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TaxTMI 
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2022 (2) TMI 1381
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....n on 28.03.2016 in Indian Overseas Bank, V.S.A. Complex, Near New Bus stand, Salem. The cheque was dishonoured on 29.03.2016 on the ground "account closed". A statutory notice dated 26.04.2016 was given to the petitioner. He received the notice on 27.02.2016 and sent a reply containing false allegations. Therefore, the complaint. 4. Petitioner filed this quash petition on the ground that the amount cheque bearing No. 284359 dated 01.02.2016 was presented by the respondent on 02.02.2016 and the same was returned for the reason "account closed". Without issuing the statutory notice, respondent again presented the cheque on 28.03.2016. This time also the cheque was returned with the same endorsement "account closed" on 29.03.2016. Only thereafter, respondent issued the Statutory notice on 26.04.2016. Petitioner gave a suitable reply on 10.05.2016 and this complaint came to be filed on 13.05.2016. 5. It is further submitted that when a cheque was returned on 03.02.2016 for the reason "account closed", the respondent ought to have issued legal notice within 30 days from the date of receipt of memo from the Bank. That was not done in this case. Having failed to give statutory notice wi....
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....signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act." 7. Per contra, the learned counsel for the respondent submitted that the second presentation of the cheque is not altogether barred. "Account closed" implies that there is no sufficient fund in the account at the time of closure of the account. Therefore, the accused can be prosecuted for insufficiency of funds. The complainant is entitled to make successive presentation of the cheque within the period permitted. That is what had been done in this case. Petitioner had no sufficient funds in his account at the time of closing the account. Therefore, the complaint is maintainable and the case should go for trial. 8. In support of his submission, the learned counsel for the respondent has relied on the following judgments. (i) 2010 4 Crime (HC) 143 [R. Basant and M.C. Hari Rani. II Devan Vs. Krishna Menon] it has been held that: "39. It is contended with the help of the decision of the Karnataka High Court in Nanjundappa V. Hanumantharayappa, that when the dishonour is on the ground of "account closed" and "the signature differs", the period of limitation must start running from ....
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.... closed, the payee cannot resort to successive presentation to save the limitation. So also in the case of dishonour of cheque on the ground that "the signature does not tally with the specimen". iii) (2013) 10 Supreme Court Cases 568 [MSR Leathers Vs. S. Palaniappan and another] it has been held that: "8. After analysing Sections 138 and 142 of the Act, Their Lordships held that: (SCC p. 192, para 23) "23.....we find it difficult to hold that the payee would lose his right to institute such proceedings on a subsequent default that satisfies all the three requirements of Section 138". Accordingly, Their Lordships held as follows: (SCC p. 193, para 25) "25. Coming then to the question whether there is anything in section 142(b) to suggest that prosecution based on subsequent or successive dishonour is impermissible, we need only mention that the limitation which Sadanandan Bhadran case reads into that provision does not appear to us to arise. We say so because while a complaint based on a default and notice to pay must be filed within a period of one month from the date the cause of action accrues, which implies the date on which the period of 15 days granted to the drawer....
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...."stop-payment" instruction to the bank although would constitute an offence under Section 138 of the NI Act since this is no longer res integra, the same is an offence subject to the provision of Section 139 of the Act and hence, where the accused fails to discharge his burden of rebuttal by proving that the cheque could be held to be a cheque only for discharge of a lawful debt, the offence would be made out. Therefore, the cases arising out of stop-payment situation where the drawer of cheques has sufficient funds in his account and yet stops payment for bona fide reasons, the same cannot be put on a par with other variety of cases where the cheque has bounced on account of insufficiency of funds or where it exceeds the amount arranged to be paid from that account, since Section 138 cannot be applied in isolation ignoring Section 139 which envisages a right of rebuttal before an offence could be made out under Section 138 of the Act as the legislature already incorporates the expression "unless the contrary is proved" which means that the presumption of law shall stand and unless it is rebutted or disproved, the holder of a cheque shall be presumed to have received the cheque of ....
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....rned on 29.03.2016 with the same reason "account closed". Whether the second presentation of the cheque, when the cheque was earlier returned for the reason "account closed" is legally permissible is the moot question? Next question is whether the claim of the petitioner that the second presentation was made only for the purpose of saving the limitation? 14. While dealing with the cheque returned on the ground that the "account closed", it was observed in 1999 4 SCC 253 [NEPC MICON LTD. and others V. MAGMA LEASING LTD] that "account is closed" would mean that the cheque is returned as unpaid on the ground that "the amount of money standing to the credit of that account is insufficient to honour the cheque". It is observed in " 2012 (13) SCC 375 [Laxmi Dyechem V. State of Gujarat and others] that the reasons for dishonour of cheque "as account closed", "payment stopped", "referred to drawer" are only species of the genus that the amount of money available in the account is insufficient. Therefore, these grounds for return would constitute a dishonour within the meaning of Section 138 of the Act. 15. The judgment reported in 2013 10 SCC 568 [MSR Leathers V.S. Palaniappan and anothe....