The Jammu and Kashmir & Ladakh High Court dismissed a Petition challenging a complaint registered under the Negotiable Instruments Act and reaffirmed that a single complaint in respect of dishonour of more than three cheques is maintainable if a consolidated notice of demand is served upon the accused.

The petitioner approached the High Court challenging the complaint filed by the respondent against him alleging the commission of offence under Section 138 of the Negotiable Instruments Act (NI Act). Challenge was also made against the order of the Trial Magistrate whereby cognizance of the offence had been taken and the process was issued against the petitioner.

The Single Bench of Justice Justice Sanjay Dhar asserted, “The issue as to whether a single complaint would be maintainable in respect of more than three cheques has been dealt with by various High Courts of this Country and it has been the consistent view of the Courts that a single complaint in respect of dishonour of more than three cheques is maintainable if a consolidated notice of demand is served upon the accused.”

Advocate M. Amin Khan represented the Petitioner while Advocate Syed Sajad Geelani represented the Respondent.

Factual Background

The Respondent-Complainant filed a complaint before the Trial Magistrate alleging the commission of an offence under Section 138 of the NI Act against the petitioner. It was pleaded in the complaint that the petitioner agreed to sell the land to the respondent for an amount of Rs.20 lakh. It was revealed during verification that the land was mortgaged to the bank, as such, the complainant/respondent requested the petitioner/accused to refund the sale consideration which he had already paid to the petitioner.

According to the respondent/complainant, for repaying the amount of sale consideration, the petitioner/accused issued four cheques in favour of the respondent/complainant. The respondent/complainant deposited these cheques with his banker but the same were returned unpaid due to insufficiency of funds. Thereafter the respondent/complainant served a single legal notice upon the petitioner/accused calling upon him to pay the amount in respect of the dishonoured cheques within fifteen days. However, when the petitioner failed to discharge his liability towards the respondent, the impugned complaint came to be filed by him.

Arguments

One of the arguments raised by the Petitioner was that the dishonour of each of the four cheques in the instant case constituted separate and distinct offences and the same could not have been tried together by filing the impugned complaint.

Issue

The main issue before the Bench was whether a single complaint with regard to dishonour of more than three cheques is maintainable.

Reasoning

The Bench explained, “As per Section 219 of the Cr. P. C, when a person is accused of more offences than one of the same kind within the space of twelve months from the first to the last of such offences, he may be charged with and tried at one trial for any number of them not exceeding three. Thus, only upto three offences of same kind committed by an accused within a period of twelve months can be tried together in one trial.”

The Bench made it clear that for constituting an offence under Section 138 of the NI Act, there has to be a drawl of a cheque by a person for an amount of money in favour of another person for the discharge, in whole or part, of any debt or any other liability. Secondly, the said cheque should be returned by the banker unpaid either because of insufficiency of funds or because it exceeds the amount arranged to be paid from the account. The third requirement is that the payee or holder in due course should make a demand for payment of the amount of money by giving a notice in writing to the drawer of the cheque, within thirty days of the receipt of information by him about dishonour of the cheque and lastly, if the drawer of the cheque fails to make the payment of the said amount of money to the payee or holder in due course within fifteen days of receipt of the said notice, the offence under Section 138 of the NI Act is constituted.

“Thus, unless a demand notice is served by the payee upon the drawer of the cheque after receipt of information regarding dishonour of the cheque and the drawer of the cheque fails to make payment within fifteen days despite receipt of such notice of demand, the offence under Section 138 NI Act would not be complete”, the Bench said. The cause of action for filing a complaint in favour of the payee against the drawer of the cheque arises only when the drawer of the cheque fails to make payment of the amount of the cheque to the payee or the holder in due course within fifteen days of receipt of notice of demand. “Mere issuance of cheque or its dishonour by the banker does not give rise to cause of action for filing a complaint against the drawer of the cheque”, it added.

“The dishonour of four cheques or issuance thereof by the petitioner in favour of the respondent did not give rise to any cause of action in favour of the respondent and, as such, mere issuance or dishonour of cheques in question would not constitute an offence against the petitioner”, the Bench held.

It was noticed that in the present matter, four different offences were not constituted upon dishonour of four different cheques issued by the petitioner in favour of the respondent. “Only one offence was constituted against the petitioner when, despite receipt of a joint notice of demand, he failed to pay the amount to the respondent within the stipulated period of fifteen days. Thus, Section 219 of the Cr. P. C does not have any applicability to the facts of the present case”, the Bench observed.

Referring to the judgments of the various High Courts in U-Turn and others vs. State of Gujarat and another (2024), Pawan Dhanpatrai Malhotra vs. Mahender Khari (2024), Sh. Charashni Kumar Talwani vs. M/S Malhotra Poultries Kumar Talwani vs. M/S Malhotra Poultries (2013), the Bench reaffirmed that a single complaint in respect of dishonour of more than three cheques is maintainable if a consolidated notice of demand is served upon the accused.

Thus, finding no merit in the Petition, the Bench dismissed the same.

Cause Title: Fayaz Ahmad Rather v. Tariq Ahmad Wani (Case No.:CRM(M) No.405/2023)

Appearance:

Petitioner: Advocate M. Amin Khan

Respondent: Advocate Syed Sajad Geelani

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Jammu & Kashmir and Ladakh High CourtJustice Sanjay Dhar

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.