M/S. PREM CHAND VIJAY KUMAR versus YASH PAL SINGH AND ANR.

Citation: [2005] 3 S.C.R. 1029 · Decided: 02-05-2005 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Dismissed

Judgment (excerpt)

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MIS. PREM CHAND VIJA Y KUMAR 
A , 
v. 
Y ASH PAL SINGH AND ANR. 
MAY 2, 2005 
[ARIJIT PASAYAT AND S.H. KAPADIA, JJ.] 
B 
Negotiable Instruments Act, 1881: Sections 138 and 142-Dishonour of 
cheque-Cause of action to file complaint on dishonour of cheque despite 
issue of notice arise only once-Once notice is received by drawer, the payee 
forfeits his right to again present the cheque as cause of action had already C 
arisen and period of limitation begun to run-Giving of second notice would 
not then give rise to fresh cause of action. 
Words and Phrases-Cause of action-Meaning of in the Context of 
Section 142 of Negotiable Instruments Act, 1881. 
D 
Respondents issued a cheque in favour of the appellant for the value 
of goods supplied. On presentation of cheque in bank, it was dishonoured 
due to inadequacy of funds. Appellant sent notice to the respondents 
demanding payment. On the request of the respondents, the cheque was 
again presented and was dishonoured due to inadequacy of funds. 
Appellant sent another notice, but respondent failed again. Appellant filed E 
complaint under Section 138 of Negotiable Instruments Ad, 1881. 
Respondents filed an application for discharge which was dismissed by the 
trial court. On a petition filed under section 482 Cr.P.C, High Court 
quashed the proceedings, holding that the requirement of Section 142 of 
the Act were not met. Hence the present appeal. 
F 
Dismissing the appeal, the Court 
HELD : 1. Clause (a) of the proviso to Section 138 of Negotiable 
Instruments Act, 1881 does not put any embargo upon the payee to 
successively present a dishonoured cheque during the perfod of its validity. G 
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 
1m9 
H 
1030 
SUPREME COURT REPORTS 
(2005] 3 S.C.R. 
A 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, 
and the cause of action for filing the complaint will arise. (1034-C-FI 
2.1. In a generic and wide sense (as in Section 20 CPC) "cause of 
action" means every fact which it is necessary to establish to support a 
B right or obtain a judgment. However clause (b) of Section 142 gives a 
restrictive meaning to the term 'cause of action'. 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 receipt of the notic~. A 
combined reading of Sections 138 and 142 makes it clear that cause of 
C 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 receipt of the notice by the drawer expires. 
f 1034-G; 1035-C-E) 
D 
2.2. Once a notice under dause (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 c~use 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 
E 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 
p 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. (1035-E"'.'H; 1036-AJ 
Sadanandan Bhadran v. Madhavan Sunil Kumar, 11998) 6 SCC 514, 
G relied on. 
Dalmia Cement (Bharat) ltd v. Galaxy Traders & Agencies Ltd and 
Ors., (2001 ( 6 SCC 463, referred to. 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 65 l 
H of 2oos. 
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PR

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