Resolving doubts on cheques
The period of limitation of one month for filing a complaint, prescribed under Section 142(b) of the Negotiable Instruments Act 1881, has to be calculated by excluding the date on which the the cause of action arose (when cheque was dishonoured), a larger Bench of the Supreme Court held in the case of Econ Antri Ltd vs Rom Industries Ltd. Resolving doubts over two differing views on the issue, the apex court in its new judgment settled the question by holding that the first case, in Saketh India Ltd vs India Securities Ltd, laid down the correct proposition of law and should be followed by all courts below. A division Bench in 2006 had referred the question to the larger Bench. “We hold that for the purpose of calculating the period of one month, which is prescribed under Section 142(b) of the Act, the period has to be reckoned by excluding the date on which the cause of action arose. We hold that the case, SIL Import, USA vs Exim Aides Silk Exporters, does not lay down the correct law…,” it stated.
In Saketh India’s case, cheques dated March 15, 1995, and March 16, 1995, issued by the accused bounced. Notices were served on the accused on September 29, 1995. As per proviso (c) to Section 138 of the Act, the accused was required to make the payment within 15 days of the receipt of the notice, i.e. on or before October 14, 1995. The accused failed to pay the amount, thus the cause of action arose on October 15, 1995. The complaint filed on November 15, 1995, was within time.
According to the complainant for calculating one month period contemplated under Section 142(b), the date “October 15, 1995” had to be excluded. But according to the accused, the date on which the cause of action arose had to be included in the period of limitation and thus the complaint was barred by time. The accused, therefore, filed petition for quashing the process issued by the Magistrate. After the HC rejected his petition, the accused approached the top court,