Trailokya Mishra vs M/S. Shankar Narayan Infrastructure ...
2025 Latest Caselaw 5856 Ori

Orissa High Court

Trailokya Mishra vs M/S. Shankar Narayan Infrastructure ... on 30 May, 2025

           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

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.

4. Out of such rival pleas the point for determination in this

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?

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. 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

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

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.

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

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.

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."

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.

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.

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

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.

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

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. The Criminal Revision is accordingly allowed.

19. 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.

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 .

Signed by: SUKANTA KUMAR BEHERA Designation: Senior Stenographer Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-May-2025 17:23:00