The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK CRLREV No. 07 of 2006 An application under Section 401 of the Cr.P.C., read with Section 397 and 482 of the Cr.P.C. challenging the judgment and order dated 17.11.2005 passed by the learned S.D.J.M., Balasore in ICC Case No.230 of 2004 corresponding to Trial No.225 of 2005. -------------- Trailokya Mishra ..…. Petitioner (Complainant) -versus- 1. M/s. Shankar Narayan Infrastructure (P) Ltd. 2. Sri Manoj Sethi @ Manohar Shetty 3. Sri Sunil Sethi 4. General Manager, M/s. Shankar Narayan Infrastructure (P) Ltd. 5. Project Manager, M/s. Shankar Narayan Infrastructure (P) Ltd. …… Opp. Parties (Accused Persons) --------------------------------------------------------------------------- For Petitioner : Ms. Sakshi Rout, Advocate on behalf of Mr. S. Mishra, Advocate For Opp. Parties ---------------------------------------------------------------------------- : None CORAM: HONOURABLE MISS JUSTICE SAVITRI RATHO CRLREV No. 07 of 2006 Page 1 of 14 JUDGMENT 30.05.2025 Savitri Ratho, J. This application under Section 401 read with Sections 397 and 482 of the Code of Criminal Procedure has been filed challenging the judgment dated 17.11.2005 passed by the learned S.D.J.M., Balasore in I.C.C. Case No. 230 of 2004 (Trial No. 225 of 2005) acquitting the opposite parties no. 1 to 5 under Section 138 of the Negotiable Instruments Act and Section 420 of IPC. 2. Brief fact of the case is that the present petitioner had filed a complaint case stating that the opposite party had entered with an agreement with him for raising metal from the quarry owned by the petitioner and from time to time the opposite parties were paying his legal dues. However, for due discharge of their liabilities the present opposite parties have given two cheques bearing no. 700050 dated 25.12.2003 for Rs.5,00,000/- and another cheque bearing no.700051 dated 25.11.2004 for Rs.10,00,000/-. However, on 27.01.2004 when the complainant deposited these cheques for encashment, those were bounced by his banker ‘Canara Bank’ Balasore on the ground payment stopped by drawer. However, when the complainant informed the matter to the present opposite parties, they requested him to deposit both cheques again and on 11.05.2004 complainant CRLREV No. 07 of 2006 Page 2 of 14 deposited both the cheques in “Andhra Bank” but those were dishonoured by the Bank on the same ground that payment stopped drawer and for insufficient of funds. Thereafter complainant issued notice to the present opposite parties through Advocate, but opposite party nos. 2 and 3 did not receive the notice and the opposite parties sent one evasive reply to the complainant (the present petitioner) disowning any claim. 3. The plea of opposite parties is one of complete denial and further they took the stand that this case is barred by limitation and opposite parties had no liability to pay any amount to the complainant. Out of such rival pleas the point for determination in this 4. case:- (i) Whether the opposite parties for due discharge of their legal liability, issue two cheques totaling Rs.15,00,000/- to the complainant and those were dishonoured by bank? (ii) Whether being duly noticed opposite parties failed to make the payment and if the case is filed in time and not barred by limitation? CRLREV No. 07 of 2006 Page 3 of 14 5. In order to prove its case, the petitioner examined one witness who is the complainant himself and produced as many as 16 documents which are marked as Ext.1 to Ext.16. 6. The defence also proved several documents and examined two witnesses and the opposite parties brought into evidence as many as 10 documents which are marked as Exts. A to K. 7.
Legal Reasoning
The learned trial Court first proceeded to consider the maintainability of the complaint as the defence had challenged the same .It observed that the cheques were dishonoured once in January 2004 and subsequently in May, 2004. As per Section 138 of the N.I. Act, once a cheque bounces, within 15 days demand notice is to be issued to the accused and thereafter within a span of one month, the case has to be filed, but in the present case though the cheques first bounced in the month of January, 2004 and demand notice was issued to the accused on 09.02.2004, no case was filed within one month. Hence the case is grossly barred by limitation. 8. The learned Trial Court found that in the instant case cause of action for the complainant arose after complainant received the intimation from bank on 25.12.2003 and on 25.01.2004 as found from Ext.4 and 5. Further, receipt of legal notice issued by the complainant CRLREV No. 07 of 2006 Page 4 of 14 himself as per Ext.A and B and subsequent issuance of notice through advocate vide Ext.C has not been disputed by complainant which tends to one irresistible conclusion that Ext. A, B and C which are all demand notices were duly received by accused persons. Regarding the stand taken by complainant that all accused persons were not served with notice, has no ground as because in this case accused No.1 is a company and accused No.2 to 5 are its officers who are managing the affairs of the company and service of notice on either of the accused tentamounts to service of notice to all accused persons as a whole. Therefore, for the complainant, cause of action arose in February, 2004, but this case was not filled during the limitation prescribed as per NI Act and for the grounds stated above subsequent presentation of the cheques and notices cannot be considered. It dismissed the complaint case holding it to be grossly barred by limitation. SUBMISSION 9. None appeared for the Opp. Parties when the matter was last
Legal Reasoning
heard. Mr. R. K. Pati, learned counsel had appeared on behalf of Mr. T. K. Pattnaik, learned counsel on 07.03.2024 and had prayed for an adjournment. When the matter was listed on 22.03.2024, Mr. B. S. Rayguru, learned counsel had appeared on behalf of the Opp. Party No. CRLREV No. 07 of 2006 Page 5 of 14 1 and had prayed for time. But on 04.04.2024 & 05.04.2024, no counsel had appeared for the Opp. Parties and Ms. Rout had been heard on behalf of the petitioner. 10. Ms. S. Rout, learned counsel for the petitioner has relied on the decision of the Supreme Court in the case of MSR Leathers vs. S. Palaniappan and Another : (2013) 1 SCC 177, where while deciding the reference, the decision in the case of Sadanandan Bhadran vs. Madhavan Sunil Kumar reported in 1998 Vol. 6 SCC 514 has been over-ruled. It has been held by the Supreme Court that “the prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso of Section 138 of the Negotiable Instrument Act.” 11. Ms. S. Rout, learned counsel for the petitioner submitted that the in the present case the accused persons had given two cheques, one dated 25.12.2003 for Rs.5,00,000/- and another cheque dated 25.01.2024 for Rs.10,00,000/- which were deposited by the complainant on 27.01.2004 and they were dishonoured on the ground that the payment had been stopped by the drawer. When the opp. parties were informed about the dishonour, they requested the complainant to deposit both the cheques again for which on 11.05.2004 the complainant deposited both the cheques and they were again dishonoured by the bank on the same CRLREV No. 07 of 2006 Page 6 of 14 ground that payment had been stopped by the drawer and for insufficient funds. Thereafter, the complainant again issued notice to the accused persons through advocate. While Opp. Party No.2 and 3 did not receive the notice, the other opp. Parties sent a reply disowning their liability. The complaint was filed thereafter. 12. During hearing of the case, witnesses were examined but the learned Trial Court has dismissed the complaint on the preliminary issue that it is barred by limitation by relying upon the decision of the Supreme Court in the case of M/s. Prem Chand Vijay Kumar vs. Yash Pal Singh and Another reported in 2005 (31) OCR SC 407 where relying on the decision in the case of Sadanandan Bhadran vs. Madhavan Sunil Kumar reported in 1998 vol. 6 SCC 514, the complaint case had been dismissed holding that once the notice under Section 138(b) of the Act had been received by the drawer of the cheque, the payee or holder forfeited his right to present the cheque again. 13. Ms. Rout, learned counsel submits that in view of the larger bench decision of the Apex Court in the case of MSR Leathers (supra) which has overruled the decision of Sadanandan Bhadran, the impugned judgment is liable for interference and the complaint case should be remanded for retrial in accordance with law. CRLREV No. 07 of 2006 Page 7 of 14 JUDICIAL PRONOUNCEMENTS 14. In the case of Sadanandan Bhadran (supra), the Supreme Court had held:- “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 given our 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 from 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.” CRLREV No. 07 of 2006 Page 8 of 14 In the case of M/s. Prem Chand Vijay Kumar vs. Yash Pal Singh and Anr. : (2005) 31 OCR (SC) 407, the Supreme Court, relying on the decision in Sadanandan Bhadran has held follows:- “12. As noted in Sadanandan Bhadran’s case (supra) once a notice under clause (b) of Section 138 of the Act is "received by the drawer of the cheque, he payee or holder of the cheque forfeits his right to again present the cheque as cause of action has accrued when there was failure to pay the amount within the prescribed period and the period of limitation starts to run which cannot be stopped on any account. 13. One of the indispensable factors to form the cause of action envisaged Section 138 of the Act is contained in clause (b) of the proviso to that section. involves the making of a 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 retum of the cheque as unpaid". If no such notice is given within the cand period of 15 days, no cause of action could have been created at all.” In the case of MSR Leathers (supra), the correctness of the decision in the case of Sadanandan Bhadran (supra), which had been followed in a number of subsequent decisions, was doubted and referred to a larger Bench. CRLREV No. 07 of 2006 Page 9 of 14 The three judge Bench in the case of MSR Leathers (supra), has held as follows : - “31. Applying the above rule of interpretation and the provisions of Section 138, we have no hesitation in holding that a prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time. CRLREV No. 07 of 2006 Page 10 of 14 32. The controversy, in our opinion, can be seen from another angle also. If the decision in Sadanandan Bhadran’s case (supra) is correct, there is no option for the holder to defer institution of judicial proceedings even when he may like to do so for so simple and innocuous a reason as to extend certain accommodation to the drawer to arrange the payment of the amount. Apart from the fact that an interpretation which curtails the right of the parties to negotiate a possible settlement without prejudice to the right of holder to institute proceedings within the outer period of limitation stipulated by law should be avoided we see no reason why parties should, by a process of interpretation, be forced to launch complaints where they can or may like to defer such action for good and valid reasons. After all, neither the courts nor the parties stand to gain by institution of proceedings which may become unnecessary If cheque amount is paid by the drawer. The magistracy in this country is over-burdened by an avalanche of cases under Section 138 of Negotiable Instruments Act. If the first default itself must in terms of the decision in Sadanandan Bhadran’s case (supra) result in filing of prosecution, avoidable litigation would become an inevitable bane of the legislation that was intended only to bring solemnity to cheques without forcing parties to resort to proceedings in the courts of law. While there is no empirical data to suggest that the problems of overburdened magistracy and judicial system at the district CRLREV No. 07 of 2006 Page 11 of 14 level is entirely because of the compulsions arising out of the decisions in Sadanandan Bhadran’s case (supra), it is difficult to say that the law declared in that decision has not added to court congestion.
Decision
33. In the result, we overrule the decision in Sadanandan Bhadran’s case (supra) and hold that prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act. The reference is answered accordingly. The appeals shall now be listed before the regular Bench for hearing and disposal in light of the observations made above.” ANALYSIS AND REASONING 15. From a reading of the decision of the larger Bench in the case of MSR Leathers (supra), it is apparent that within its period of validity, a cheque can be presented for payment any number of times in the bank and even if notice is issued to the drawer after dishonor of the cheque on any occasion and complaint is not filed within the statutory period, it would not debar / preclude the complainant from presenting the cheque for payment again , issuing statutory notice and filing the complaint . Such complaint would not be barred by limitation on the ground that cause of action arose only once when CRLREV No. 07 of 2006 Page 12 of 14 notice was issued to the drawer after the cheque was dishonored on the previous occasion. 16. From a reading of the impugned judgment, it is apparent that the complaint has been dismissed only on the ground of limitation holding that cause of action arose when notice had been issued to the drawers after the cheque was dishonoured and the period of limitation started running when the notice was served on the drawer (s) for which the subsequent presentation of the cheque and its dishonor followed by issuance of statutory notice would not give rise to a fresh cause of action. 17. In view of the decision of the Supreme Court in the case of MSR Leathers (supra) and the facts of this case, the impugned judgment is set aside and the matter is remanded to the learned trial court for fresh disposal. The complaint shall be decided on merit, in accordance with law after issuing notice to the parties. 18. 19. The Criminal Revision is accordingly allowed. A copy of this judgment alongwith the trial Court record if received, be sent back to the learned court with a copy of the judgment forthwith. CRLREV No. 07 of 2006 Page 13 of 14 20. Ms. Sakshi Rout, learned counsel for the petitioner has rendered valuable assistance to the Court in rendering this decision, for which this Court appreciates her effort. 21. As the complaint is of the year 2005, the learned trial court is requested to make an attempt to complete the trial expeditiously. ……………………… (Savitri Ratho) Judge Orissa High Court, Cuttack. The 30th May, 2025. Subhalaxmi, Junior Stenographer S.K.Behera, Senior Stenographer . Signature Not Verified Digitally Signed Signed by: SUKANTA KUMAR BEHERA Designation: Senior Stenographer Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-May-2025 17:23:00 CRLREV No. 07 of 2006 Page 14 of 14