Supreme Court of India
(From Punjab and Haryana High Court)
Arijit Pasayat & S.H. Kapadia, JJ.
M/s. Prem Chand Vijay Kumar —Appellant
versus
Yash Pal Singh and Anr. —Respondents
Criminal Appeal No. 651 of 2005
(Arising out of SLP (Crl.) No. 1507 of 2004)
Decided on 2-5-2005

Important point
Once a notice u/s 138 (b) of the Negotiable Instruments Act is received by the drawer of the cheque, payee or holder of cheque forfeits his right to present the cheque again to create fresh cause of action after expiry of first cause of action pursuant to first notice.

Headnote:Negotiable Instruments Act, 1881 —Sections 138 and 142—Prosecution for dishonour of cheque—Cause of action within the meaning of Section 142(c) of the Act arises and can arise only once—Cheque issued in favour of complainant-appellant was dishonoured due to insufficient funds on 6.2.1995 and complainant issued demand notice on 17.2.1995 and amount was not paid—As requested by respondents-accused cheque was presented again on 6.7.1995 and was again dishonoured and again lawyer’s notice was sent on 24.7.1995 and then present complaint was filed—High Court in exercise of it’s power u/s 482 Cr.P.C. quashed complaint—Appeal—Once notice u/s 138 (b) of the Act was received by the drawer of the cheque, payee or holder of the cheque forfeited his right to present the cheque again—It was not permissible for a payee to create another cause of action with same cheque—Impugned judgment did not suffer from any infirmity.

       Held : 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. 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. On each presentation of the cheque and its dishonour, a fresh right-and not a cause of action - accrues in his favour. He may, therefore, ­without taking pre-emptory action in exercise of his such right under clause (b) of ­Section 138, 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 in case of failure of the drawer to pay the money within the stipulated time, he would be liable for offence and the cause of action for filing the complaint will arise. (Paras 8 and 9)

       Clause (b) of Section 142 gives it a restrictive meaning, in that, it refers to only one fact which will give rise to the cause of action and that is the failure to make the payment within 15 days from the date of the receipt of the notice. A combined reading of Sections 138 and 142 makes it clear that cause of action is to be reckoned accordingly. The combined reading of the above two sections of the Act leaves no room for doubt that cause of action within the meaning of Section 142(c) arises - and can arise - only once. The period of one month for filing the complaint will be reckoned from the day immediately following the day on which the period of fifteen days from the date of the receipt of the notice by the drawer expires. As noted in Sadanandan Bhadran’s case (supra) once a notice under clause (b) of Section 138 of the Act is “received” by the drawer of the cheque, the payee or holder of the cheque forfeits his right to again present the cheque as cause of action has accrued when there was failure to pay the amount within the prescribed period and the period of limitation starts to run which cannot be stopped on any account. One of the indispensable factors to form the cause of action envisaged in Section 138 of the Act is contained in clause (b) of the proviso to that section. It involves the making of a demand by giving a notice in writing to the drawer of the cheque “within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid”. If no such notice is given within the said period of 15 days, no cause of action could have been created at all. Thus, it is well settled that if dishonour of a cheque has once snowballed into a cause of action it is not permissible for a payee to create another cause of action with the same cheque. (Paras 10 to 14)

       Result : Appeal dismissed.