109. NI Act - Limitation starts from first notice

Whether after the notice issued under clause (b) of Section 138 of the Negotiable Instruments Act,1881 is received by the drawer of the cheque, the payee or holder of the cheque, who does not take any action on the basis of such notice within the period prescribed under Section 138 of the Act, is entitled to send a fresh notice in respect of the same cheque and, thereafter, proceed to file a complaint under Section 138 of the Act?

Above question has been answered in negative by the Supreme Court in CRIMINAL APPEAL NO.46 OF 2010 (@ SPECIAL LEAVE PETITION (CRL) NO.6676 OF 2008), Tameeshwar Vaishnav Vs. Ramvishal Gupta (Decided on 8/1/10) wherein relying on two earlier decisions it has been held that under s 138 , NI Act, the cause of action arises only once. In this case first notice was issued on 22th march 2006 but complaint was not filed within 30 days and subsequently the cheque was again presented and dishonored and fresh notice was issued on 14th June 2006 and on that basis a complint was filed on 10th July 2006.
The Supreme Court accepted the argument that when the complainant did not take any action on the basis of the first notice a second notice in regard to the self-same cheque was barred under the proviso to Section 138 of the Act. In Sadanandan Bhadran vs. Madhavan Sunil Kumar [(1998) 6 SCC 514], it was held that the cause of action to file complaint on non-payment despite issue of notice, arises but once. Another cause of action would not arise on repeated dishonour on re-presentation. It was also held that while the payee was free to present the cheque repeatedly within its validity period, once notice had been issued and payments not received within 15 days of the receipt of the notice, the payee has to avail the very cause of action arising thereupon and file the complaint. Dishonour of the cheque on each re-presentation does not give rise to a fresh cause of action. This view was reiterated in Prem Chand Vijay Kumar vs. Yashpal Singh & Anr. [(2005) 4 SCC 417].


Following above decisions in Tameeshwar case (supra) the Supreme Court held that:

“The provisions of Section 138 and clauses (a), (b) and (c) to the proviso thereof indicate that a cheque has to be 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. Clause (b) indicates that the payee or the holder in due course of the cheque, has to make demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid and clause (c) provides that if the drawer of the cheque fails to make the payment of the said amount of money to the payee or to the holder in due course of the cheque within 15 days of receipt of the said notice, the payee or the holder of the cheque may file a complaint under Section 142 of the Act in the manner prescribed.”

The Supreme Court hald that : “In the instant case, it is clear that the fresh (sic) notices were received by the Appellant on 14th June, 2006, whereas the complaints were filed on 10th July, 2006. It must, therefore, be held that the complaints were filed beyond the period of limitation and the learned Magistrate erred in taking cognizance on the complaints filed on the basis of the second notices issued on 7th June, 2006. Similarly, the High Court was also wrong in affirming the order of the learned Magistrate.”