Cheque Dishonour Alone Doesn't Create NI Act Section 138 Offence; It Arises After 15-Day Payment Failure: SC

Cheque Dishonour Alone Doesn't Create NI Act Section 138 Offence; It Arises After 15-Day Payment Failure: SC

The Supreme Court clarified that the cause of action under Section 138 of the NI Act arises not upon cheque dishonour but after the expiry of 15 days from the receipt of the demand notice. In this case, the 15-day period would have ended on 21.08.2018, while the IBC moratorium was already in effect from 25.07.2018. Since the cause of action arose after the moratorium, the Court ruled that the proceedings against the appellant could not continue. Accordingly, the Court allowed the appeal and quashed the cheque dishonour case.

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