India News | Court Can Take Cognisance of Complaint for Cheque Dishonour when Filed Within 1 Month: Allahabad HC

Prayagraj, Mar 6 (PTI) The Allahabad High Court has ruled that a court can take cognizance of a complaint for dishonour of cheque when it is filed within one month of cause of action.

In the present case, a complaint was filed under Section 138 of the Negotiable Instruments Act, 1881 as a result of a cheque drawn by the petitioner being returned unpaid by the bank due to insufficient funds in the account.

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Dismissing the petition filed by one Sudesh Kumar, Justice Yogendra Kumar Srivastava said, "A conjoint reading of the aforesaid provisions would indicate that a complaint under Section 138 can be filed within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138, which happens as soon as the drawer of the cheque fails to make payment of the cheque amount to the payee or to the holder in due course of the cheque, within fifteen days of the receipt of the notice required to be sent in terms of clause (b) of the proviso to Section 138 of the NI Act."

The court noted that the petitioner had 15 days' period to make the payment of the amount from the date of receipt of notice but he failed to do so. Therefore, the cause of action for filing the complaint arose and the same was filed before the court within the prescribed time of one month.

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The court, in its judgment dated March 1, has examined the three conditions in the proviso to Section 138 of the NI Act, which must be met in order for the dishonour of a cheque to constitute an offence: Firstly, the cheque must be presented to the bank within six months from its issuance or within its validity period; secondly, the payee or holder must issue a written notice to the drawer within thirty days of being informed of the cheque's return; and thirdly, the drawer must fail to make payment within fifteen days of receiving the notice.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)