MSR LEATHERS versus S. PALANIAPPAN & ANR.

Citation: [2013] 10 S.C.R. 81 · Decided: 10-09-2013 · Supreme Court of India · Bench: K.S. RADHAKRISHNAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2013] 10 S.C.R. 81 
MSR LEATHERS 
v. 
S. PALANIAPPAN & ANR. 
(Criminal Appeal Nos. 261-264 of 2002) 
SEPTEMBER 10, 2013 
[K.S. RADHAKRISHNAN AND PINAKI CHANDRA 
GHOSE, JJ.] 
A 
B 
Negotiable Instruments Act, 1881 - ss.138 & 142 -
Prosecution based on second or successive dishonour of the 
C 
cheque - Held: Is permissible so long as it satisfies the 
requirements stipulated under the proviso to s. 138. 
The respondent issued four cheques to the 
appellant. The appellant presented those four cheques on 
0 
21st November, 1996 and on presentation, those cheques 
were dishonoured. On 8th January, 1997, the appellant 
sent a notice to the respondent under section 138(b) of 
the Negotiable Instruments Act, 1881. The respondent 
duly received the said notice. Subsequent thereto, those 
E 
cheques were again presented before the Bank on 21st 
January, 1997 by the appellant. On presentation, the said 
cheques were again dishonoured. On 28th January, 1997 
the appellant sent a notice under Section 138(b) of the Act 
While the first notice dated 8th. January, 1997 Was beyond 
the limitatiorf period, as required under Section 138(b) of 
F 
the Act, the second notice sent by the appellant under the 
Act was within the limitation period from the date the 
Bank informed the appellant on the second occasion, i.e., 
on 28th January, 1997. 
Thereafter, the appellant filed a complaint before the 
Trial Court. In the circumstances, question arose for 
consideration before this Court as to whether the action 
81 
G 
H 
82 
SUPREME COURT REPORTS 
[2013] 10 S.C.R. 
A of the appellant was time-barred under Section 138(b) of 
the Negotiable Instruments Act, 1881 or not. 
The Division Bench of the Supreme Court since 
expressed reservation about the correctness of the law 
B laid down in Sadanandan Bhadran case and felt that it 
requires to be considered by a larger Bench and 
accordingly, the matter was placed before a larger Bench. 
Allowing the instant appeals, the Court 
c 
HELD: 1. The larger Bench, while deciding the 
question, noticed that proviso to Section 138 of the 
Negotiable Instruments Act, 1881, stipulates three distinct 
conditions precedent, which must be satisfied before 
dishonour of the cheque can constitute an offence and 
0 becomes punishable; and that fulfilment of those three 
conditions constitutes an offence under Section 138 and 
it can then be said that an offence under the said section 
has been committed by the person issuing the cheque. 
Their Lordships further noticed that no court shall take 
E cognizance of any offence punishable under Section 138 
except when a complaint in writing is made by the payee 
or by the holder in due course and such complaint has 
to be made within one month from the date on which the 
cause of action arises under clause (b) of the proviso to 
F Section 138. It was also noticed by their Lordships that 
neither Section 138 nor Section 142 of the Act or any 
other provision contained in the said Act prevents the 
holder or the payee of the cheque from presenting the 
cheque for encashment for any number of occasions 
within a period of six months from the date of its issuance 
G or within a period of its validity, whichever is earlier. 
Therefore, It appears that the payee or the holder has a 
right to present the same as many number of times for 
encashment within a period of six months or within its 
validity period, whichever is earlier. After analysing 
H Sections 138 and 142 of the Act, their Lordships found it 
MSR LEATHERS v. S. PALANIAPPAN & ANR. 
83 
"difficult to hold that the payee would lose his right to 
A 
institute such proceedings on a subsequent default that 
satisfies all the three requirements of Section 138." In the 
result, their Lordships overruled the decision in 
Sadanandan Bhadran's case and held that the 
prosecution based on second or successive dishonour B 
of the cheque is also permissible so long as it satisfies 
the requirements stipulated under the proviso to Section 
138 of the Act. In the light of the said decision, the 
impugned order passed by the High Court is set aside. 
[Para 6, 7, 8, 10 & 11] [85-A-B, E-H; 86-A-C; 88-F-G] 
C 
Sadanandan Bhadran vs. Madhavan Sunil Kumar 1998 
(6) sec 514:1998 (1) Suppl. SCR 178 - held overruled. 
Case Law Reference: 
1998 (1) Suppl. SCR 178 
held overruled 
Para 5 D 
CRIMINAL AP PELLA TE JURISDICTION : Criminal Appeal 
Nos. 261-264 of 2002. 
From the. Judgment & Order dated 19.01.2001 of the High 
E 
Court of M

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