminal Revision Nos.230, 231 and 243 of 2011. The petitioners (in Criminal Revision No.230 of 2011 (M/s Gopal Krishan Enterprises, Ambala Cantt. and another Vs. The Patiala District Co-operative Milk Producers Union Ltd., Patiala and others) are in revision and pray for quashing the order passed by Additional Sessions Judge, Patiala, who has interfered with the order of their discharge passed by Magistrate. The issue relates to dishonour of a cheque and a complaint filed on that basis under Section 138 of the Negotiable Instruments Act (for short, “the Act). Cheque No.384013 dated 28.2.2006 for a sum of Rs.2 lacs issued by the petitioners in favour of the complainant to discharge the legally CRIMINAL REVISION NO.230 OF 2011 :{ 2 }: enforceable liability was dishonoured on presentation for “insufficient funds”. Despite legal notice, the petitioners failed to discharged the liability for which the complaint was filed. After considering the preliminary evidence, the petitioners were summoned for offence under Section 138 of the Act. Complaint against two of the accused was dismissed. Thereafter, an application was filed under Section 245 Cr.P.C. by the accused-petitioners on 3.8.2007 for their discharge. This application was resisted by the complainant. The Magistrate, however, allowed the application and discharged the petitioners on 23.11.2007. Against this, the petitioners preferred a revision before the Court of Sessions, who has allowed the same and has set-aside the order of discharge dated 23.11.2007. The present revision is filed by the petitioners against this order. Similarly, second Criminal Revision No.231 of 2011 (M/s Gopal Krishan Enterprises, Ambala Cantt. and another Vs. The Patiala District Co-operative Milk Producers Union Ltd., Patiala and others) is directed against the order passed by the Additional Sessions Judge, Patiala, whereby order of discharge passed by Magistrate concerning cheques No.384011 and 384015 amounting to sums of Rs.1 lac and Rs.4.5 lacs respectively. Both these revision petitions are being disposed of by this common order since the issue involved is same and identical. Addl.Chief Judicial Magistrate, Patiala had discharged the petitioners on the ground that the complaint as filed was time barred from the date of initial notice/letter in regard to dishonour of cheque, which was issued on 22.4.2006, but the complaint was filed on CRIMINAL REVISION NO.230 OF 2011 :{ 3 }: 15.7.2006, which was after the expiry of period of 45 days. As per the finding, the complaint could be filed after 7.6.2006. There is no dispute that cheque in this case was issued by the accused-firm through its partner in order to discharge a legally enforceable liability. It is also not disputed that the cheque on presentation was dishonoured due to “insufficient funds” and the accused-petitioners failed to discharge the liability. The main issue for which this complaint has been held to be time barred is a letter dated 22.4.2006, which has been treated to be a legal notice and on this basis, it is held that the complaint was to be filed within a period of 45 days from the issuance of this letter which has been held to be a legal notice and the same having been filed beyond the period of 45 days would be barred by limitation. After issuance of a letter dated 22.4.2006, the cheque was again presented, but was again dishonoured for want of funds. The cheque is dated 28.2.2006 and was issued through its partner Vikram Pal Singh (petitioner No.2). The cheque was dishonoured vide memo dated 13.5.2006, which shows that the same was so dishonoured with the remarks “funds insufficient”. Legal notice was then served on 30.5.2006 and on the basis of this evidence, the petitioners were summoned for having committed an offence under Section 138 of the Act. The petitioners had primarily relied upon a letter dated 22.4.2006 sent by the complainant to the Co-operative Society through its General Manager and copy of the agreement dated 18.7.2002 executed between the parties. Initially, the cheque was presented on 31.3.2006 when it was dishonoured for “insufficient funds”. Thereupon, the letter was issued CRIMINAL REVISION NO.230 OF 2011 :{ 4 }: on 22.4.2006 to petitioner No.1 stating that they had defaulted by issuing cheque without sufficient funds in the Bank, which is an offence under the law and case also can be registered against them for cheating. The complainant has further mentioned in this letter that before he proceeded to take further legal action against the petitioners, it would be in their interest to clear the outstanding amount of Rs.9,12,477/- and the bank charges as claimed by the HDFC Bank. The copies of the dishonoured cheques were also sent alongwith this letter. It is, thus, to be seen whether this letter dated 22.4.2006 can be termed as a demand notice under Section 142 of the Act or not. In this letter, the complainant had never asked the petitioners to make a payment of the cheque in question within the stipulated period of 15 days or that failing this, the complainant shall proceed against them under the provisions of the Act. On this basis, the Sessions Court has held that this cannot be construed as a notice to satisfy the requirement of Section 142 of the Act. It is only through a notice dated 30.5.2006 that the accused was asked to make the payment of the amount within 15 days of the receipt of notice and failing this, the complainant had clearly indicated that further legal action would follow. It is this notice dated 30.5.2006 which has been held to be a legal notice and on that basis, finding is given that the complaint as filed is not time barred. The petitioners in support of their case have referred to Tameeshwar Vaishnav Vs. Ramvishal Gupta, 2010(1) R.C.R. (Criminal) 730. In this case, demand notice was duly served on the accused but the complaint has not been filed within a period of 30 CRIMINAL REVISION NO.230 OF 2011 :{ 5 }: days of service of notice. The court has held that complaint after expiry of period of 30 days was not maintainable. Second notice was again sent by the complainant and complaint was filed 30 days of the second notice. The Hon'ble Supreme Court observed that the complaint was not maintainable as cause of action arose when the first notice was served and second notice would not give rise to fresh cause of action. At the same time, it is also observed in Tameeshwar Vaishnav (supra) that the cheque may be presented several times within the period of its validity, but the cause of action for a complaint under Section 138 arises but once, with the issuance of a notice after dishonour of the cheque and the receipt thereof by the drawer. In support of this, the court has relied upon Sadanandan Bhadran Vs. Madhavan Sunil Kumar, 1998(4) RCR (Criminal) 90=(1998) 6 SCC 514 and Prem Chand Vijay Kumar Vs. Yashpal Singh, 2005(2) RCR (Criminal) 876. Reference is also made to the case of Krishna Exports Vs. Raju Das, 2006(2) R.C.R. (Criminal) 672, where notice was issued to the accused demanding payment on dishonour of the cheque but no complaint was filed. Cheque was again presented and was dishonoured. Thereafter, the complaint was filed which was held to be barred by limitation. The Hon'ble Court has observed that cause of action could arise only once and the same was relatable to the first notice. In this case also, reliance is placed on Sadanandan Bhadran (supra). The Hon'ble Supreme Court in Sadanandan Bhadran (supra) has observed that a combined reading of Section 138 and Section 142 leaves no room for doubt to cause of action within the meaning of Section 142(b) arises and can arise only CRIMINAL REVISION NO.230 OF 2011 :{ 6 }: once. The relevant observations made are as under:- “Now, the question is how the apparently conflicting provisions of the Act, one enabling the payee to repeatedly present the cheque and the other giving him only one opportunity to file an complaint for its dishonour, and that too within one month from the date the cause of action arises, can be reconciled. Having givenour anxious consideration to this question, we are of the opinion that the above two provisions can be harmonised, with the interpretation that 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 this such right under clause (b) of Section 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 clause (b) of Section 138 he forfeits such right for in case of failure of the drawer to pay the money and the cause of action for filing the complaint will arise. Needless to say, the period of one month fro 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.” To tide over the situation, the respondent before the Hon'ble Supreme Court had urged that the first notice was not really CRIMINAL REVISION NO.230 OF 2011 :{ 7 }: a notice contemplated by clause(c) of proviso to Section 138 and, hence, could not be construed to have given rise to a cause of action to file the complaint. On a reading of the letter which was the first notice, the Hon'ble Supreme Court found that it was plainly clear that the respondent had required immediate payment of the amount and failing which he had threatened to take legal action. This letter was held to be qualifying itself to be a notice within the contemplation of clause(c) of the proviso to Section 138. On the other hand, counsel for the respondent has referred to M/s Uniplas India Ltd. Vs. State (Govt. of NCT of Delhi), AIR 2001 SC 2625. In this case, notice demanding payment was sent after 15 days on receipt of information regarding dishonour of cheque from the bank. The court has held this not to be a valid notice. It is further observed that in view of the invalidity of the notice, cause of action did not arise and that payee could present the cheque again and launch prosecution if the cheque was dishonour again. The court had gone on to observe that cause of action will arise on subsequent dishonour of the cheque. No doubt, the court in this case has also held that where notice demanding payment is sent to drawer but no prosecution is launched and the cheque is again presented and dishonoured, then it would not give a fresh cause of action on the dishonour of the second cheque. Reliance is also placed on S.L.Consstruction and another Vs. Alapati Srinivasa Rao and another, 2009(1) RCR (Criminal) 218. In this case, the cheque was presented twice and was dishonoured both times. Notice demanding the payment was sent on both the occasions but CRIMINAL REVISION NO.230 OF 2011 :{ 8 }: remained unserved. It is held that this gave no cause of action to the complainant and the cheque could be presented third time and thereafter the complaint could be filed on the service of a third notice. It is also held in this case that where notice is sent to the accused upon a cheque being dishonoured, but the notice is legally invalid, then no cause of action arises. In such a situation, the cheque can be presented again and the complaint can be filed on the service of a second notice. While taking this view, the Hon'ble Court has referred to Sadanandan Bhadran, Prem Chand Vijay Kumar and Krishna Exports (supra). In this case, the petitioners are clinging on to a previous letter sent by the payee of the cheque and would contend that the same was enough to knock off the prosecution based on a second presentation and the second bouncing of the cheque. The Magistrate did find this argument in favour of the petitioner and ordered his discharge, but the Appellate Court reversed that finding in an appeal. A perusal of the provisions of the Negotiable Instruments Act would show that the relevant section in this regard provides that a creditor should make a demand requiring the company to pay the amount due to the creditor and the mode of making such demand is also delineated in the section. Clause(b) of the provision to Section 138 of the Act contemplates the making of the demand for payment of the cheque amount as an indispensable step to snowball into a cause of action. The said proviso reads:- “(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of CRIMINAL REVISION NO.230 OF 2011 :{ 9 }: 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.” Thus, clause(b) of the proviso to the section reproduced above involves the making of demand 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. It is fully settled in view of the ratio of law as held by the Hon'ble Supreme Court in the cases, as noted above, that if dishonour of cheque has once led to a cause of action, then it is not permissible for a payee to create another cause of action with the same cheque. The question, therefore, to be seen in this case would be if the payee had issued notice within 15 days after the first dishonour of the cheque or not. Put in another form, the question is “whether the notice dated 22.4.2006 was a valid notice in the eyes of law and that would be the crux of the issue involved in this case. The perusal of letter dated 22.4.2006 would show that it was an intimation sent by the respondent to the petitioner-company in regard to dishonour of the cheques for “insufficient funds” and the petitioners were told to clear the outstanding amount in their own interest. This communication was not termed as legal notice under Section 138 of the Act nor there was any demand for payment of the amount failing which action was to follow under the provisions of the Act. If this notice is analysed in contrast to the legal notice finally sent upon second presentation of the cheque on 30.5.2006, then this fact CRIMINAL REVISION NO.230 OF 2011 :{ 10 }: would clearly emerge that earlier was simply a letter intimating the petitioners about the factual issue and requiring them to clear the amount in their own interest, but there was no notice for taking any legal action. In legal notice dated 30.5.2006, the respondents had clearly mentioned this notice to be a legal notice, through which the petitioners were called upon to make the payment of Rs.2.00 being a principal amount of the said cheque alongwith interest at the prevailing market rates from the date of issuance of the cheque to the date of final payment within a period of 15 days, failing which, the legal action against them in accordance with law was to follow. Accordingly, the letter dated 22.4.2006 cannot be treated as a legal notice as per the provisions of the Act and, thus, would not give rise to any cause of action. In view of the facts situation in this case, it would be possible to view that the first letter was not a legal notice giving rise to cause of action to the complainant and, hence, the presentation of a cheque second time followed by a notice which was in terms of the provisions of the Act was only the valid notice giving rise to cause of action in this case. Thus, no case for interference in the view formed by the Appellate Court is made out in the facts and circumstances of this case. I am, therefore, not inclined to interfere in the impugned order passed by the Addl.Sessions Judge, Patiala and would dismiss the present revision petitions December 15, 2011 ( RANJIT SINGH ) ramesh JUDGE