Section 138 of the NI Act applies to cheques issued for payment of any amount of money to another person for discharge of any debt or other liability, regardless of whether the cheque is issued to the creditor or a third party. The requirement of notice and time limit for payment under Section 138 is mandatory and cannot be defeated by extending the time period specified in the notice.

( 1 ) THE matter was heard on 7-7-1998.

( 2 ) THE applicant made a prayer for quashing the proceedings of Complaint Case No. 5434 of 1997 (Ram Gopal Rai v. Devendra Kumar Rai) under Section 138 of the Negotiable Instruments Act (hereinafter referred to as the NI Act) pending in the Court of CJM, Jhansi. Certain papers were brought on record as annexures to the original affidavit, as also to the supplementary affidavit.

( 3 ) THE complaint in question was filed by Ram Gopal Rai alleging therein that his father was entitled Rs. 62500. 00 from Devendra Kumar Rai (present applicant) on account of supply of cement as also on account of payment of labour charges in cash. When demanded the accused always insisted that he would make the payment. But he had always been deferring such payment. Finally, he issued a cheque in favour of the complainant for payment of the aforesaid sum due to the father of the complainant. The cheque was drawn on the Punjab National Bank and was presented for encashment with the Central Bank of India, Babina. The PNB refused payment on the cheque on the ground of shortage of fund as also on other technical grounds. A notice was sent to the present applicant by the complainant demanding payment of the sum and the notice was refused on 12-3-1996. No payment despite this notice was made and the complaint was filed on 30-3-1998.

( 4 ) TWO legal pleas were raised on behalf of the applicant. It was contended that the money was not due to the complaint and, as such, there was no question of issuance of any cheque in his favour and even though such a cheque was issued, it could not be termed as one for payment of a debt. It was further stated that in the notice complainant demanded payment within 30 days of service but before the expiry of the aforesaid 30 days, the complaint was filed and cognizance was thus bad as the cause of action had not arisen at all.

( 5 ) SECTION 138 of the NI Act covers dishonour of cheque for insufficiency etc. of funds in the account. The whole of the section may be quoted up to the explanation annexed thereto :"138. Dishonour of cheque for insufficiency, etc. , of funds in the account.- Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that acount by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both : Provided that nothing contained in this section shall apply unless- (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money 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; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.- For the purposes of this section "debt or other liability" means a legally enforceable debt or other liability. "

( 6 ) A careful reading of the words of the section indicate that it relates to issuance and dishonour of a cheque issued for payment of any amount of money to