IMPORTANT POINT
There is no prohibition u/s 138 on instituting criminal complaint based on the second or successive statutory notice based on second or successive dishonour of the cheque on its presentation.

JUDGMENT :

R. Banumathi, J.

Leave granted.

2. These appeals arise out of the judgment and orders dated 14.11.2011 in Crl. O.P. No. 20401 of 2011 and 15.12.2014 in Crl. O.P.S.R. No. 55782 of 2014 passed by the High Court of Judicature at Madras in and by which the High Court has quashed the criminal complaints filed by the appellant-complainant under Section 138 of the Negotiable Instruments Act.

3. For convenience, the facts in C.C. No. 4029/2010 (Crl. O.P. No. 20401 of 2011) are referred to. Case of the appellant-complainant is that they had business dealings with the respondents and in the course of business dealings, the respondents had issued three cheques viz.

1. Cheque 316693 dated 20.07.2009 for Rs.1,44,362/-

2. Cheque 316663 dated 30.07.2009 for Rs.4,26,400/-

3. Cheque 316692 dated 10.08.2000 for Rs.4,48,656/-

The three cheques were presented for collection and the same were dishonoured and returned with the endorsement “insufficient funds”. The appellant-complainant had issued first notice to the respondent(s) on 31.08.2009 demanding the repayment of the amount. The cheques were again presented and returned with the endorsement “insufficient funds”. The appellant had issued a statutory notice on 25.01.2010 to the respondent(s). Since the cheque amount was not being paid, the appellant-complainant had filed the complaint under Section 138 of the Negotiable Instruments Act based on the second statutory notice dated 25.01.2010.

4. The respondent(s)-accused filed petition before the High Court under Section 482 Cr.P.C. seeking to quash the criminal complaint filed by the appellant-complainant on the ground that the complaint was not filed based on the first statutory notice dated 31.08.2009 and the complaint filed based on the second statutory notice dated 25.01.2010 is not maintainable. The High Court quashed the complaint by holding that “the amount has been specifically mentioned in the first notice and, thereafter, the complainant himself has postponed the matter and issued the second notice on 25.01.2010 and the complaint filed on the same cause of action was not maintainable.

5. We have heard Mr. K.K. Mani, learned counsel appearing on behalf of the appellant as well as Mr. B. Karunakaran, learned counsel appearing on behalf of the respondents.

6. The issue involved whether the prosecution based upon second or successive dishonour of the cheque is permissible or not, is no longer res integra. In Sadanandan’s case it was held that while second and successive presentation of the cheque is legally permissible so long as such presentation is within the period of six months or the validity of the cheque whichever is earlier, the second or subsequent dishonour of the cheque would not entitle the holder/payee to issue a statutory notice to the drawer nor would it entitle him to institute legal proceedings against the drawer in the event he fails to arrange the payment. The correctness of the decision in Sadanandan’s case was doubted and referred to the larger bench.

7. Three-Judge Bench of this Court in 2013 (1) SCC 177 MSR Leathers vs. S. Palaniappan and Another held that there is nothing in the provisions of Section 138 of the Act that forbids the holder of the Cheque to make successive presentation of the cheque and institute the criminal complaint based on the second or successive dishonour of the cheque on its presentation. In paragraphs 29 and 33 this Court held as under:

“29. It is trite that the object underlying Section 138 of the Act is to promote and inculcate faith in the efficacy of banking system and its operations giving creditability to negotiable instruments in business transactions and to create an atmosphere of faith and reliance by discouraging people from dishonouring their commitments which are implicit when they pay their dues through cheques. The provision was intended to punish those unscrupulous persons who issued cheques for discharging their liabilities without really intending to honour the promise that goe