IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Criminal Misc.No.M of 2012 Date of Decision: versus

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1 Criminal Misc.No.M of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Criminal Misc.No.M of 2012 Date of Decision: Sh.Charashni Kumar Talwani versus...petitioner M/s Malhotra Poultries, Naraingarh Road, Barwala...Respondent CORAM: HON'BLE MR.JUSTICE HEMANT GUPTA HON'BLE MR.JUSTICE FATEH DEEP 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.Ashok Gupta, Advocate for the petitioner Mr.Aman Bahri, Advocate for the respondent **** Fateh Deep Singh J. A petition, under Section 482 of the Code of Criminal Procedure (for short "Cr.P.C."), has been preferred by petitioner Charashni Kumar Talwani, seeking quashing of criminal complaint filed by respondent M/s Malhotra Poultries, under Section 138 of the Negotiable Instruments Act (for short 'the Act'), pending before the learned Judicial Magistrate 1 st Class, Panchkula. The brief background as to what has led to this is that

2 Criminal Misc.No.M of during the se proceedings, the petitioner had earlier raised question of territorial jurisdiction of the Court at Panchkula, which prayer was declined by the learned trial Magistrate. Against this a revision was preferred before the learned Sessions Court, which was accepted and the matter was remitted back. It is in the light of this, vide order dated , the present petitioner was summoned in this complaint as an accused by the learned Judicial Magistrate. Before the learned trial Court, the petitioner submitted that the present complaint was in respect of dishonour of ten cheques which constitute separate offences and therefore, the accused cannot be tried together. It is argued that under the provisions of Section 219 Cr.P.C., a person who is accused of offences of the same kind within a period of 12 months can be charged and tried for offences not exceeding three of them but an accused of ten distinct charges, each cheque disclosing separate offence, cannot be charged in one complaint. However, this plea of the accused/present petitioner was rejected. The accused was served with the notice of accusation. It is at this juncture, the petitioner has come up in this petition praying for exercise of inherent powers of this Court for quashing of the complaint. The learned single Bench of this Court, finding contradictory views over the interpretation of Section 219 and Section 220 Cr.P.C., whereby offences which formed part of the same transaction could be tried together irrespective of their number and the contrary view to it, has thought it fit and thus has referred the

3 Criminal Misc.No.M of matter to be decided by a Larger Bench to comprehensively adjudicate on this issue. It is in the light of this, the matter has come up before us. Heard learned counsel for the parties at length. The Act has been legislated way back in the year 1881 with the purpose to regulate mercantile transactions. However, with the passage of time and evolution of complexities, it was felt necessary to bring about changes for better regulation of the merchanting system. It was with this end in view, Sections 138 to Section 142 were inserted by The Bank, Public Financial Institution and Negotiable Instruments Laws (Amendment) Act, 1988, w.e.f This is an apt illustration of balanced and pragmatic approach adopted by the Legislature for the economic development of the Country. Hon'ble the Supreme Court of India in Kusum Ingots Alloys Ltd Vs Pennar Peterson Ltd AIR 2000 SC 954, interpreting the provisions of Section 138 of the Act, have laid down the essential ingredients of this provision as follows: (i)a person must have drawn a cheque on an account maintained by him in the bank for payment of a certain amount of money to another person from out of that account for the discharge of any debt or other liability; (ii)that cheque has been presented to the bank within a

4 Criminal Misc.No.M of period of six months from the date on which it is drawn or within the period of its validity whichever is earlier; (iii)that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank; (iv)the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque unpaid; (v)the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice. This was further reiterated in the case of K.R.Indira versus Dr.G.Adinarayana (2003) 8 SCC 300. It needs to be kept in mind that the provisions of Section 138 of the Act, do not run counter to the basic principles of criminal law that an accused must be presumed to be innocent. However, the provisions of Section 139 of

5 Criminal Misc.No.M of the Act, raises a presumption in the light of certain admitted facts in favour of the holder of the cheque and that the accused is guilty. The provisions of Section 243 Cr.P.C. and Section 4 of the Indian Evidence Act also have their application during trial of offences under the provisions of this Act. By virtue of Section 143 of the Act, which has been subsequently inserted by the Negotiable Instruments (Amendment and Misc.Provisions)Act, 2002, a complaint preferred under Section 138 of the Act is to be tried summarily and thus, the provisions of Section 262 and Section 265 Cr.P.C. govern such a process. The procedure for summary trials has been well laid down in Chapter XXI from Section 260 to Section 265 Cr.P.C. It needs to be clarified here that pendency of criminal complaint under Section 138 of the Act, would not be an impediment to the proceeding with the civil suits. Therefore the enforcement of the liability through a Civil Court will not dis-entitle the aggrieved person from prosecuting the offender for the offence punishable under Section 138 of the Act. Both these remedies can be simultaneously availed of. It needs to be ensured here that the successful termination of civil litigation does not mean or can be construed that the criminal prosecution under such provision is an abuse of the process of the Court justifying interference by this Court, under its inherent powers. The short question that has arisen before us in this reference is the very legality of prosecution of the petitioner under

6 Criminal Misc.No.M of Section 138 of the Act for the dishonour of the ten cheques which are enumerated as below to lay emphasis: 1. Cheque No dated for ` 50,000/- of State Bank of India, Paharganj, New Delhi. 2. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 3. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 4. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 5. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 6. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 7. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 8. Cheque No dated for ` 50,000/- of State Bank of India, Paharganj, New Delhi. 9. Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj, New Delhi. 10.Cheque No dated for ` 1,00,000/- of State Bank of India, Paharganj,

7 Criminal Misc.No.M of New Delhi. It is undisputed stand of the respondent that it had initially presented cheque bearing No dated for a sum of ` 50,000/- to its banker for encashment on , but the same was dishonoured on with the memo insufficient funds of the State Bank of India, dated Complainant claims that it was when it confronted the accused and on his assurance and asking, the complainant had presented all these cheques together for encashment to its banker on , which were received back dishonoured with individual memos, all dated bearing endorsement payment stopped by drawer. It is through a consolidated registered AD notice dated , the complainant had sought the payment from the accused-petitioner of his amount of the cheques totalling to ` 9,50,000/-. Admittedly, the first cheque presented by the complainant stood dishonoured and subsequently, as has been alleged, the complainant on the asking of the accused had simultaneously presented all the ten cheques for encashment. Answering a similar situation, the Hon'ble Supreme Court of India in the case of MSR Leathers versus S.Palaniappan and another (2013) 1 Supreme Court Cases 177, has delved deep into the provisions of the Act and has held that the holder of a dishonoured cheque is not obliged to necessarily file a complaint

8 Criminal Misc.No.M of upon very first dishonour of cheque, while overruling the ratio laid down in Sadanandan Bhadran vs. Madhavan Sunil Kumar (1998) 6 SCC 514, which has laid down that the first default itself must result in filing of prosecution or else results in forfeiture of right to bring prosecution. It was further held by their Lordships that repeated presentation/dishonour of the cheque gives rise to multiple causes of action each time and thus has held it permissible that so long as it satisfies all the requirements stipulated in the proviso to Section 138 of the Act, a complaint therefore, lies. From this, it ensues that so long as the cheque remains valid and unpaid there is a continuing obligation of the drawer to make good the same. It was further held in the case of K.R.Indira (supra) by the Hon'ble Supreme Court that a consolidated notice which provides sufficient information envisaged by the statutory provision and there was a sufficient demand for the payment of same covered by the cheques so dishonoured and the mere fact that it was a consolidated notice, as in the present case, does not invalidates such an act of the complainant. More so, the legislative intent as is evident from Section 138 of Act is that if for the dishonoured cheque, the payment is not made within the prescribed days of the receipt of the notice, the drawer is liable for conviction and where the cheque amount is paid within this period or before the complaint is filed, the legal liability under Section 138 ceases to be operative. However, the fulfilment of the concatenation of the numbers of acts, so prescribed needs to be fulfilled. A similar view

9 Criminal Misc.No.M of has been taken by the Hon'ble Andhra Pradesh High Court in the case of M.Chandrashekar Rao vs. V.Kutamba Rao and another 2006 Crl.L.J.1399, where reliance has been placed upon K.R.Indira's case (supra) to hold that such a consolidated notice is a valid notice. Moreover, examining from another angle, as to the filing of separate complaints in respect of each dishonoured cheque, the Hon'ble Apex Court alarmed over the astronomical rise in cases instituted under the provisions of Section 138 of the Act in the case of Damodar S.Prabhu vs. Sayed Babalal H. (2010) 5 Supreme Court Cases 663, has sought to lay guidelines for the Courts below holding that invariably the provision of a strong criminal remedy has encouraged the institution of large number of cases that are relatable to the offences contemplated by Section 138 of the Act. The large number of the cases is choking criminal justice system and has encouraged compounding of the offences even at belated stages. It has also interpreted that the provisions of the Section 147 of the Act are enabling provisions and that of providing for such compounding of offences override the provisions of Section 320(9) Cr.P.C. It has been stressed by their Lordships in Damodar S.Prabhu's case (supra), as under:- For instance, in the same transaction pertaining to a loan taken on an instalment basis to be repaid in equated monthly instalments, several cheques are

10 Criminal Misc.No.M of taken which are dated for each monthly instalment and upon the courts which may also have jurisdiction in relation to the complaint. In light of this submission, we direct that it should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed under Section 200 Cr.P.C. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice. These directions should be given effect prospectively. No doubt, Section 138(c) of the Act prescribes 15 days on the receipt of the notice from the holder for the drawer to make the payment of the said amount of money and by virtue of Section 142(b), the complaint is to be made within one month of date on which the cause of action under Section 138(c) arises, but with the amendment to Section 142 by Act No.55 of 2002, proviso has been made that the cognizance of a complaint may be taken by the Court even after the prescribed period, if the complainant satisfies the Court that he has sufficient cause for not making a complaint within

11 Criminal Misc.No.M of such period. Therefore, the statute holds a discretion for the Court to waive such a mandatory period. In Harman Electronics (P) Ltd. vs. National Panasonic India Ltd. (2009) 1 SCC 720, a fine distinction has been made in making a demand by giving a notice and of the receipt of of the said notice and it was laid down that giving notice in the context is not the same as receipt of the notice and therefore, it was held that on the due receipt of the notice or its knowledge by the drawer after the dishonour of the cheque when the prescribed period has a lapse, the offence is deemed to have been committed, which position was reiterated in Siva Kumar vs. Natarajan (2009) 13 Supreme Court Cases 623 by the Hon'ble Apex Court. Thus, from this, it flows that it was only after a lapse of 15 days of the receipt of the notice under Section 138 (c) of the Act by the accused and on non-payment, the offence under Section 138 of the Act is deemed to have been committed. Since, in the present case, there is a single consolidated notice for all the ten cheques so dishonoured, so after the period of 15 days of the receipt of this consolidated notice upon non payment of the amount of these cheques, the offence under Section 138 of the Act is deemed to have taken place. Thus, it invariably gives rise to a single offence only as it is a single criminal act of omission and conduct of the accused. In a Single Bench view of this Court which has also been relied upon on behalf of the respondent in the case of

12 Criminal Misc.No.M of M/s Kumar Rubber Industries, Kapurthala versus Sohan Lal, 2002(2) RCR (Criminal) 111, it was answered by the learned Court while interpreting the provisions of Section 219 Cr.P.C. that clubbing of a number of cheques in the complaint cannot be a ground to quash the complaint, further holding the position enunciated in the case of Anita vs. Anil K.Mehara, 1996(1) RCR (Cri) 257, where reliance was placed upon another Hon'ble Supreme Court view in State of Andhra Pradesh vs. Kandimala Subbaiah and another AIR 1961 Supreme Court 1241 and judgement of Delhi High Court reported as Stalion Shox Pvt.Ltd. Co. vs. Auto Tensions (P) Ltd., 1994 (1) RCR (Cri) 3, that where firstly no prejudice has been caused to the accused by such a clubbing and there was one transaction and the dishonoured cheques form part of the same very transaction, the provisions of Section 219 Cr.P.C. will not be a bar to such a recourse. The definition a transaction as crops up is a group of facts connected together as to be referred to be a single name, as a crime, a wrong or any other subject of enquiry, which may be in issue. The group of facts constituting a transaction are so connected together as to involve certain ideas viz. unity, continuity and connection. The question whether series of acts are so connected together as to form the same transaction is a question of fact in each particular case depending upon the proximity of time, place, continuity of action and unity, purpose or design. Therefore, it is

13 Criminal Misc.No.M of essential to look into such acts whether they are linked together to present a continuous whole. Merely a common purpose may not constitute same transaction. Looking from another angle, the Court taking cognizance of the complaint under Section 138 of the Act is required to be satisfied as to whether a prima facie case is made out under the said provision. Undoubtedly, the drawer of the cheque gets an opportunity under Section 139 of the Act to rebut the presumption at the trial and therefore, as has been laid down in M/s Modi Cements Ltd. Vs. Kuchil Kumar Nandi, AIR 1998 Supreme Court 1057, resorting to the exercise of the provisions of Section 482 Cr.P.C. in quashing the complaint has deemed it to be highly uncalled for. Similar views were expressed in the case of Chand Rattan Newar vs. Shaym Rattan Newar 2000(4) RCR (Criminal) 416. It would be highly too preposterous to invoke the jurisdiction of this Court under Section 482 Cr.P.C. to quash a complaint barely on a single remiss as even at the trial, complainant can exercise his discretion to choose before the trial Court the cheques on which he would prefer to maintain the complaint even if it is accepted as per the contentions of the counsel for the complainant that provisions of Section 219 Cr.P.C. hold good in such an eventuality. It has even so laid down by Hon'ble Madras High Court in the case of M/s Printo Stick and another vs. M.L.Oswal 1997 Crl.L.J Reliance by learned counsel for the respondent has also been placed on a view of

14 Criminal Misc.No.M of Hon'ble Rajashtan High Court in the case of Naresh Chander vs. State of Rajasthan and another 2000 Crl.L.J.5090, where it was held otherwise that dishonour of number of cheques issued for one transaction does not give rise to different causes of action. Though, it is explicitly clear under the provisions of Section 218 (1) Cr.P.C., which provides that for every distinct offence of which any person is accused, there shall be a separate charge and every such charge shall be tried separately. Section 220(1) Cr.P.C. states that if in one series of acts so connected together as to form the same transaction, more offences than one are committed by the same person, he may be charged with and tried at one trial for every such offence. Section 220(1) and Section 223(d) Cr.P.C. constitute an exception to Section 218 as well as Section 219 (2) Cr.P.C. Since Section 220 Cr.P.C. is an enabling provision, therefore separate trials in respect of the offence charged are not barred. However, where series of acts are so connected together forming same transaction, accused can be tried in one case by the Court. In the light of the fact that in the present situation all the ten cheques have been simultaneously presented to the banker on the same day and dishonour so effected on the same very day for all the cheques, regarding which a consolidated notice has been issued calling upon the drawer to make good the payment of these cheques, does not suffer from the vice of joinder of many offences in one trial. It is after the expiry of the period of the receipt of the notice,

15 Criminal Misc.No.M of prescribed under Section 138 (c) of the Act, offence under Section 138 of the Act is deemed to have been committed. Thus by all means, the facts disclose as constituting only one offence and it cannot be said that ten offences have been committed by the accused and therefore, Section 219 Cr.P.C, does not come into play. As per the allegations contained in the complaint, the parties have transacted regarding business of eggs, in lieu of which it is claimed that these cheques have been issued. Though, these cheques may be of different dates and amounts, but the mere act of giving these cheques together have merged to form the same transaction especially when all the ten cheques have been presented together on a particular day as per the averments of the complainant at the asking of the drawer coupled with the demand having been raised by the complainant through a consolidated notice giving rise to the same transaction as all these series of acts are so inter-linked or inter-connected together so as to form the same transaction of dishonouring the cheques on a single day on the presentation of the same as per the request of the drawer. In the light of the arguments raised, applying the test of continuity of action and commonness of purpose as there is a continuous operation of acts leading to the same end, the complaint filed cannot be said to be not maintainable. Learned counsel for the petitioner could not convince this Court how or in what manner any prejudice has been caused to

16 Criminal Misc.No.M of the petitioner by such alleged joinder of the cheques issued by him. Such complaint will facilitate speedy trial of dishonour of so many cheques, saving precious time of the Courts by lessening their burden and thereby resulting in speedy dispensation of justice which is hallmark of obligation created by virtue of Articles 39A, 21 and 14 of the Constitution. In the light of prologue discussions, we answer the reference to the effect that in the case of dishonour of multiple cheques presented together for which a consolidated single notice has been issued, tantamounts to commission of a single offence under Section 138 of the Act after the prescribed period of receipt of the notice on non payment of the amount of the cheques, and, therefore, a single complaint will be maintainable for all these dishonoured cheques. The matter be sent back to the learned Single Bench for decision of the petition on merits. (Hemant Gupta) Judge neenu (Fateh Deep Singh) Judge