MSR LEATHERS versus S. PALANIAPPAN & ANR.

Citation: [2012] 9 S.C.R. 165 · Decided: 26-09-2012 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Reference answered

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

[2012) 9 S.C.R. 165 
MSR LEATHERS 
v. 
S. PALANIAPPAN & ANR. 
(Criminal Appeal Nos. 261-264 of 2002) 
SEPTEMBER 26, 2012 
[R.M. LODHA, T.S. THAKUR AND ANIL R. DAVE, JJ.] 
Negotiable Instruments Act, 1881 - s. 138 - Dishonour 
A 
B 
of cheque - Prosecution based upon second or successive 
dishonour - When no prosecution initiated on first dishonour C 
- Whether permissible - Held: In view of s. 138 and the object 
underlying therein, the prosecution based on second or 
successive default in payment of cheque is permissible even 
when no prosecution was initiated pursuant to first default -
Even the legislative intention was not to impose such 
D 
restriction - So Jong as the cheque remains unpaid within its 
validity period and condition precedent for prosecution in 
terms of proviso to s. 138 are satisfied, cheque holder's right 
to prosecute the drawer remains valid and exercisable - The 
benefit of further opportunity to the drawer by reason of a fresh 
E 
presentation of cheque, cannot help the defaulter to get a 
complete absolution from prosecution - Interpretation of 
Statues. 
Interpretation of Statutes - Purposive interpretation - The 
court should adopt an interpretation which promotes and 
F 
advances the object sought to be achieved by the legislation, 
in preference to an interpretation which defeats such object. 
Words and Phrases: 
'Absolution' - Meaning of. 
'Cause of Action' - Meaning of, in the context of s. 138 
of Negotiable Instruments Act, 1881. 
165 
G 
H 
166 
SUPREME COURT REPORTS 
[2012] 9 S.C.R. 
A 
A Division Bench of this Court referred the question 
to the three Judges Bench 'Whether the prosecution u/ 
s. 138 of Negotiable Instruments Act, 1881 based upon 
second or successive dishonour of cheque is 
permissible, if the holder of the cheque had not initiated 
B prosecution when the cheque was dishonoured for the 
first time. 
Answering the reference, the Court 
HELD: 1. Prosecution based upon second or 
C 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. [Para 33] [192-G] 
0 
2. Presentation of the cheque and dishonour thereof 
within the period of its validity or a period of six months 
is just one of the three requirements that constitutes 
'cause of action' within the meaning of Sections 138 and 
142(b) of the Act, an expression that is more commonly 
E used in civil law than in penal statutes. For a dishonour 
to culminate into the commission of an offence of which 
a court may take cognizance, there are two other 
requirements, namely, (a) service of a notice upon the 
drawer of the cheque to make payment of the amount 
covered by the cheque and (b) failure of the drawer to 
F make any such payment within the stipulated period of 
15 days of the receipt of such a notice. It is only when 
the said two conditions are superadded to the dishonour 
of the cheque that the holder/payee of the cheque 
acquires the right to institute proceedings for prosecution 
G under Section 138 of the Act, which right remains legally 
enforceable for a period of 30 days counted from the date 
on which the cause of action accrued to him. There is, 
however, nothing in the proviso to Section 138 or Section 
142 for that matter, to oblige the holder/payee of a 
H dishonoured cheque to necessarily file a complaint even 
MSR LEATHERS v. S. PALANIAPPAN & ANR. 
167 
when he has acquired an indefeasible right to do so. The 
A 
fact that an offence is complete need not necessarily lead 
to launch of prosecution especially when the offence is 
not a cognizable one. The complainant may, even when 
he has the immediate right to institute criminal 
proceedings against the drawer of the cheque, either at 
B 
the request of the holder/payee of the cheque or on his 
own volition, refrain from instituting the proceedings 
based on the cause of action that has accrued to him. 
Such a decision to defer prosecution may be impelled by 
several considerations. [Para 14] [181-C-H; 182-A] 
c 
3. The expression 'cause of action' is more 
commonly and easily understood in the realm of civil 
laws. The expression is not defined anywhere in CPC to 
which it generally bears relevance but has been 
universally understood to mean the bundle of facts which 
D 
the plaintiff must prove in order to entitle him to succeed 
in the suit. [Para 18] [184-A] 
State of Madras v. C. P. Agencies AIR 1960 SC 1309; 
Raj

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