Sheelam Raji Reddy vs Samudrala Bixmaiah and Another

C.Y. Somayajulu, J.—The short, but important, point for consideration in this petition is whether the period of limitation of six months prescribed by section 138 of the Negotiable Instruments Act, 1881 (for short "the Act"), begins from the actual date of drawal of the cheque or from the date which is found on the cheque.

The first respondent filed C.C. No. 299 of 2001 on the file of the Court of the Judicial First Class Magistrate, Special Mobile, Nalgonda, against the petitioner, alleging that on July 7, 2000, the petitioner, accepting the liability of Surender Reddy to discharge the loan due to him from Surender Reddy, had issued two post-dated cheques dated March 28, 2001, for Rs. 75,000 each and requested him to collect the amount by encashing the cheques, and accordingly on March 28, 2001, he presented the said cheques to the bank, but those cheques were returned for want of funds on August 21, 2001, and so he issued a statutory notice to the petitioner but the petitioner did not pay the amount, and so the petitioner is liable to be punished u/s 138 of the Act. This petition is filed to quash the proceedings on the ground that the complaint is barred by time because the cheques admittedly issued on July 7, 2000, were in fact presented on March 28, 2001, i.e., beyond six months'' period contemplated by Section 138 of the Act.

The contention of learned counsel for the petitioner is that as per Section 138 of the Act, a cheque has to be presented in the bank within six months from the date of its drawal or within the period of its validity, whichever is earlier, and since admittedly the cheques were drawn and given to the first respondent on July 7, 2000, as per Section 138 of the Act they have to be presented within six months therefrom, and since admittedly they were presented in the bank on March 28, 2001, beyond six months from July 7, 2000, complaint u/s 138 of the Act is not maintainable. It is his contention that the presumption u/s 118 of the Act also stood rebutted since the first respondent himself admitted that the cheques were in fact drawn on July 7, 2000, but not on August 23, 2002, the date which they bear. Learned counsel for the first respondent relying on Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., and Ashok Yeshwant Badave Vs. Surendra Madhavrao Nighojakar and Another, contended that the period of six months has to be reckoned from the date mentioned on the cheques but not from date on which they were actually drawn and since the cheques bearing the date March 28, 2001, were present in the bank on the same day, it is clear that the cheque was presented within the period mentioned in Section 138 of the Act and so there are no grounds to quash the complaint against the petitioner. In reply, the contention of learned counsel for petitioner is that since the Supreme Court in the two decisions relied on by learned counsel for the first respondent did not consider whether presumption u/s 118 stood rebutted or not, those decisions have no application to the facts of this case.

In para. 7 of Shri Ishar Alloy Steels Ltd. Vs. Jayaswals NECO Ltd., , the Supreme Court held a post-dated cheque is a bill of exchange till the date mentioned thereon and becomes a cheque under the Act only on the date mentioned on the cheque and the six months'' period has to be reckoned, for the purposes of Section 138 of the Act, from the "said date". The contention of learned counsel for the petitioner is that the "said date" refers to the date of drawal of the cheque but not the date mentioned on the cheque. There is no force in the said contention because it is clearly stated that till the date mentioned in the cheque arrives, a post-dated cheque would remain a bill of exchange and it becomes a "cheque" for the purpose of Section 138 of the Act only from the "said date". Since Section 138 of the Act does not apply to bills of exchange, it is clear that the "said date" mentioned towards the end of para. 7 of the above judgment of the Supreme Court refers to date mentioned on the cheque but not to the date of its drawal. In Ashok Yeshwant Badave Vs. Surendra Madhavrao Nighojakar and Another, a cheque drawn on November 10, 1995, with a post-date January 20, 1996, was presented in the bank by the drawee on July 7, 1996. On its dishonour the drawee filed a complaint for an offence u/s 138 of the Act. The drawer filed a quash petition on the ground that the cheque was presented in the bank beyond six months from its drawal on November 10, 1995, and so the complaint is not maintainable. The Supreme court in para. 20 of its judgment held that when a post-dated cheque is written or drawn, it is only a bill of exchange, and so long as the same remains a bill of exchange, the provisions of Section 138 are not applicable to the said instrument, and that a post-dated cheque becomes a cheque within the meaning of Section 138 of the Act on the date written thereon, and the six months'' period has to be reckoned for the purposes of proviso (a) to Section 138 of the Act from the said date and dismissed the quash petition.

In view of the above decision of the Supreme Court it is clear that a postdated cheque becomes a cheque for the purpose of Section 138 of the Act only on the date mentioned thereon and in between the period of drawal of the cheque and the date mentioned on the cheque it is only a bill of exchange. Therefore, the period of six months mentioned in proviso (a) to Section 138 of the Act begins to run only from the date mentioned in the cheque but not the date of drawal of the cheque. In view thereof the contention of learned counsel for the petitioner that the complaint is liable to be quashed because the cheque dated March 28, 2001, actually drawn on July 7, 2000, was presented in the bank only on March 28, 2001, beyond six months from July 7, 2000, is not tenable, because the six months period has to be reckoned only from March 28, 2001, the date mentioned on the cheque. Since the cheque was presented in the bank on March 28, 2001, itself, there is no infraction of proviso (a) to Section 138 of the Act and so I find no grounds to quash the complaint. Therefore, the petition is dismissed.