CALCUTTA HIGH COURT
DEBIPRASAD SENGUPTA, J.
C.R.R. No. 351 of 1999
Decided on 25.8.1999
KULIK PAPER INDUSTRIES (PVT.) LTD. & ANR.
Versus
SANJAY AGARWALA
For the Petitioners Advocates Mr. Biplab Mitra and Mr. Subhir Banerjee, Advocates
For the O.P. Mr. Achintya Kumar Dutta and Mr. T. Roy Chowdhury, Advocates.
A complaint under Section 138 of the Negotiable Instruments Act must be filed within one month from the date when the cause of action arises. The cause of action arises only once, upon the failure of the drawer to pay the money within the stipulated time after receiving the demand notice. A second demand notice cannot create a fresh cause of action.
Headnote:
NEGOTIABLE INSTRUMENTS ACT - SECTION 138, 142 - LIMITATION - CAUSE OF ACTION - SECOND DEMAND NOTICE - MAINTAINABILITY OF COMPLAINT - QUASHING OF PROCEEDING:
Fact of the Case:
A complaint was filed under Section 138 of the Negotiable Instruments Act for dishonor of cheques. The accused challenged the maintainability of the complaint on the ground that it was filed beyond the statutory period prescribed in the Act. The complainant argued that a second demand notice was issued and the complaint was filed on the basis of the second cause of action.
Finding of the Court:
The court held that the cause of action for lodging the complaint arose after the expiry of the period of 15 days from the date of receipt of the demand notice by the accused. The complainant failed to avail the opportunity of lodging a complaint after the cause of action arose and instead issued a second demand notice and filed the complaint on the basis of the second cause of action. This was not permissible as per the law.
Issues: Whether the complaint was filed within the statutory period prescribed in the Negotiable Instruments Act.
Ratio Decidendi: The court relied on the Supreme Court judgment in Sadanandan Bhadran v. Madhavan Sunil Kumar, which held that a cause of action for filing a complaint under Section 138 of the Negotiable Instruments Act arises only once, upon the failure of the drawer to pay the money within the stipulated time after receiving the demand notice. The court held that the complainant could not file a complaint on the basis of a second cause of action created by a second demand notice.
Final Decision: The court allowed the revisional application and quashed the proceeding pending in the lower court.
Debiprasad Sengupta, J. - This revisional application is for quashing of a proceeding being C.R. Case No. 478 under Section 138 of the Negotiable Instruments Act pending in the Court of the learned Sub-Divisional Judicial Magistrate, Rajganj, Uttar Dinajpur.
2. The opposite party herein filed a petition of complaint in the Court of learned Sub-Divisional Judicial Magistrate, Raiganj alleging commission of an offence under Section 138 of the Negotiable Instruments Act. In the said petition of complaint it was alleged that the accused No.2 is the Director of the accused No. 1 Company, who was incharge of and was responsible to the conduct of the day-to-day business of the Company. For the payment of some outstanding bills the accused person issued four cheques drawn on Central Bank of India, Calcutta Main Office in favour of the complainant. The aforesaid four cheques were duly presented for encashment by the complainant. But out of said four cheques only one cheque was honoured by the Bank and the rest three cheques were dishonoured by the Bank due to insufficient fund in the account. Having received the said intimation from the Bank the complainant sent a demand notice through his Advocate on 30.6.1997 asking the accused person to make the payment of the cheque amount within the stipulated period. It was alleged that having received the aforesaid notice the accused met the complainant and requested him to present the said three cheques once again for encashment after 25th July, 1997. The complainant accepted the said request of the accused and presented the said three dishonoured cheques for encashment to Allahabad Bank, Mohanbati Branch. But the said three cheques were again dishonoured by the Bank, which was intimated to the complainant by the Bank through a memo dated 7.8.1997. The complainant thereafter sent a demand notice for the second time to the accused NO.l on 18.8.1997. After delivery of the said notice the acknowledgement card was received by the complainants Advocate on 21.8.1997. Thereafter on failure to make the payment by the accused the petition of complaint was filed in Court.
3. On 19.2.1998 an application was filed on behalf of the present petitioner before the learned Magistrate challenging the maintainability of the proceeding. The petitioner prayed for discharge from the said case on the ground that the petition of complaint was filed beyond the statutory period as prescribed in the N.I. Act. It was further stated in the said application that the Company was declared as a Sick Industrial Company under the Sick Industrial companies (Special Provisions) Act. The said application was taken up for hearing on 28.10.1998 and the same was rejected by the learned Magistrate. It is at this stage the petitioners have come up before this Court challenging the said order dated 28.10.1998 as also with a prayer for quashing of the proceeding.
4. Mr. Mitra, learned Advocate appearing for the petitioners submits that the legal formalities at laid down under Section 138 read with Section 142 of the Negotiable Instruments Act having not been strictly complied with the prosecution is not legally maintainable and the continuation of the above criminal case will be an abuse of the process of the Court. Mr. Mitra further submits that the complainant failed to the file the petition of complaint within the stipulated time after the first cause of action arose and he had no right to file the complaint on the basis of second cause of action and failure to do so makes the case time-barred. Mr. Mitra relies on a judgment Sadanandan Bhadran v. Madhavan Sunil Kumar, AIR 1998 SC 3043. wherein it was held by the Hon'ble Apex Court as follows :
"A cheque can be presented any number of times during the period of its validity to payee. On each presentation of the cheque and its dishonour a fresh right- and not cause of action accrued in his favour. He may, therefore, without taking peremptory action in exercise of his such right