Landmark Judgment on Conditions precedent for constituting an offence under S. 138 Amaresh Patel LANDMARK JUDGMENT Sat, Oct 12, 2019, at ,12:26 AM Title of the Case – Conditions precedent for constituting an offence under S. 138 Name of the case – Msr Leathers vs. S. Palaniappan & anr., (2013) 1 SCC 177, Crl.A. Nos. 2661-64 of 2002 (Supreme Court) Date of Judgment – 10th Sept 2013 Judges: Justice K.S. Radhakrishnan & Justice Pinaki Chandra Ghose Subject and sections involved – Section 138 of Negotiable Instruments Act, 1881 Issue: Whether precedent laid down in Sadanandan Bhadran’s Case is relevant? Whether prosecution based on second or successive dishonour of the cheque is right? Fact of the Case: The cheques presented by respondent to appellant were returned by the Bank with an endorsement “not arranged funds for”. At the request of the respondent, the appellant did not present the said cheques since the respondent agreed to settle the dispute. However, the respondent failed to settle the dispute subsequently. In these circumstances, on 8th January, 1997, the appellant sent a notice (to the respondent) under section 138(b) of the Negotiable Instruments Act, 1881 (hereinafter referred to as ‘the Act’). The respondent duly received the said notice. Subsequent thereto, those cheques were again presented before the Bank on 21st January, 1997 by the appellant. On presentation, the said cheques were dishonoured for want of sufficient funds. Click Here to Get All Important Judgment of the Month Ratio of the Case: The Supreme Court overruled the decision in Sadanandan Bhadran vs. Madhavan Sunil Kumar [1998 (6) SCC 514] and held that the prosecution based on second or successive dishonour of the cheque is also permissible so long as it satisfies the requirements stipulated under the proviso to Section 138 of the Act. There are three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. (i) The cheque ought to have been presented to the bank within a period of 6 months [3 months]* from the date on which it is drawn or within the period of its validity, whichever is earlier. (ii) The payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid. (iii) The drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within 15 days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque.