It is generally true that a cheque can be presented to the bank for clearance, multiple times, during the period of its validity, despite the fact that it was not honoured on the earlier occasion(s), i.e., despite the fact that the cheque had bounced earlier.
However, the Supreme Court has clarified that once a notice has been issued by the payee to the drawer of the cheque after it had bounced and had been returned by the bank unpaid, thereafter it would not be possible to present the cheque again in the bank, and in such a situation the option before the payee would be to file a complaint for cheque dishonour under Section 138 of the Negotiable Instruments Act if the drawer fails to make the payment within the stipulated period after service of the notice to him.
In the case of Sadanandan Bhadran v. Madhavan Sunil Kumar, (1998) 6 SCC 514, the Supreme Court observed that on a careful analysis of Section 138 of the N.I. Act, it is seen that its main part creates an offence when a cheque is returned by the bank unpaid for any of the reasons mentioned therein. The significant fact, however, is that the proviso lays down three conditions precedent to the applicability of the above section and, for that matter, creation of such offence and the conditions are:
(i) the cheque should have been presented to the bank within six months of its issue or within the period of its validity, whichever is earlier;
(ii) the payee should have made a demand for payment by registered notice after the cheque is returned unpaid; and
(iii) that the drawer should have failed to pay the amount within 15 days of the receipt of the notice.
The Supreme Court held that it is only when all the above three conditions are satisfied that a prosecution can be launched for the offence under Section 138.
The important aspect of this judgment from the point of view of the present issue is that, the Supreme Court held that so far as the first condition is concerned, clause (a) of the proviso to Section 138 does not put any embargo upon the payee to successively present a dishonoured cheque during the period of its validity. This apart, in the course of business transactions it is not uncommon for a cheque being returned due to insufficient funds or similar such reasons and being presented again by the payee after sometime, on his own volition or at the request of the drawer, in expectation that it would be encashed. Needless to say, the primary interest of the payee is to get his money and not prosecution of the drawer, recourse to which, normally, is taken out of compulsion and not choice.
For these reasons, the Supreme Court held that a cheque can be presented any number of times during the period of its validity.
The next question was whether dishonour of the cheque on each occasion of its presentation gives rise to a fresh cause of action for the purposes of filing a cheque dishonour case?
After analysing the relevant provisions, the Supreme Court held that on each presentation of the cheque and its dishonour, a fresh right — and not cause of action — accrues in favour of the payee. He may, therefore, without taking pre-emptory action in exercise of his such right under clause (b) of Section 138 (i.e., of issuing notice), go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque. But once he gives a notice under clause (b) of Section 138, he forfeits such right because in case of failure of the drawer to pay the money within the stipulated time after the notice has been issued, he would be liable for offence and the cause of action for filing the complaint will arise.
Thus, it is quite clear from the above judgment, that the payee is free to present the cheque to the bank for clearance multiple times during the period of its validity, but only before he issues notice to the drawer. Once the payee issues a notice to the drawer under Section 138 of the NI Act after it was returned unpaid by the bank, thereafter the payee cannot present the same cheque again to the bank, and in such a situation the option left to him is to file the case under Section 138 of the Negotiable Instruments Act if the drawer fails to make the payment within the stipulated period after service of notice.
This legal principle was reiterated by the Supreme Court in the subsequent case of Prem Chand Vijay Kumar v. Yashpal Singh, (2005) 4 SCC 417.
With due respect to you, Hon’ble SUPREME COURT OF INDIA in a case named MSR Leathers Vs. S. Palaniappan and Anr. MANU/SC/0928/2013 Equivalent Citation: AIR2014SC642, Decided On: 10.09.2013 held at para 10 as follows:
10. In the result, their Lordships overruled the decision in Sadanandan Bhadran’s case (supra) 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.