Gujarat HC Allows Single Complaint for Dishonour of Four Cheques Under NI Act

U-Turn & Ors. Vs State of Gujarat & Anr. (Gujarat High Court)

Summary: The Gujarat High Court considered whether a single complaint under Section 138 of the Negotiable Instruments Act, 1881 could be maintained for dishonour of four cheques arising from one transaction. The petition was filed under Section 482 of the Code of Criminal Procedure, 1973, challenging the order dated 26.04.2021 passed by the Additional Senior Civil Judge and Judicial Magistrate, First Class, Surat, in Criminal Case No.23017 of 2021. The petitioners sought to have the order quashed as an abuse of the process of law. :contentReference[oaicite:1]{index=1}

Petitioner No.1, U-Turn, was a partnership firm engaged in the business of optical glasses, while petitioners Nos.2 and 3 were its partners. Respondent No.2, Insperson Ink, was also a partnership firm and had obtained a franchise of petitioner No.1 on 11.09.2019. Under the franchise arrangement, the complainant had paid Rs.72.50 lakh through RTGS and NEFT. When repayment was demanded towards the legally enforceable debt, four cheques were issued. The four cheques were dated 26.02.2020, 26.02.2020, 26.02.2020 and 20.05.2020, bearing cheque numbers 071027, 071028, 071029 and 071026 respectively, for Rs.15 lakh, Rs.15 lakh, Rs.14 lakh and Rs.15 lakh. :contentReference[oaicite:2]{index=2}

All four cheques were dishonoured on 22.05.2020. A statutory notice was issued on 10.06.2020, which was returned unserved. The cause of action was stated to have arisen on 28.06.2020, and a complaint under Section 138 of the Negotiable Instruments Act, 1881 was filed in respect of the four dishonoured cheques. The complaint was filed on 21.08.2020 and cognizance was taken on 26.04.2021. The Court also noted the notifications issued during the COVID-19 pandemic and the order of the Supreme Court in Suo Moto Writ (Civil) No.3/2020 while considering the limitation aspect. :contentReference[oaicite:3]{index=3}

The petitioners principally contended that the Magistrate had taken cognizance of a single complaint concerning four cheques without examining the complaint in accordance with Section 200 of the CrPC and in violation of Section 219 of the CrPC. Their submission was that Section 219 permitted only three offences of the same kind committed within one year to be charged together. They therefore argued that a single complaint concerning four cheques was not maintainable.

The State opposed the petition and sought its rejection in limine.

The High Court identified the short issue as whether one complaint could be maintained for dishonour of four cheques. It considered the special statutory scheme governing proceedings under Section 138 of the NI Act and the relationship between those proceedings and Section 219 of the CrPC.

The Court referred to the decision of the Karnataka High Court in A. Adinarayana Reddy vs. S. Vijayalakshmi, reported in 2024 LawSuit (Kar) 43. That decision, as reproduced in the judgment, relied upon the Punjab and Haryana High Court decision in Sh. Charashni Kumar Talwani Vs. M/s. Malhotra Poultries, Naraingarh Road, Barwala and the Supreme Court decision in Siva Kumar Vs. Natarajan, (2009) 13 SCC 623. The principle extracted was that where a consolidated notice is issued for dishonoured cheques, the offence under Section 138 is constituted after failure to pay within fifteen days of receipt of the notice, resulting in a single offence in the circumstances considered.

The Court also reproduced the discussion from Unique Infoways Pvt. Ltd. Vs. M/s. MPS Telecom Pvt. Ltd., which referred to Sharma Contracts India Pvt. Ltd. V. State & Anr. and Rajasthani Trading Co. v. Chemos International Limited. Those decisions addressed complaints involving multiple dishonoured cheques and the applicability of the procedural provisions governing joinder and trial of offences. The reproduced reasoning in Rajasthani Trading specifically concerned 27 cheques arising from a single transaction, presented and dishonoured together, followed by a single notice, and held that one complaint could be filed in respect of the transaction.

On the basis of the legal proposition reproduced from these authorities, the Gujarat High Court held that no case was made out to interfere with the impugned order. The petition was therefore dismissed in limine.

The precise outcome was that the petition seeking quashing of the Magistrate’s order dated 26.04.2021 was dismissed, rather than the complaint being quashed. :contentReference[oaicite:4]{index=4}

Cases Discussed

• A. Adinarayana Reddy vs. S. Vijayalakshmi — Karnataka High Court, 2024 LawSuit (Kar) 43
• Sh. Charashni Kumar Talwani Vs. M/s. Malhotra Poultries, Naraingarh Road, Barwala — Punjab and Haryana High Court
• Siva Kumar Vs. Natarajan — Supreme Court, (2009) 13 SCC 623
• Unique Infoways Pvt., Ltd. Vs. M/s. MPS Telecom Pvt., Ltd. — Delhi High Court
• Sharma Contracts India Pvt. Ltd. V. State & Anr. — Delhi High Court, (2012) SCC Online Delhi 310
• Rajasthani Trading Co. v. Chemos International Limited — Bombay High Court, II (2001) BC 426
• Vani Agro Enterprises vs. State of Gujarat & anr. — Supreme Court, Criminal Appeal No.587-590 of 2010

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

[1.0] By way of present petition under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as “CrPC”), the petitioners have prayed for the following relief:

“Quash and set aside order passed by learned Additional Senior Civil Judge and Judicial Magistrate, First Class at Surat by an order dated 26.04.2021 in Criminal Case No.23017 of 2021 as being abuse of process of law;”

[2.0] The facts in nut-shell emerging from the record of the case are as follows:

[2.1] Petitioner No.1 is a partnership firm viz. U-Turn and petitioner Nos.2 and 3 are partners of petitioner No.1 – partnership firm and are engaged in the business of optical glasses. Respondent No.2 is the original complainant i.e. Insperson Ink – a partnership firm, who had obtained franchisee of petitioner No.1 firm on 11.09.2019 and as per the franchisee agreement, the complainant firm had made total payment of Rs.72.50 lakh through RTGS and NEFT to the petitioner firm. That, thereafter, when the complainant demanded the amount from the petitioners towards their legally enforceable debt, four cheques were issued.

[2.2] The aforesaid cheques when presented before the Bank by the complainant, came to be dishonored on 22.05.2020 and therefore, the complainant issued a statutory notice on 10.06.2020 which returned as unserved and then the cause of action arose on 28.06.2020 and in this regard, the impugned complaint under Section 138 of the Negotiable Instruments Act, 1881 came to be filed for dishonor of four cheques.

Hence, present petition.

[3.0] Heard learned advocate for the petitioners and learned APP appearing for respondent No.1 – State of Gujarat.

[4.0] The sole contention of the learned advocate for the petitioners is that the learned Additional Senior Civil Judge, Surat without examining the complaint as per the mandate of section 200 of the CrPC and in violation of section 219 of the CrPC has been pleased to take cognizance of the single complaint which has been filed for dishonor of four cheques and issued process against the accused. Therefore, he has requested to allow the present petition.

[5.0] Per contra, learned APP has opposed the present petition and has submitted to reject the present petition in limine.

[6.0] I have given thoughtful consideration to the arguments canvassed by learned advocate appearing for respective parties.

[6.1] In the present case, a very short issue is, as to whether for dishonor of four cheques, one complaint is maintainable or not? Herein, proceedings under Section 138 of the NI Act is initiated at the instance of respondent No.2 – Insperson Ink through its power of attorney holder. The petitioner No.1 – a partnership firm viz. U-Turn entered into transaction with respondent No.2 and four different cheques, having details as mentioned below, for an amount of Rs.72.50 lakh came to be issued.

The aforesaid four cheques came to be dishonored on 22.05.2020 pursuant to which statutory notice came to be issued on 10.06.2020, which was returned as unserved and thus, the cause of action arose on 28.06.2020 and in this regard, complaint came to be filed.

[6.2] Considering the notification issued from time to time by the Ministry of Health and Family Welfare as also the order passed by the Hon’ble Supreme Court in Suo Moto Writ (Civil) No.3/2020 and COVID-19 pandemic and the fact that the complaint is filed on 21.08.2020 i.e. within the period of limitation, the learned Additional Senior Civil Judge, Surat has been pleased to take the cognizance on 26.04.2021.

[7.0] The main ground of the learned advocate for the petitioners is that under Section 219 of the CrPC, if three offences are committed in one year then such three offences of same kind within year may be treated as one transaction and one complaint is permissible. The proceeding under Section 138 of the NI Act is having an overriding effect and under the special Act as section 142 starts with non-obstante clause. Now, turning back to the submission of learned advocate for the petitioners that one complaint for four cheques is not maintainable is concerned, section 219 of the CrPC provides that three offences of same kind within year may be charged together.

[7.1] As discussed hereinabove, the proceeding under Section 138 of the NI Act is under special Act. The cause of action occured only after the dishonor of cheques and issuing the notice herein for dishonor of cheques and then the complaint came to be filed.

In this regard, considering the special provisions of the NI Act and the law laid down by the High Court of Karnataka in the case of A. Adinarayana Reddy vs. S. Vijayalakshmi reported in 2024 LawSuit (Kar) 43, it has been held that for dishonor of multiple cheques issued in one transaction, filing of multiple complaints caused tremendous harassment and prejudice to the drawer of the cheques. In the paragraph 10 of the said decision, it has been held and observed as under:

“10. The High court of Punjab and Haryana at Chandigarh, in case of “Sh.Charashni Kumar Talwani Vs. M/s. Malhotra Poultries, Naraingarh Road, Barwala, by relying upon the judgment of the Hon’ble Supreme Court in the case of Siva Kumar Vs Natarajan (2009) 13 SCC 623 has held as under;

“Thus, from this, it flows that it was only after a lapse of 15 days of the receipt of the notice under Section 138 (c) of the Act by the accused and on non-payment, the offence under Section 138 of the Act is deemed to have been committed. Since, in the present case, there is a single consolidated notice for all the ten cheques so dishonoured, so after the period of 15 days of the receipt of this consolidated notice upon non payment of the amount of these cheques, the offence under Section 138 of the Act is deemed to have taken place. Thus, it invariably gives rise to a single offence only as it is a single criminal act of omission and conduct of the accused.”

Thus, it has been well settled that even when single notice is issued for dishonor of four cheques, single complaint is maintainable.

[7.2] Further, in paragraph 12 of the said decision, it has been held as follows:

“12. Delhi High court in Unique Infoways Pvt., Ltd., Vs M/s. MPS Telecom Pvt., Ltd., held at paragraph 21 of the judgment as under,

“21. As regards the contention raised on behalf of the petitioner herein that in relation to the six cheques adverted to herein above, there was only one criminal complaint that had been filed i.e. CC No. 1529/2015 out of which the impugned order arises, in relation thereto it is essential to observe in as much as it was laid down by this Court in Sharma Contracts India Pvt. Ltd. V. State & Anr. (2012) SCC Online Delhi 310 vide para 11 to the effect

“11. The purport of the above provision is that where a person is accused of more than one offence of the same kind committed within the space of twelve months he can be charged and tried at one trial for, any number of them not exceeding three. The stage for determining whether there should be more than one charge and therefore more than one trial has not yet been reached. That will be decided at the appropriate stage by the learned trial court as and when charges are framed. This issue should therefore be appropriately addressed to that Court. The mere reference in the complaint to 20 cheques as having been dishonoured cannot render the complaint bad in law or not maintainable. The order of the learned MM issuing summons also does not get invalidated on that score. The second submission of learned Senior counsel for the Petitioner is also rejected.”

and that of Bombay High Court in Rajasthani Trading Co. v. Chemos International Limited II (2001) BC 426 observing:

“It is true that in the instant case petitioner has issued 27 cheques, 2 of which were dated 30.11.1996 while the remaining were dated 26.2.1997. Thus all the 27 cheques came to be issued to respondent No. 1, within a span of less than 3 months. It is also true that dishonour in respect of each cheque would constitute separate offence. However, it is to be borne in mind that all the 27 cheques were presented to the Bank on one and the same date and they were dishonoured by the Bank. The intimation of dishonour of the cheques was given by the Bank to respondent No. 1 on one and the same date i.e. 10.3.1997. It may further be noted that a single notice dated 19.3.1997 in respect of the dishonour of all the 27 cheques was given to the petitioners. The offence under Section 138 is deemed to have committed when the drawer of the chques fails to make payment of the amount of money within 15 days of the receipt of the demand notice given under Section 138(b) of the Negotiable Instruments Act. It is also material to note that all the 27 cheques issued by the petitioner were in connection with a single transaction entered with respondent No. 1. Therefore, the provisions of Section 220(1) of Cr. P. Code permits the respondent No. 1 to file one complaint against the petitioners in respect of the said transaction and the petitioners can be tried together for the dishonour of 27 cheques which in fact forms the same transactions.”

[8.0] In wake of aforesaid legal proposition of law, no case is made out to interfere with the impugned order and hence, present petition is dismissed in limine.