SC: 'Cheque Bounce' Complaint based on 2nd Notice after Re-Presentation of Cheque is Maintainable, Read Judgment

17 Jan 2019

January 17, 2019

The Apex Court has held that a 'Cheque Bounce' complaint filed based on the 2nd statutory notice issued after re-presentation of cheques, is maintainable.

In this case, 3 cheques issued by the accused were presented by the complainant & after they were dishonored, a notice was issued to the accused on in August 2009 demanding the repayment of the amount.

After-which, the cheques were again presented, which were again dishonoured. The complainant issued a statutory notice on 25.01.2010 & later filed a complaint under Section 138 of the Negotiable Instruments Act based on the 2nd statutory notice.

The Madras HC, allowing the petition filed by the accused, quashed the complaint by holding that "the amount has been specifically mentioned in the 1st notice & thereafter, the complainant himself has postponed the matter & issued the second notice on 25.01.2010 & the complaint filed on the same cause of action wasn't maintainable.

While disposing the appeal, the bench comprising Justices R. Banumathi & Indira Banerjee specifically took note of the 3 judge bench decision in the case of MSR Leathers v. S. Palaniappan wherein it was 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 & institute the criminal complaint based on the second or successive dishonour of the cheque on its presentation.

In the above stated case, it was specifically held that there's no real or qualitative difference between a case where default is committed & prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time.

The Court had observed, "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 statutory notice and a failure to pay had not been launched."

Applying the dictum laid in MSR Leathers v. S. Palaniappan , the bench, on the facts of this case, said, "In the present case as pointed out earlier that cheques were presented twice and notices were issued on 31.08.2009 and 25.01.2010. Applying the ratio of MSR Leathers (supra) the complaint filed based on the second statutory notice is not barred and the High Court, in our view, ought not to have quashed the criminal complaint and the impugned judgment is liable to be set aside."

Setting aside the Madras High Court order, the bench remitted back the matter to the Trial Court.