Supreme Court reinstates criminal complaints under Section 138, emphasizes right to present contentions

The Supreme Court allowed the appeals, setting aside the High Court's judgment that quashed the criminal complaints under Section 138 of the Negotiable Instruments Act. The complaints were restored to the Trial Court for further proceedings, emphasizing the parties' right to present their contentions. The Court held that successive presentation of a cheque and filing a complaint based on subsequent dishonour is permissible to uphold faith in the banking system. The respondents were granted the liberty to seek dispensation from personal appearance before the Trial Court, subject to legal considerations.

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Issues involved:
Appeal against quashing of criminal complaints under Section 138 of the Negotiable Instruments Act based on second statutory notice. Interpretation of whether prosecution based on successive dishonour of cheque is permissible.

Analysis:

Issue 1: Quashing of criminal complaints based on second statutory notice
The appellant filed criminal complaints under Section 138 of the Negotiable Instruments Act after the cheques issued by the respondents were dishonoured. The High Court quashed the complaints on the ground that the complaint based on the second statutory notice was not maintainable as the appellant had initially issued a first notice demanding repayment. However, the Supreme Court held that successive presentation of the cheque and instituting a complaint based on subsequent dishonour is permissible under Section 138. The Court cited the MSR Leathers case, emphasizing the objective of promoting faith in the banking system and preventing dishonour of cheques. Therefore, the complaint based on the second statutory notice was not barred, and the High Court's decision to quash the complaints was set aside.

Issue 2: Interpretation of prosecution based on successive dishonour
The Supreme Court clarified that the purpose of Section 138 of the Negotiable Instruments Act is to compel drawers to honor their commitments. The Court held 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 was launched. The Court reasoned that there is no qualitative difference between immediate prosecution after the first default and prosecution deferred until subsequent dishonour. In the present case, since the cheques were presented twice and notices issued accordingly, the complaint based on the second statutory notice was deemed valid, and the High Court's decision to quash the complaints was deemed erroneous.

Conclusion:
The Supreme Court allowed the appeals, setting aside the High Court's judgment that quashed the criminal complaints. The complaints were restored to the Trial Court for further proceedings, emphasizing that the parties can raise all contentions before the Trial Court. The respondents were given the liberty to apply for dispensing with personal appearance before the Trial Court, which would be considered in accordance with the law.

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