MSR Leathers vs S. Palaniappan & Anr.
AIR 2014 SC 642, (2013) 10 SCC 568
Coram: Hon’ble Justice K.S. Radhakrishnan & Hon’ble Justice Pinaki Chandra Ghose
Forum: Hon’ble Supreme Court of India
Case No.: Criminal Appeal 261-264 of 2002
Date of Decision: September 10, 2013

Facts and Background:

  • MSR Leathers was the Appellant, and S. Palaniappan & Anr. were the Respondents.
  • The Respondent issued 4 cheques on August 14, 1996 which were returned on November 21, 1996, with “not arranged funds” endorsement.
  • The Appellant did not present the cheques as the Respondent had promised to settle the dispute but failed to do so.
  • The Appellant sent a notice under Section 138(b) of the Negotiable Instrument Act, 1881 on January 8, 1997 and the Respondent received it.
  • The Appellant re-presented the cheques to the bank on 21st January 1997 but cheques were dishonoured again due to insufficient funds.
  • On January 28, 1997, the Appellant issued a second notice under Section 138(b) demanding payment with interest within 15 days, which the respondent received on February 3, 1997.
  • The Appellant filed a complaint before the Trial Court on March 4, 1997, for non-payment of funds after the dishonor of cheque.
  • The Division Bench expressed doubts about the correctness of the law in Sadanandan Bhadran vs. Madhavan Sunil Kumar 1998 (6) SCC 514 and sought review by a larger Bench.
  • Consequently, the matter was referred to the Hon’ble Chief Justice and subsequently placed before a larger Bench for consideration.

Main Issue:

Whether the Appellant's action time-barred under Section 138(b) of the Negotiable Instruments Act or not?