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2001 Supreme(SC) 120

R.P.SETHI, K.T.THOMAS
Dalmia Cement (Bharat) LTD. – Appellant
Versus
Galaxy Traders And Agencies LTD. – Respondent


Judgement Key Points

Key Points: - The complainant must file within one month of the date on which the cause of action arose under Clause (c) of the proviso to Section 138. (!) - The cause of action accrues on receipt of the notice by the drawer, not merely on sending the notice. (!) (!) - If the drawer receives a notice, the right to present the cheque again for a fresh cause of action may be forfeited once the notice is not paid within 15 days; re-presentation and fresh notice can be valid if the drawer’s receipt of the prior notice is disputed or not, depending on service proof. (!) (!) (!) - Service by post is presumed under Section 27 of the General Clauses Act, but such presumption is rebuttable; the despatcher may rely on this presumption or contest receipt. (!) (!) - The presumption of service applies when notices are sent by post and can be relied upon if not rebutted; otherwise, a fresh notice may be issued after re-presenting the cheque. (!) (!) - The High Court’s quashing of a complaint for time barred relief was reversed, directing continuation of proceedings; the appellant presented the cheque again and issued a fresh notice after receipt of a prior disputed communication. (!)

How to determine the period within which the complaint under Section 138 of the Negotiable Instruments Act must be filed?

What is the effect of receipt versus mere sending of the notice of dishonour on the accrual of cause of action under Section 138?

What are the consequences of receiving a communication that the notice was not received and opting to issue a fresh notice after re-presenting the cheque?


JUDGMENT

Sethi, J.-The complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter called "the Act") was quashed by the High Court vide the judgment impugned in this appeal holding that the same was barred by time as the complainant had allegedly failed to file it within the statutory period from the date of accruing of the cause of action.

2. In order to appreciate the legal submissions, a resume of facts of the case is necessary. In its complaint, the appellant-company had stated that Accused Nos. 2 to 9 who are partners of respondent-firm purchased cement from it and issued cheque for Rs. 9,13,353.84 on 26th May, 1998 which was drawn on Karur Vysa Bank Ltd., Ernakulam Branch. When presented for collection, the cheque was dishonoured on account of insufficiency of funds in the account of the accused. The information regarding non payment of the cheque amount was communicated by the Bank to the complainant on 2.6.1998. The complainant on 13.6.1998, through its Advocate, issued a statutory notice in terms of Section 138 of the Act intimating respondents 1 and 2 regarding the dishonour of the cheque and calling upon the respondents to pay the said amount wit






























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