M/S. UNIPLAS INDIA LTD. AND ORS. versus STATE (GOVT. OF NCT OF DELHI) AND ANR.

Citation: [2001] 3 S.C.R. 985 · Decided: 17-07-2001 · Supreme Court of India · Bench: K.T. THOMAS · Disposal: Dismissed
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Judgment (excerpt)

y 
;I 
MIS. UNIPLAS INDIA LTD. AND ORS. 
A 
v. 
STATE (GOVT. OF NCT OF DELHI) AND ANR. 
JULY 17, 2001 
• 
[K.T. THOMAS AND R.P. SETHI, JJ.] 
B 
Negotiable Instruments Act, 1881: 
Section J 38 proviso (b)-Dishonour of cheque-Notice of demand-
/ssued under S.434 of the Companies Act-Validity of-Is a valid notice C 
under Clause (b) of proviso to S.138-Companies Act, 1956, Ss.433 and 434. 
Section /42(b)-Dishonour of cheque-Cause of action-Arising of-
Held: Notice of demand has to be given within 15 days of dishonour of 
cheque-If such a notice is not given within 15 days no cause of action D 
arises-Successive causes of action cannot be created with repeated 
presentations of the same cheque for the purpose of launching a prosecution. 
Dishonour of cheque-Successive presentations of cheque-Notice of 
demand-Cheque, when presented for the first time, dishonoured-Notice of 
demand given after expiry of a period of 15 days-Cheque presented again E 
and dishonoured-Notice of demand given within the statutory period of 15 
days-Validity of second notice-Held: The first dishonour did not snowball 
into a cause of action as there is no valid notice-Therefore, payee not 
prevented from presenting the cheque once again, and upon its dishonour, 
cause of action arises for launching a complaint. 
"Cause of action "-Meaning of-In the context of S. J 42(b) of the 
Negotiable Instruments Act, 1888. 
E' 
I 
The appellant issued two cheques in favour of the respondent-
complainant, which were dishonoured by the Bank. The respondent sent a G 
notiee of demand to the appellant under clause (b) of proviso to Section 138 
of the Negotiable Instruments Act, 1888 calling upon him to pay the amount 
within the statutory period of 15 days. As the appellant did not pay the amount 
within the statutory period the respondent filed a complaint before the Chief 
Metropolitan Magistrate. 
985 
H 
986 
_SUPREME COURT REPORTS. 
[200 I] 3 S.C.R. 
A 
The appellant contended before the trial court that the respondent had 
earlier presented the cheque and when it was dishonoured the respondent 
issued a notice under Section 434 of the Companies Act, 1956 but did not file 
a complaint within one month of the expiry of 15 day~ after the said notice 
and, therefore, the respondent could not create one more cause of action by 
presenting the cheque once again. The trial court rePelled the contention on 
B the ground that the first notice under Section 434 of the Companies Act could 
not be treated as a valid notice under Section 138 of the Negotiable Instruments 
Act. This position ofthe trial court was upheld by the High Court. Hence this 
appeal. 
C 
Dismissing the appeal, the Court 
HELD : 1. If any notice is issued under Section 434 of the Companies 
Act, 1956 within 15 days of the information from the Bank regarding return 
of the cheque drawn by a company as unpaid, such a notice would as well be 
good enough under clause (b) of the proviso to Section 138 of the Negotiable 
D 
Inst~uments Act, 1881. A complai_nant cannot create successive causes of 
action with the same ~heque. If no complaint is filed on the first cause of 
action the payee is disentitled to create another cause of action to file a 
complaint for the purpose of launching a prosecution op. it. [990-B-C] 
Sadanandan"Bhadran v. Madhavan Sunil Kumar, [1998) SCC 514 and 
E SIL Import, USA v. Exim Aides Silk Exporters. Bangalore, [1999] 4 SCC 567, 
relied on. 
F 
2.1. One of the indispensable factors to form the cause of action envisaged 
in Section 138. of the Negotiable Instruments 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 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. [990-H) 
G 
2.2.rAdmittedly, the first notice of the earlier dishonoui of the cheque 
was issued only afte~ the expiry of 15 days from. the receipt of the intimation 
from the ·sank regardi~g the di~honour. u so the' said dishonour remained -
without any further escalation ·and need for snowball into a cause of action. 
Its.corollary is th~~t-the payee ~as ~ot prevented from pr~senting the
1cheque 
once 'again Within the permitted pe~iod and to' make use of such presentation 
H and the subsequent dishonour for a cause of action to
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