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Complaint Against Bounced Cheque to Be Filed Within One Month of Cause of Action

The Allahabad High Court, in the case of Sudesh Kumar v. State of U.P. and another (2024 AHC 38337), decided on March 1, 2024, examined the date on which the cause of action arose and whether it was within the period of limitation of one month in a complaint against an offence under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act) for the court to be able to take cognizance as per Section 142 of the N.I. Act.

In the present case, a cheque drawn by the petitioner, upon being presented by the respondent to the bank on September 18, 2019, was returned unpaid along with a return memo dated December 17, 2019, with the remark “amount insufficient”. On receipt of the return memo, the respondent issued a notice to the petitioner for the return of the cheque on January 4, 2020, which was received by the petitioner on January 8, 2020. The petitioner contended that since the limitation period would run from January 8, 2020, when the notice was received by the petitioner, the complaint which was filed on February 20, 2020, was beyond the period of limitation and hence liable to be rejected.

The court observed that a joint reading of Section 138 and Section 142 of the N.I. Act would show that a complaint can be filed within one month of the date on which the cause of action arises, which is when the drawer of the cheque failed to make the payment of the cheque amount either to the payee or the holder of the cheque within fifteen days of receipt of notice.

Following the timeline, the court observed that the cheque that was drawn by the petitioner was presented by the respondent to the bank for which a return memo dated December 17, 2019, was received. Thereafter, a notice was issued by the respondent to the petitioner on January 4, 2020, i.e., within 30 days of the receipt of the return memo. This notice was received by the petitioner on January 8, 2020, the date from which the petitioner had a period of fifteen days to make the payment of the cheque amount. This fifteen-day period expired on January 23, 2020, which is the date on which the cause of action for filing the complaint arose according to the court.

Therefore, the court held that the complaint which was filed on February 20, 2020, was within the prescribed period of one month from the date on which the cause of action arose and therefore the concerned court was within its right to take cognizance of the offence as per Section 142 of the N.I. Act.