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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Suresh Gupta received a demand notice on 5 April after his cheque to Lakshmi Enterprises bounced. He did not pay within the statutory period after receipt of notice. Lakshmi now wishes to file a complaint in court. Within what time must the complaint be filed, and from when does it run?

The complaint must be filed within one month from the date the cause of action arises, which is the day after the drawer's 15-day period to pay after receiving the notice expires. Counting from dishonour or the date of the cheque is incorrect.

  1. AWithin one month from the date on which the cause of action arises, i.e. after the expiry of the 15-day payment periodCorrect
  2. BWithin one month from the date the cheque was dishonoured
  3. CWithin three months from the date of the cheque
  4. DWithin 15 days from the date the notice was sent

Explanation

The drawer has 15 days from receipt of notice to pay. If he fails, the cause of action arises on expiry of that period, and the complaint must be made within one month of that date (the court may condone delay for sufficient cause). Counting from dishonour or the cheque date is wrong.

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