Settling the cheque bounce issue

Written by Indu Bhan | Indu Bhan | Updated: Sep 6 2013, 10:53am hrs
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 Indias 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, which excluded the date October 15, 1995, for counting the period of one month.

Land acquisition quashed

Dismissing the Singareni Collieries Cos appeal against the Andhra Pradesh High Court order that quashed the land acquisition proceedings in its favour, the Supreme Court said that the award must be made within a period of two years from the date of the publication of the declaration under Section 6 of the Land Acquisition Act. It said that the declaration in this case, Singareni Collieries Co vs Vemuganti Ramakrishan Rao & Ors, was published on March 2, 1994, while the award was made on November 5, 1999. The same was, therefore, clearly beyond two years period stipulated under the provisions. Even so the award could be held to be valid if the same was within two years of the declaration after excluding the period during which the HC had stayed the proceedings, the court said.

More than 35 acres in three districts of AP were notified in 1992 for acquisition for the benefit of the government company. However, proceedings dragged on for years. But when some land owners sought quashing of the land acquisition, the HC held that the collector made the award beyond the stipulated period and, therefore, the acquisition lapsed. Even the Supreme Court confirmed the HC order by holding that the the acquisition proceedings had elapsed by reason of a breach of Section 11-A of the Act.

Enhancing insurance liability

The Supreme Court, in its judgment S Iyyappan vs United India Insurance Co, has held that an insurance company in a motor vehicle accident case cannot disown its liability. It further stated that the right of the victim of a road accident to claim compensation is a statutory one and the insurer cannot disown its liability merely because the driver did not get any endorsement in his driving licence for commercial vehicles also.

On the claim petition filed by the wife of the deceased, who was hit by a high speed van being driven by one Sivananayaitha Perumal, the Motor Accidents Claims Tribunal had awarded R2.42 lakh compensation with interest at 12% per annum to be paid jointly and severally.

The tribunal was of the view that the person possessing licence to drive light motor vehicle was entitled to drive Mahindra maxi cab. Insurance company preferred an appeal before the HC, which held that the insurance firm was not liable to pay any compensation as there was a breach of the condition of the contract of insurance and its the owner alone who was liable to pay.