Section 138 notice and limitation bar re-presenting the same cheque to create a fresh cause of action.

A cheque issued by a Managing Director for a company's liability was treated as falling within section 138 of the Negotiable Instruments Act even though the account belonged to a sister concern, so the maintainability objection failed. However, once statutory notice under section 138 had been issued, the complainant could not re-present the same cheque to create a fresh cause of action; the later dishonour did not revive limitation under section 142. On the facts, the notice requirements and limitation were not satisfied, and the conviction and sentence were ultimately set aside with refund of the fine, if paid.

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Issues: (i) Whether the complaint under section 138 of the Negotiable Instruments Act was maintainable against the company and its Managing Director when the cheque was drawn on the account of another sister concern; (ii) Whether, after issuance of notice under section 138 and its non-service, the complainant could present the cheque again and treat the later dishonour as giving rise to a valid cause of action within limitation.

Issue (i): Whether the complaint under section 138 of the Negotiable Instruments Act was maintainable against the company and its Managing Director when the cheque was drawn on the account of another sister concern.

Analysis: The cheque was signed and issued by the Managing Director in discharge of the liability of the accused company. The drawer-situation was treated as one arising from the common control of sister concerns, with the cheque having been issued for the debt due from the accused company. The mere fact that the account belonged to another concern did not, on these facts, defeat prosecution under section 138.

Conclusion: The complaint was maintainable on this ground and the objection was rejected.

Issue (ii): Whether, after issuance of notice under section 138 and its non-service, the complainant could present the cheque again and treat the later dishonour as giving rise to a valid cause of action within limitation.

Analysis: The statutory scheme under section 138 requires presentation of the cheque, issuance of notice within the prescribed time, and failure to pay within fifteen days of receipt of the notice before cause of action arises under section 142. Once notice is issued, the right to present the cheque again is forfeited for the purpose of creating a fresh cause of action. On the facts, the earlier notice had either not been served or, if deemed served, the subsequent complaint would still be time-barred. The Court declined to draw a presumption of deemed service on the material before it and held that the later presentation could not revive limitation.

Conclusion: The complaint was barred by limitation and no valid fresh cause of action arose from the subsequent presentation.

Final Conclusion: The conviction and sentence under section 138 were held unsustainable and were set aside, with the fine amount, if paid, directed to be refunded.

Ratio Decidendi: After issuance of a statutory notice under section 138, the complainant cannot create a fresh cause of action by re-presenting the same cheque, and liability under section 138 depends on compliance with the notice and limitation requirements in the statutory proviso.

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