Dishonour of Cheque – Second or Successive Default in Payment

Applying the rules of interpretation and the provisions of Section 138, Negotiable Instrument Act the Court held that there was no hesitation in holding that a prosecution based on second or successive default in payment of cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason. There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time. MSR Leathers v. S. Palaniappan and another, (2013) 1 SCC 177.

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Filed under Negotiable Instruments Act, Second Default

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