Prepared By,
S. I. BHORANIA
10th Additional District & Sessions Judge,
Ahmedabad [Rural] at Mirzapur.
Guidance of
Hon’ble Principal District & Sessions Judge,
Ahmedabad [Rural] at Mirzapur.
::: I N D E X :::
Sr.
No.
Name of the subject. Page
No.
1. Mission Statement. 1
2. Hon’ble Supreme Court On Essential Ingredients of Section138
of N.I.Act.
1A
3. Complaint Can be dropped as offence u/s 138 is Civil wrong. 3
4. Meaning of the expression “holder”, “holder in due course”
and “payee”, “legally enforceable debt” or “other liability” Competence
of power of attorney Substitute
of the
complainant Contents
of the notice.
5
5. No illegality in pronouncement of the judgment and order of
conviction and sentence in the absence of the Accused.
8
6. Compounding of Offence – Costs. 10
7. Cause of Action Subsequent
Presentation of Cheque. 15
8. Stop Payment Cases. 18
9. Closure of Account Cases. 20
10. Dishonour For Signature Mismatch. 21
11. Successive Presentation of Cheque. 23
12. Jurisdiction. 25
13. Premature Complaints. 27
14. A HOLDER IN DUE COURSE has the locus standi to file
the complaint under section 138 of Negotiable Instruments Act.
30
15. Complaint Need
not be signed by complainant. 31
16. Complaint Can
be filed through power of attorney holder. 33
17. Presumption u/S 118 and 139. 38
18. Computation of Limitation Period. 43
19. Condonation of Delay. 45
20. Summary trial proceedings. 46
21. Denovo Trial. 49
22. Offence by Company. 51
23. Offence by Partnership Firm. 59
24. Complaint for dishonour of cheque filled by an unregistered
partnership firm is maintainable.
61
25. Compensation. 62
26. Defence Cheque
given as Security. 65
27. Substitution of Complainant. 67
28. No legal bar for instituting and proceeding with a complaint
under S.138 against sick industrial company.
68
29. Failure to prove Source of Income. 70
30. Requirement of Proper Verification. 71
31. Demand Notice. 72
32. Accused cannot be allowed to tender his Evidence on
Affidavit.
78
33. Criminal Liability Cheque
issued from Joint Bank Account. 79
34. Section. 20 – Filling the particulars of Blank Cheque. 80
35. Application for getting Opinion of Hand Writing Expert. 81
36. No Vicarious Criminal Liability of Principal Cheque
issued
by Power of Attorney holder.
83
37. Concurrent running of Sentences. 84
38. No dismissal of complaint Matter
should be decided on
merits.
85
39. Just Punishment. 86
40. Burden of proof Preponderance
of probability. 87
41. Section 319 Cr.P.C. Section
142 N.I.Act. Limitation.
89
1 Judgments on Negotiable Instruments Act.
BOOKLET FOR CASES UNDER NEGOTIABLE INSTRUMENTS ACT.
1. Mission Statement:
In view of the Video Conference with Hon’ble The Chief Justice, Gujarat
High Court and Hon’ble Administrative Judge of this District, exclusive
Court is directed to prepare Booklet / Ready Reference to expedite the
disposal of N.I. Act cases.
There are 7240 cases under the Negotiable Instruments Act pending in
this District as on 31/10/2017.
1 Judgments on Negotiable Instruments Act.
Hon’ble Supreme Court On Essential Ingredients of Section138 of N.I.Act
Essential ingredient via Juristic Or Natural Person, for attracting a
liability under Section 138 of N. I. Act, 1881
The first and foremost essential ingredient for attracting a liability under
Section 138 of N.I.Act,1881 is
a) that the person who is to be made liable should be the drawer of the cheque
and
b) should have drawn the cheque on an account maintained by him with a
banker for payment of any amount of money to another person from out of that
account for discharge, in whole or part, of any debt or other liability
The Honourable Apex Court dealt with the same issue in the case of Krishna
Texport and Capital Markets Ltd. Vs. Ila A. Agrawal & Ors, (AIR 2015
SC 2091), and has held as under“
The notice under Section 138 is required to be given to the ‘drawer’ of the
cheque so as to give the drawer an opportunity to make the payment and
escape the penal consequences. No other person is contemplated by Section
138 as being entitled to be issued such notice. The plain language of Section
138 is very clear and leaves no room for any doubt or ambiguity. There is
nothing in Section 138 which may even remotely suggest the issuance of
notice to anyone other than the drawer.”
“The learned counsel for the respondents has relied upon the case of Anil Hada
Vs. Indian Acrylic Ltd., (2000) 1 SCC 1, wherein this Court held – “Normally
an offence can be committed by human beings who are natural persons. Such
offence can be tried according to the procedure established by law. But there
are offences which could be attributed to juristic person also. If the drawer of a
cheque happens to be a juristic person like a body corporate it can be
prosecuted for the offence under Section 138 of the Act.”
“Now there is no scope for doubt regarding that aspect in view of the clear
language employed in Section 141 of the Act. In the expanded ambit of the
word ‘company’ even firms or any other associations of persons are included
2 Judgments on Negotiable Instruments Act.
and as a necessary adjunct thereof a partner of the firm is treated as director of
that company.”
“Thus when the drawer of the cheque who falls within the ambit of Section
138 of the Act is a human being or a body corporate or even firm, prosecution
proceedings can be initiated against such drawer.”
“In this context the phrase ‘as well as’ used in Subsection
(1) of Section 141
of the Act has some importance. The said phrase would embroil the persons
mentioned in the first category within the tentacles of the offence on a par with
the offending company. Similarly the words ‘shall also’ in Subsection
(2) are
capable of bringing the third category persons additionally within the dragnet
of the offence on an equal par.”
“The effect of reading Section 141 is that when the company is the drawer of
the cheque such company is the principal offender under Section 138 of the
Act and the remaining persons are made offenders by virtue of the legal fiction
created by the legislature as per the section. Hence the actual offence should
have been committed by the company, and then alone the other two categories
of persons can also become liable for the offence.”
The said ratio has been further reiterated in the recent decision by the Hon’ble
Apex Court, in the case of Jitendra Vora Vs Bhavana Y. Shah & Ors.
S. M. S. Pharmaceutical Ltd. Vs. Neeta Bhalla & Anr.
2007(1) Apex Court Judgments 668 (S.C.) : 2007(2) Civil Court Cases 127
(S.C.) : 2007(2) Criminal Court Cases 026 (S.C.)
Negotiable Instruments Act, 1881, S.138 Dishonour
of cheque Ingredients
of offence u/s 138 of the Act are : (i) a cheque was issued; (ii) the
same was presented; (iii) but, it was dishonoured; (iv) a notice in terms of the
said provision was served on the person sought to be made liable; and (v)
despite service of notice, neither any payment was made nor other obligations,
if any, were complied with within fifteen days from the date of receipt of the
notice.
3 Judgments on Negotiable Instruments Act.
Complaint Can be dropped as offence u/s 138 is Civil wrong
M/s. meters and instruments private limited & Anr. Vs. Kanchan Mehta
(Criminal appeal No. 1732 of 2017)
Hon’ble Supreme Court
Section 138
NI Act matters are primarily Civil wrong, can be dropped w/o
Complainant’s consent
The Hon’ble Supreme Court has clarified that an accused in a case under
Section 138 of Negotiable Instruments Act can be discharged even without the
consent of the complainant, if the Court is satisfied that the complainant has
been duly compensated.
It is also held that the normal role of criminal law that composition of offence
is possible only with the consent of complainant/victim is not applicable for
cases under Sec.138 of NI Act.
This is because the offence under Section 138 is ‘primarily a civil wrong’.
Therefore, the power under Section 258 of the Code of Criminal Procedure to
stop trial and discharge the accused is available to the Magistrate even though
the summary trial under Chapter XXI of Cr.P.C.
The Hon’ble Supreme Court in the judgment has passed following directions:
“i) Offence under Section 138 of the Act is primarily a civil wrong. Burden of
proof is on accused in view presumption under Section 139 but the standard of
such proof is “preponderance of probabilities”. The same has to be normally
tried summarily as per provisions of summary trial under the Cr.P.C. but with
such variation as may be appropriate to proceedings under Chapter XVII of the
Act. Thus read, principle of Section 258 Cr.P.C. will apply and the Court can
close the proceedings and discharge the accused on satisfaction that the cheque
amount with assessed costs and interest is paid and if there is no reason to
proceed with the punitive aspect.
4 Judgments on Negotiable Instruments Act.
ii) The object of the provision being primarily compensatory, punitive element
being mainly with the object of enforcing the compensatory element,
compounding at the initial stage has to be encouraged but is not debarred at
later stage subject to appropriate compensation as may be found acceptable to
the parties or the Court.
iii) Though compounding requires consent of both parties, even in absence of
such consent, the Court, in the interests of justice, on being satisfied that the
complainant has been duly compensated, can in its discretion close the
proceedings and discharge the accused.
iv) Procedure for trial of cases under Chapter XVII of the Act has normally to
be summary. The discretion of the Magistrate under second proviso to Section
143, to hold that it was undesirable to try the case summarily as sentence of
more than one year may have to be passed, is to be exercised after considering
the further fact that apart from the sentence of imprisonment, the Court has
jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with
default sentence under Section 64 IPC and with further powers of recovery
under Section 431 Cr.P.C. With this approach, prison sentence of more than
one year may not be required in all cases.
v) Since evidence of the complaint can be given on affidavit, subject to the
Court summoning the person giving affidavit and examining him and the
bank’s slip being prima facie evidence of the dishonor of cheque, it is
unnecessary for the Magistrate to record any further preliminary evidence.
Such affidavit evidence can be read as evidence at all stages of trial or other
proceedings. The manner of examination of the person giving affidavit can be
as per Section 264 Cr.P.C. The scheme is to follow summary procedure except
where exercise of power under second proviso to Section 143 becomes
necessary, where sentence of one year may have to be awarded and
compensation under Section 357(3) is considered inadequate, having regard to
the amount of the cheque, the financial capacity and the conduct of the accused
or any other circumstances.”
5 Judgments on Negotiable Instruments Act.
Meaning of the expression “holder”, “holder in due course” and “payee”.
Meaning of expression “legally enforceable debt” or “other liability”.
Competence of power of attorney
Substitute of the complainant.
Contents of the notice
2017 eGLR_HC 10006047
J CHITRANJAN AND COMPANY PROPRIETOR C
D SHAH Vs.
STATE OF GUJARAT AND ORS.
Before the Hon’ble MR. JUSTICE G. R. UDHWANI,
CRIMINAL REVISION APPLICATION No. 231 of 2009
Decided on : 13/10/2016
“8. From the rival contentions, following legal questions call for determination
for this Court:(
1) Meaning of the expression “holder” as contemplated in section 8 and
section 139 of N.I. Act and whether the expression comprehends the “holder in
due course” and the “payee”.
(2) Meaning of expression “legally enforceable debt” or “other liability” as
used in explanation to Section 138 of N.I. Act. Whether time barred debt is
legally enforceable debt
(3) Competence of power of attorney and/or substitute of the complainant to
depose before the court.
(4) Competence of minor to advance loan and prosecuting the accused for
dishonour of cheque issued for discharge of the overdue loan.
(5) What should be the contents of the notice, complaint, verification or power
of attorney deed.
(6) Maintainability of complaint by heir or successor in absence of succession
6 Judgments on Negotiable Instruments Act.
certificate.
(7) The effect of not posing incriminating circumstance relevant for
determination of the case under Section 313 of Cr. P.C. to the accused. (books
of accounts)
(8) Whether there can be deposition of facts not stated in documents like
complaint, power of attorney deed etc.
(9) Whether secondary evidence under section 65(b) was permissible.”
Held – “The intention of the maker of the cheque to constitute its successor in
title a holder would thus be clear by delivering the cheque to a person on free
volition or for lawful consideration. Thus, a mere delivery of the cheque by
lawful means or for lawful consideration would constitute a person
‘holder’ of the cheque. The “drawer” or “holder” of a cheque may either
endorse the cheque further or the cheque may be discounted so as to constitute
the successor “holder in due course”. Thus, indorsement or further negotiation
in any other manner would be to invest the property in the cheque in successor
of the negotiator. It can thus be seen that the transfer or negotiation of the
cheque under the provisions of the N.I. Act would be with a definite purpose of
transferring the property in the cheque. The property in the cheque so derived
would necessarily mean a right to realize the amount stated therein irrespective
of a person being a ‘payee’ or ‘holder’ or ‘holder in due course’.”
Standard of proof in discharge of the burden in terms of section 139 of the
Act being preponderance of a probability.
Question regarding competence of minor to advance loan and pursue the cause
for dishonour of cheque, Nothing is pointed out to warrant inference that no
action would lie under section 138 of the N.I. Act on a cheque issued for
repaying the debt incurred by minor and in view of the language used in
section 138 of the N.I. Act no such limitation can be read therein.
The debt in question was not legally enforceable as the same was barred by
limitation under Article19 of the Limitation Act.
The witness deposing the facts of the case was not, in fact, the witness with
personal knowledge about the facts and therefore his deposition was not
entitled to any legal weightage.
7 Judgments on Negotiable Instruments Act.
Question is with regard to affidavit of power of attorney or substitute of the
complainant to be witness of facts deposing before the court in absence of
personal knowledge on the subject with him. The legal position in this regard
is settled that in absence of personal knowledge with the power of attorney
or for that with any other witness, no deposition of such person can be
relied upon.
2016Crimes(
HC)266,
2016RCR(
Cri)1982.
Mukundlal Mohanlal Gandhi Vs. State Of Gujarat.
Negotiable Instruments Act, 1881 S.
138 and 139 Code
of Criminal Procedure,
1973 S.
357, 397 and 401 dishonour
of cheque legal
enforceable debt complaint
conviction
u/s 138 of NI Act dismissal
of appeal revision
complainant
was dealing in edible oil supply
of oil to the applicant three
cheques were given by the applicant to the complainant all
three cheques were
dishonoured on account of insufficiency of funds in bank account of the applicant
death
of the complainant son
of the complainant replaced as complainant requirement
of proving legal enforceable debt son
of the complainant joined his
father’s business in the year of 1995 son
of the deceased complainant was aware
about the transaction between the applicant and his father/original complainant complainant
duly discharged the initial burden of proving that there existed
legally enforceable debt towards which all three cheques were given to him defence
of the applicant was that he sought adjustment of cheque amount towards
the outstanding amount due from the brother of the complainant no
proceedings
initiated by the applicant towards recovery of the outstanding debt of brother of
the complainant no
error in concurrent findings of courts below limited
scope
of interference in revisional jurisdiction u/s 397 and 401 of CRPC compensation
of total amount of all cheques granted to the complainant with 9% interest from
the date of complaint revision
dismissed.
8 Judgments on Negotiable Instruments Act.
No illegality in pronouncement of the judgment and order of conviction
and sentence in the absence of the Accused.
2017 eGLR_HC 10006044
SHARAD JETHALAL SAVLA Vs. STATE OF GUJARAT AND ORS.
Before the Hon’ble MR. JUSTICE J B PARDIWALA,
CRIMINAL MISC. APPLICATION No : 19862 of 2015
Decided on : 14/11/2016
“15 Having heard the learned counsel appearing for the parties and having
considered the materials on record, the following questions fall for my
consideration:
(I) Whether on account of the absence of the applicant accused herein on the
date of the pronouncement of the judgment, the judgment would become
invalid in view of the provisions of Section 353 of the Code of Criminal
Procedure, 1973
(II) Whether the trial Court was justified in issuing a nonbailable
warrant of
arrest of the applicant accused herein having noticed that the accused was not
present at the time of the pronouncement of the judgment and order of
conviction and sentence
(III) Whether the nonbailable
warrant issued by the trial Court for the arrest of
the applicant accused herein could be said to be for the purpose of execution of
the sentence of imprisonment, as provided under Section 418 of the Cr.P.C.
(IV) Whether the trial Court was justified in rejecting the application filed
under Section 389(3) of the Code or declining to pass an appropriate order on
such application for the purpose of suspension of the substantive order of
sentence to enable the applicant accused herein to file an appeal before the
Sessions Court on the ground of his absence before the Court” To put it in
other words, whether the insistence on the part of the trial Court for the
personal presence of the accused for the purpose of passing appropriate order
on the application filed under Section 389(3) of the Cr.P.C. by the advocate
9 Judgments on Negotiable Instruments Act.
could be said to be justified in law
(V) Whether the Sessions Court was justified in refusing to register the appeal
filed by the applicant accused herein through his advocate challenging the
judgment and order of conviction and sentence on the ground that the accused
had not surrendered before the trial Court and the trial Court had not passed
any order under Section 389(3) of the Code suspending the substantive order
of sentence passed by the trial Court to enable the accused to prefer an appeal
before the appellate Court
(VI) Whether the Sessions Court was justified in insisting for the personal
presence of the applicant accused herein for the purpose of the registration of
the appeal”
‘Be you ever so high, but the law is above you’, is the signature theme of rule of
law that loudly and silently (as well) echoes in the Indian Constitutional
context. Of
course, the law makers and law enforcers must willingly assist
the Court in angling the convict avoiding and dodging the law makers, the law
enforcers and the law interpreters (Judges and Courts).
No illegality as regards the pronouncement of the judgment and order of
conviction and sentence in the absence of the applicant accused.
The judgment that the learned Magistrate may pronounce in the absence
of the accused by itself will not vitiate the judgment. Subsection
(7) of
Section 353 of the Cr.P.C. clearly lays down that no judgment delivered by any
criminal court shall be deemed to be invalid by reason only of the absence of
any party.
The trial Court committed no error in issuing a nonbailable
warrant of
arrest having noticed that the the accused was not present at the time of
pronouncement of the judgment and order of conviction and sentence in view
of the provisions of Section 418 (2) of the Cr.P.C. Under Subsection
(2) of
Section 418 of the Cr.P.C., when the accused sentenced to imprisonment is not
present in the Court, the Court has to issue a warrant of his arrest and the
sentence shall commence on the date of his arrest.
In the absence of the convict accused, the learned advocate appearing for him
cannot prefer an application under Section 389(3) of the Code for suspension
10 Judgments on Negotiable Instruments Act.
of the sentence to enable the convict accused to prefer an appeal before the
Sessions Court.
Compounding of Offence Costs
2010 CRI. L. J. 2860
Damodar S. Prabhu Vs. Sayed Babalal H
SUPREME COURT
Coram : 3 K. G. BALAKRISHNAN , C.J.I., P. SATHASIVAM AND J. M.
PANCHAL , JJ. ( Full Bench )
Criminal Appeal No. 963 with 964966
of 2010 (arising out of S.L.P. (Cri.)
No. 6369 with 63706372
of 2007), D/3
5
2010.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.147 DISHONOUR
OF CHEQUE COMPOUNDING
OF OFFENCE SUPREME
COURT COSTS
Dishonour
of cheque Compounding
of offence Tendency
of
parties to go for compounding at late stage of proceedings Putting
unnecessary strain on judicial system Absence
of guidance in S.147 Supreme
Court directed courts to impose graded costs on litigants to encourage
them to go for early compounding.
The tendency of litigants to adopt compounding as a last resort to compound
offence of dishonour of cheque is putting unnecessary strain on judicial system
and contributing to increase in number of pending cases. Moreover, the free
and easy compounding of offences at any stage, however belated, gives an
incentive to the drawer of the cheque to delay the settling of cases for years.
An application for compounding made after several years not only results in
the system being burdened but the complainant is also deprived of effective
justice. Section 147 which permits compounding does not carry any guidance
on how to proceed with the compounding of offences under the Act. The
Scheme contemplated under S. 320 of the Cr. P.C. cannot be followed in the
strict sense. In view of legislative vacuum Supreme Court directed Courts to
follow a graded system of levying costs on parties so as to encourage them to
go in for early compounding. The Supreme Court framed following
11 Judgments on Negotiable Instruments Act.
guidelines :(
a) Directions can be given that the Writ of Summons be suitably modified
making it clear to the accused that he could make an application for
compounding of the offences at the first or second hearing of the case and that
if such an application is made, compounding may be allowed by the Court
without imposing any costs on the accused.
(b) If the accused does not make an application for compounding as aforesaid,
then if an application for compounding is made before the Magistrate at a
subsequent stage, compounding can be allowed subject to the condition that
the accused will be required to pay 10% of the cheque amount to be deposited
as a condition for compounding with the Legal Services Authority, or such
authority as the Court deems fit.
(c) Similarly, if the application for compounding is made before the Sessions
Court or a High Court in revision or appeal, such compounding may be
allowed on the condition that the accused pays 15% of the cheque amount by
way of costs.
(d) Finally, if the application for compounding is made before the Supreme
Court, the figure would increase to 20% of the cheque amount. (Para 15)
The Court made it clear that even though the imposition of costs by the
competent Court is a matter of discretion, the scale of costs has been suggested
in the interest of uniformity. The competent Court can of course reduce the
costs with regard to the specific facts and circumstances of a case, while
recording reasons in writing for such variance. (Paras 15 , 17)
(B) Negotiable Instruments Act (26 of 1881) , S.138 Criminal
P.C. (2 of
1974) , S.200 DISHONOUR
OF CHEQUE COMPLAINT
SUPREME
COURT AFFIDAVIT
Dishonour
of cheque Cheques
issued in one
transaction Filing
of multiple complaints Causes
tremendous harassment
and prejudice to drawers of cheque Supreme
Court made it mandatory to
complainant to file along with complaint sworn affidavit that no other
complaint has been filed in other Court in respect of same transaction High
Court directed to levy heavy costs on complainant resorting to practice of
filing multiple complaints Directions,
however, given prospective effect.
(Para 16)
(C) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Nature
of offence It
is regulatory offence Created
to serve public interest in ensuring reliability of negotiable instruments
Impact
of offence is confined to private parties. (Para 3)
12 Judgments on Negotiable Instruments Act.
(D) Negotiable Instruments Act (26 of 1881) , S.147 , S.38 Criminal
P.C. (2
of 1974) , S.320 DISHONOUR
OF CHEQUE COMPOUNDING
OF
OFFENCE NON
OBSTANTE CLAUSE Compounding
of offences under
Act Not
governed by S.320 of Criminal P.C. in view of non obstante clause
in S.147. (Para 8)
AIR 2016 SUPREME COURT 4363
Hon’ble Supreme Court
Criminal Appeal No. 867 of 2016
Sampelly Satanarayana Rao vs M/S Indian Renewable Energy
19/09/2016
(a) Negotiable Instruments Act, 1881 – Section 138 – If on the date of the
cheque liability or debt exists or the amount has become legally recoverable –
Section 138 will apply – Not otherwise. (Para 10)
(b) Negotiable Instruments Act, 1881 – Section 138 – Agreement showing post
dated cheques as security – But refers to the cheques being towards repayment
of installments – Repayment becoming due the moment the loan is advanced
and the installment falls due – Instantly loan disbursed prior to date of cheques
– Installments falling due on dates of cheques – Cheques represent the
outstanding liability – Dishonour of such cheque would fall under section 138.
(Para 11)
(c) Code of Criminal Procedure, 1973 – Section 482 r/w section 138,
Negotiable Instruments Act, 1881 – Quashing petition – Court to proceed on
the basis of complaint – Defence of accused cannot be considered at this stage
– Court does not adjudicate upon a disputed question of fact – Once issuance
of a cheque and signature thereon are admitted, presumption of a legally
enforceable debt in favour of the holder of the cheque arises – Accused may
rebut the presumption but mere statement of the accused may not be sufficient.
(Para 17, 18)
Facts of the case:
The question for consideration in this appeal is whether in the facts of the
present case, the dishonour of a postdated
cheque given for repayment of loan
installment which is also described as “security” in the loan agreement is
13 Judgments on Negotiable Instruments Act.
covered by Section 138 of the Negotiable Instruments Act, 1881.
Finding of the Court:
Dishonour of cheque in the present case being for discharge of existing
liability is covered by Section 138 of the Act
“Once the loan was disbursed and instalments have fallen due on the date of
the cheque as per the agreement, dishonour of such cheques would fall under
Section 138 of the Act. The cheques undoubtedly represent the outstanding
liability.”
The Indus Airways ruling has been distinguished from this case.
The Hon’ble Supreme Court distinguished the landmark case of Indus
Airways Private Limited v Magnum Aviation Private Limited ((2014) 12
SCC 539) from this case on the grounds that in the Indus Airways case the
purchase order was cancelled and therefore the dishonour of cheque, issued for
advance payment for the said purchase order, did not represent any subsisting
outstanding liability or debt and therefore Section 138 of the Act, 1881 was not
attracted. In other words, the dishonour of postdated
cheque would not be
considered an offence under Section 138 of the Act, 1881 when the said
cheque cannot be considered as discharge of a legally enforceable liability or
debt. However, in the present case, although the postdated
cheques were
described as “security” in the loan agreement but in essence the issuance of the
same was for the purpose to repay the loan instalments for satisfaction of
outstanding liability. Thus, in this judgement the Hon’ble Supreme Court has
held that there is difference between a purchase order transaction which was
cancelled and a loan transaction in which the loan has been granted to the
borrower and the repayment of the loan instalments is due on the date of the
cheque.
14 Judgments on Negotiable Instruments Act.
2014 (2) GLH 161, ( 2014 (3) GLR 2482. )
Indus Airways Private Limited Vs. Magnum Aviation Private Limited.
CRIMINAL LAWS Negotiable
Instruments Act, 1881 S.
138 Whether
the
postdated
cheques issued as advance payment in respect of the purchase order
would be considered in discharge of legally enforceable debt or other liabilities
and, if so, whether dishonor of such cheques amounts to an offence under Sec.
138 of Negotiable Instruments Act, 1881 Held
_ Explanations appended to
Section 138 explain the meaning of expression “debt” or other liabilities of
Section 138 Thus
expression “debt” means legally enforceable debt or other
liabilities Sec.
138 treats dishonored cheques as an offence, If the cheque has
been issued in discharge of legally enforceable debt or other liabilities The
Explanation leaves no manner of doubt that to attract offence under Sec. 138,
there should be legally enforceable debt or other liabilities subsisting on the date
of drawal of cheque In
other words, drawal of cheque in discharge of existing or
past adjudicated liability is sine qua non for bringing the offence under Sec. 138 If
a cheque is issued as an advance payment for the purchase of the goods and for
any reason purchase order is not carried to its logical conclusion, either because of
the cancellation or otherwise, the cheque cannot be held to have drawn for
existing debt or liability payment
by cheque in advance indicates that at the time
of drawal of cheque, there was no existing liability It
is further held that for
criminal liability under Sec. 138, there should be legally enforceable debt or other
liabilities subsisting on the date of drawal of the cheque.
15 Judgments on Negotiable Instruments Act.
Cause of Action Subsequent
Presentation of Cheque
2013 CRI. L. J. 1112
MSR Leathers Vs. S. Palaniappan
SUPREME COURT
Coram : 3 R. M. LODHA , T. S. THAKUR AND ANIL R. DAVE , JJ. ( Full
Bench )
Criminal Appeal Nos. 261264
of 2002, D/26
9
2012.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , Proviso 138(2) ,
S.142(b) DISHONOUR
OF CHEQUE Dishonour
of cheque Failure
to
prosecute on basis of first default in payment Does
not result in forfeiture of
right of holder/payee to prosecute Nothing
in the N. I. Act that forbids
holder/payee of cheque from issuing fresh demand notice and launching
prosecution. Limitation of one month from accrual of cause of action for
taking cognizance in S. 142 Does
not militate against accrual of successive
cause of action.
Presentation of the cheque and dishonour thereof within the period of its
validity or a period of six months is just one of the three requirements that
constitutes ’cause of action’ within the meaning of Sections 138 and 142(b) of
the Negotiable Instruments Act, an expression that is more commonly used in
civil law than in penal statutes. For a dishonour to culminate into the
commission of an offence of which a Court may take cognizance, there are two
other requirements, namely, (a) service of a notice upon the drawer of the
cheque to make payment of the amount covered by the cheque and (b) failure
of the drawer to make any such payment within the stipulated period of 15
days of the receipt of such a notice. It is only when the said two conditions are
superadded to the dishonour of the cheque that the holder/payee of the cheque
acquires the right to institute procedings for prosecution under Section 138 of
the Act, which right remains legally enforceable for a period of 30 days
counted from the date on which the cause of action accrued to him. There is,
however, nothing in the proviso to Section 138 or Section 142 for that matter,
to oblige the holder/payee of a dishonoured cheque to necessarily file a
16 Judgments on Negotiable Instruments Act.
complaint even when he has acquired an indefeasible right to do so. The fact
that an offence is complete need not necessarily lead to launch of prosecution
especially when the offence is not a cognizable one. It follows that the
complainant may, even when he has the immediate right to institute criminal
proceedings against the drawer of the cheque, either at the request of the
holder/payee of the cheque or on his own volition, refrain from instituting the
proceedings based on the cause of action that has accrued to him. Such a
decision to defer prosecution may be impelled by several considerations but
more importantly it may be induced by an assurance which the drawer extends
to the holder of the cheque that given some time the payment covered by the
cheques would be arranged, in the process rendering a time consuming and
generally expensive legal recourse unnecessary. It may also be induced by a
belief that a fresh presentation of the cheque may result in encashment for a
variety of reasons including the vicissitudes of trade and business dealings
where financial accommodation given by the parties to each other is not an
unknown phenomenon. Suffice it to say that there is nothing in the provisions
of the Act that forbids the holder/payee of the cheque to demand by service of
a fresh notice under clause (b) of provisio to Section 138 of the Act, the
amount covered by the cheque, should there be a second or a successive
dishonour of the cheque on its presentation. Simply because the prosecution
for an offence under Section 138 must on the language of Section 142 be
instituted within one month from the date of the failure of the drawer to make
the payment does not militate against the accrual of multiple causes of action
to the holder of the cheque upon failure of the drawer to make the payment of
the cheque amount. In the absence of any juristic principle on which such
failure to prosecute on the basis of the first default in payment should result in
forfeiture, it is difficult to hold that the payee would lose his right to institute
such proceedings on a subsequent default that satisfies all the three
requirements of Section 138.
(B) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Object
underlying S.138 Is
to promote and inculcate faith in the
efficacy of banking system and its operations.
17 Judgments on Negotiable Instruments Act.
2016 0 Supreme (Guj) 1162
Patel Bachubhai Ramjibhai Vs.
Parsottambhai P. Rami and Ors.
Criminal Misc. Application No. 14925 of 2011
Decided On : 30062016
Held Prosecution
can be based upon second or successive dishonour of the
cheque, which is also permissible so long as it satisfies the requirements
stipulated under the provisions of Section 138 of the Negotiable Instruments
Act.
18 Judgments on Negotiable Instruments Act.
Stop Payment Cases
AIR 1998 SUPREME COURT 1057 (1998) 3 SCC 249)
Modi Cements Ltd Vs. Kuchil Kumar Nandi
In this case, Hon’ble Full bench of the Hon’ble Apex court held that merely
because the drawer issues a notice to the drawee or to the Bank for stoppage of
the payment, it will not preclude an action u/s 138 by the drawee or the holder
of a cheque in due course. Thus defence under the strict interpretation of
“insufficiency of funds” is diluted to this extent.
AIR 2002 SUPREME COURT 182
M.T.C. Ltd. and Anr. Vs. Medchl Chemicals and Pharma (P) Ltd. and
Anr.
In this case the Hon’ble Supreme Court held that section 138 gets attracted,
even if the drawer has given instruction for “stop payment”. It is further held
that the court has to presume that the cheque has been issued for a debt or a
liability (Sec 139) and onus lies on the drawer to rebut this presumption.
Complaint cannot be quashed merely on the ground that complaint has not
been signed by authorized person on behalf of the company. This technical
defect can be cured later with the permission of the court
AIR 2003 SUPREME COURT 2035
Goaplast (P) Ltd Vs. Chico Ursual D’Souza and Anr.
In this case, a postdated cheque has been issued and drawer has issued stop
payment instruction to bank before the date mentioned on the cheque. Lower
courts have taken a view that postdated cheque becomes a cheque on the date
mentioned on the cheque and therefore Section 138 does not apply to this case.
Hon’ble Supreme Court set aside the judgment of lower court and held that the
purpose of postdated cheques is to accommodate a drawer of cheque and he
should not be allowed to abuse the accommodation given to him by the
creditor. If allowed, it would render Section 138, a dead letter.
19 Judgments on Negotiable Instruments Act.
2016JX(
Guj)0422,
2016AIJEL_
HC0234985.
Nirav Bipinbhai Patel Vs. State Of Gujarat.
Code of Criminal Procedure, 1973 S.
482 Negotiable
Instruments Act, 1881 S.
138 Constitution
of India Art.
226 quashing
of complaint dishonour
of
cheque applicant
lost five cheques and intimated to his banker to make stop
payment in respect of lost cheques applicant
also intimated to the concern
police station about lost cheques subsequently
respondent issued notice to the
applicant in respect of dishonour of cheque reply
to the statutory notice given by
the applicant wherein he denied the facts of any advance taken from complainant
denial
of meeting with the complainant by the applicant held,
cheques in
question dishonestly and in collusion with other person came in possession of the
complainant instruction
of stop payment issued by the banker produced on
record no
legally enforceable debt against the applicant fit
case to exercise
jurisdiction u/s 482 of Code complaint
quashed application
allowed.
20 Judgments on Negotiable Instruments Act.
Closure of Account Cases
AIR 1999 SC 1952
NEPC Micon Ltd. Vs. Magma Leasing Ltd.
In this case, the drawer of the cheque closed the account in the Bank before
presentation of the cheque by the payee. When the cheque was presented, it
was returned by the Bank with the remark “account closed”. Hon’ble Supreme
Court observed that the expression “the amount of money standing to the credit
of that account is insufficient to honour the cheque” is a genus of which the
expression “that account being closed” is specie. It is further held that return of
a cheque on account of account being closed would be similar to a situation
where the cheque is returned on account of insufficiency of funds in the
account of the drawer of the cheque and an offence is committed.
2015JX(
Guj)0931,
2015AIJEL_
HC0233342.
Gopalchand Hotchand vs. Vagwani Gurmukhdas Bhagwandas
Negotiable Instruments Act, 1881 S.
138 dishonour
of cheque appeal
against
acquittal complainant
and accused were neighbours transaction
of advance
between the parties at
the time of repayment of debt, accused gave cheque to the
complainant towards discharge of his liability signature
of the accused on the
cheque identified by the Bank Manager bank
account of the accused was
closed at the time of dishonour of cheque no
substance in the contention of
respondent that the S. 138 of NI Act not attracted in case where the bank account
of the accused is closed object
and purpose of the Section 138 of NI Act is to
enhance the credibility of instrument and to induce faith in the efficiency in
banking operation ratio
laid down in the case of Urban Cooperative
Credit
Society (Supra) not applied.
Negotiable Instruments Act, 1881 S.
138 Code
of Criminal Procedure, 1973 S.
378 dishonour
of cheque scope
of interference in an appeal against acquittal
service
of notice RPAD
produced on record by the complainant side burden
upon the accused who claims that the notice has not been served by leading
necessary evidence discharging the burden letter
or the notice served by RPAD
would lead to the presumption about the service no
fetters on the powers of the
Appellate Court to scrutinize the evidence acquittal
set aside appeal
allowed.
21 Judgments on Negotiable Instruments Act.
Dishonour For Signature Mismatch
2013 CRI. L. J. 3288
Laxmi Dyechem, M/s. Vs. State of Gujarat
SUPREME COURT
Coram : 2 T. S. THAKUR AND Mrs. GYAN SUDHA MISRA , JJ. ( Division
Bench)
Criminal Appeal Nos. 18701909
with 19101949
of 2012 (arising out of S. L.
P. (Cri.) Nos. 17401779
with 17801819
of 2011), D/27
11
2012.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.139 DISHONOUR
OF CHEQUE INHERENT
POWERS Dishonour
of cheque Quashing
of
complaint Dishonour
of cheque on ground that signature of drawer of cheque
do not match specimen signatures available with bank Would
attract penal
provisions of S. 138 Further
allegations of fraud and like are matter that
cannot be investigated by a Court under S. 482, Cr. P.C. Order
of High Court
quashing complaint Liable
to be set aside.
The two contingencies envisaged under S. 138 of the Act must be interpreted
strictly or literally. The expression “amount of money is insufficient”
appearing in S. 138 of the Act is a genus and dishonour for reasons such “as
account closed”, “payment stopped”, “referred to the drawer” are only species
of that genus. Just as dishonour of cheque on the ground that the account has
been closed is a dishonour falling in the first contingency referred to in S. 138,
so also dishonour on the ground that the “signatures do not match” or that the
“images is not found”, which too implies that the specimen signatures do not
match the signatures on the cheque would constitute a dishonour within the
meaning of S. 138 of the Act. There is no qualitative difference between a
situation where the dishonour takes place on account of the substitution by a
new of authorized signatories resulting in the dishonour of the cheques already
issued and another situation in which the drawer of the cheque changes his
own signature or closes the account or issues instructions to the bank not to
make the payment. So long as the change is brought about with a view to
preventing the cheque being honoured the dishonour would become an offence
22 Judgments on Negotiable Instruments Act.
under S. 138 subject to other conditions prescribed being satisfied. There may
indeed be situations where a mismatch between the signatures on the cheque
drawn and the specimen available with the bank may result in dishonour of the
cheque even when the drawer never intended to invite such a dishonour.
Dishonour on account of such changes that may occur in the course of ordinary
business of a company, partnership or an individual may not constitute an
offence by itself because such a dishonour in order to qualify for prosecution
under S. 138 shall have to be preceded by a statutory notice where the drawer
is called upon and has the opportunity to arrange the payment of the amount
covered by the cheque. It is only when the drawer despite receipt of such a
notice and despite the opportunity to make the payment within the time
stipulated under the Statute does not pay the amount that the dishonour would
be considered a dishonour constituting an offence, hence punishable. Even in
such cases, the question whether or not there was a lawfully recoverable debt
or liability for discharge whereof the cheque was issued would be a matter that
the trial Court will examine having regard to the evidence adduced before it
and keeping in view the statutory presumption that unless rebutted the cheque
is presumed to have been issued for a valid consideration. Further offer made
by respondentcompany
to issue new cheques to the appellant upon settlement
of the accounts and that a substantial payment has been made towards the
outstanding amount was in any case conditional and subject to the settlement
of accounts. So also whether the cheques were issued fraudulently by the
authorized signatory for amounts in excess of what was actually payable to the
appellant is a matter for examination at the trial. That the cheques were issued
fraudulently by the authorised signatory for amounts in excess of what was
actually payable to the appellant is a matter for examination at the trial. That
the cheques were issued under the signature of the persons who were
authorised to do so on behalf of the respondentcompany
being admitted would
give rise to a presumption that they were meant to discharge a lawful debt or
liability. Allegations of fraud and the like are matters that cannot be
investigated by a Court under Section 482 Cr. P. C. and shall have to be left to
be determined at the trial after the evidence is adduced by the parties.
Moreover plea that the dishonour had taken place after they had resigned from
their positions and that the failure of the company to honour the commitment
implicit in the cheques cannot be construed an act of dishonesty on the part of
the signatories of the cheques would not justify quashing of the proceedings
against them. (Paras 15 , 16 , 17 , 18 , 19)
23 Judgments on Negotiable Instruments Act.
Successive Presentation of Cheque
(2013)10 SCC 568
MSR Leathers Vs S Palaniappan&Ors
The Hon’ble Full bench of the Hon’ble Apex court, on reference, had to
examine, the issue whether payee or holder of cheque can initiate proceedings
for prosecution u/s 138 for second and subsequent presentation of cheque and
its dishonour, if he has not initiated action to file complaint on earlier cause of
action i.e. within 30days from the date of expiry of first notice period. The
Hon’ble Supreme Court over ruled the earlier decision in Sadanandan
Bhadran Vs Madhavan (1998) 6 SCC 514. The Hon’ble Supreme Court
observed that representation
of cheque gives a fresh opportunity to drawer to
settle payment and such fresh opportunity should not help a defaulter on any
juristic principle to escape prosecution. There is no real or qualitative
difference between where a default has been committed and prosecution is
immediately launched and in another situation where prosecution is deferred
till the cheque presented again gets dishonoured. The Hon’ble Supreme Court
thus took a broader view and felt that any narrow/strict interpretation would
result in helping the accused and will defeat the objective of the Act.
The Hon’ble Supreme Court at Para 23 recorded an observation that there is
nothing in Section 142 which suggests that drawer of the cheque would be
absolved of his criminal liability, if the cheques is dishonored on subsequent
presentations.
24 Judgments on Negotiable Instruments Act.
2014 CRI. L. J. 1071
Kamlesh Kumar Vs. State of Bihar
SUPREME COURT
Coram : 2 K. S. RADHAKRISHNAN AND A. K. SIKRI , JJ. ( Division
Bench )
Criminal Appeal No. 2083 of 2013 (arising out of S.L.P. (Criminal) No. 10056
of 2012), D/11
12
2013.
Negotiable Instruments Act (26 of 1881) , S.138 , S.142(b) DISHONOUR
OF CHEQUE INHERENT
POWERS INHERENT
POWERS Dishonour
of cheque Complaint
Limitation
Cheque
presented for second time and
was returned unpaid Legal
notice for demand was not issued within thirty
days from date of receipt of information from bank regarding return of cheque
as unpaid Act
of complainant in presenting cheque again for encashment
though cannot be questioned But
nonissuance
of demand notice within time
prescribed would render complaint as not maintainable Refusal
to quash
proceedings hence, not proper.
25 Judgments on Negotiable Instruments Act.
Jurisdiction
2015 AIR SCW 6556
Bridgestone India Pvt. Ltd., M/s. Vs. Inderpal Singh
Coram : 2 JAGDISH SINGH KHEHAR AND R. BANUMATHI , JJ.
Criminal Appeal No. 1557 with 1562 to 1564 of 2015, (Arising out of SLP
(Cri) Nos. 7850 with 9758, 10019, 10020 of 2011), D/24
11
2015.
(A) Negotiable Instruments Act (26 of 1881) , S.142 , S.142A (as amended by
Second Ordinance 2015) DISHONOUR
OF CHEQUE TERRITORIAL
JURISDICTION Cheque
dishonour complaint Territorial
jurisdiction Place
where cheque is delivered for collection Determinative
of place of
territorial jurisdiction Provisions
of Criminal P. C. will not apply to cheque
dishonour cases on account of non obstante clause in S. 142 A(1) as inserted
by 2015 amendment.
A perusal of the amended Section 142 (2), leaves no room for any doubt,
specially in view of the explanation thereunder, that with reference to an
offence under Section 138 of the Negotiable Instruments Act, 1881, the place
where a cheque is delivered for collection i.e. the branch of the bank of the
payee or holder in due course, where the drawee maintains an account would
be determinative of the place of territorial jurisdiction. (Para 11 )
A perusal of subsection
(1) of 142A as inserted by 2015 amendment Second
Ordinance thereof leaves no room for any doubt, that insofar as the offence
under Section 138 of the Negotiable Instruments Act is concerned, on the issue
of jurisdiction, the provisions of the Code of Criminal Procedure, 1973, would
have to give way to the provisions of the instant enactment on account of the
non obstante clause in subsection
(1) of Section 142A. Likewise, any
judgment, decree, order or direction issued by a Court would have no effect
insofar as the territorial jurisdiction for initiating proceedings under Section
138 of the Negotiable Instruments Act is concerned. Section 142(2)(a),
amended through the Negotiable Instruments (Amendment) Second Ordinance,
2015, vests jurisdiction for initiating proceedings for the offence under Section
138 of the Negotiable Instruments Act, inter alia in the territorial jurisdiction
26 Judgments on Negotiable Instruments Act.
of the Court, where the cheque is delivered for collection (through an account
of the branch of the bank where the payee or holder in due course maintains an
account).
(B) Negotiable Instruments Act (26 of 1881) , S.142(2) , S.142A(1) (as
amended by 2015 Second Ordinance) DISHONOUR
OF CHEQUE COMPLAINT
(
as inserted by 2015 Second Ordinance) Cheque
dishonour
complaint Territorial
jurisdiction Words
”as if that subsec.
had been in
force at all material times” Used
with reference to S. 142. (2), in S 142 A(1) Gives
retrospectivity to S. 142(2) Cheque
drawn on Union Bank of India,
Chandigarh, D/252006
Presented
for encashment at IDBI Bank, Indore
which intimated its dishonour on 482006
JMFC
Indore, has territorial
jurisdiction to take cognizance of proceedings. (Para 13 )
2017 (3) GLR 793
GAUTAM INDUSTRIAL CORPORATION PVT. LTD. THROUGH
NARESH ANNRAJ BHANSALI (DECEASED) Vs. STATE OF
GUJARAT AND ORS.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
142 & 142A (As
amended by N.I. (Amendment) Second Ordinance, 2015) & Sec. 138 Dishonour
of cheque Territorial
jurisdiction Held,
if cheque delivered for
collection through account place where branch of Bank where payee or
holder in due course maintains account is situate has jurisdiction If
cheque
presented for payment otherwise than through account, place where branch
of draweeBank
where drawer maintains account is situate, has jurisdiction Further,
decision by Supreme Court in Dashrath Rupsingh Rathod v. State of
Maharashtra, 2014 (3) GLR 2700 (SC) : 2014 (9) SCC 129, stands superseded
by abovementioned N.I. Amendment Ordinance Order
by Addl. Chief
Judicial Magistrate reversed.
27 Judgments on Negotiable Instruments Act.
Premature Complaints
2015 CRI. L. J. 51
Yogendra Pratap Singh Vs. Savitri Pandey
SUPREME COURT
Coram : 3 R. M. LODHA C.J.I., KURIAN JOSEPH AND ROHINTON FALI
NARIMAN , JJ. ( Full Bench )
Criminal Appeal No. 605 of 2012 with 1924, 1925 of 2014, D/19
9
2014.
(A) Negotiable Instruments Act (26 of 1881) , S.138 NEGOTIABLE
INSTRUMENT DISHONOUR
OF CHEQUE Dishonour
of cheque Complaint
Filed
before expiry of 15 days from date on which notice has
been served on drawer/accused Is
no complaint in eye of law No
cognizance of offence can be taken on basis of such complaint Fact
that
on date of consideration of complaint or taking cognizance thereof a
period of 15 days has elapsed Not
a ground to take cognizance of
complaint.
Reading of the provision contained in clause (c) of the proviso to S.138 makes
it clear that no complaint can be filed for an offence under S. 138 unless the
period of 15 days has elapsed. Any complaint before the expiry of 15 days
from the date on which the notice has been served on the drawer/accused is no
complaint at all in the eye of law. It is not the question of prematurity of the
complaint where it is filed before expiry of 15 days from the date on which
notice has been served on him, it is no complaint at all under law. As a matter
of fact, S. 142 of the Act, inter alia, creates a legal bar on the Court from
taking cognizance of an offence under S. 138 except upon a written complaint.
Since a complaint filed under S. 138 of Act before the expiry of 15 days from
the date on which the notice has been served on the drawer/accused is no
complaint in the eye of law, obviously, no cognizance of an offence can be
taken on the basis of such complaint. Merely because at the time of taking
cognizance by the Court, the period of 15 days has expired from the date on
which notice has been served on the drawer/accused, the Court is not clothed
with the jurisdiction to take cognizance of an offence under S. 138 on a
28 Judgments on Negotiable Instruments Act.
complaint filed before the expiry of 15 days from the date of receipt of notice
by the drawer of the cheque. (Para 36)
A complaint filed before expiry of 15 days from the date on which notice has
been served on drawer/accused cannot be said to disclose the cause of action in
terms of clause (c) of the proviso to S. 138 and upon such complaint which
does not disclose the cause of action the Court is not competent to take
cognizance. A conjoint reading of S. 138, which defines as to when and under
what circumstances an offence can be said to have been committed, with S.
142(b) of the NI Act, that reiterates the position of the point of time when the
cause of action has arisen, leaves no manner of doubt that no offence can be
said to have been committed unless and until the period of 15 days, as
prescribed under clause (c) of the proviso to S. 138, has, in fact, elapsed.
Therefore, a Court is barred in law from taking cognizance of such complaint.
It is not open to the Court to take cognizance of such a complaint merely
because on the date of consideration or taking cognizance thereof a period of
15 days from the date on which the notice has been served on the
drawer/accused has elapsed. All the five essential features of S. 138 as noted in
the judgment in AIR 2005 SC 954 must be satisfied for a complaint to be filed
under S.138. If the period prescribed in clause (c) of the proviso to S. 138 has
not expired, there is no commission of an offence nor accrual of cause of
action for filing of complaint under S. 138 of the Act.
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.142 LIMITATION
Dishonour
of cheque Complaint
Filed
before expiry of
15 days from date of receipt of notice issued under Cl. (c) to proviso to
S.138 Is
not maintainable Complainant
cannot be permitted to present
very same complaint at any later stage Remedy
is only to file fresh
complaint If
the same could not be filed within time prescribed under
S.142(b) Benefit
of proviso directed, could be sought on satisfying
sufficient cause Said
direction applicable to all such pending cases where
complaint does not proceed further in view of aforesaid finding.
A complaint filed before the expiry of 15 days from the date of receipt of
notice issued under Cl. (c) of the proviso to S. 138 is not maintainable, the
complainant cannot be permitted to present the very same complaint at any
later stage. His remedy is only to file a fresh complaint; and if the same could
not be filed within the time prescribed under S. 142(b), his recourse is to seek
the benefit of the proviso, satisfying the Court of sufficient cause. (Para 42)
29 Judgments on Negotiable Instruments Act.
A complaint for dishonour of cheque filed before expiry of 15 days from date
of receipt of notice issued under S.138 proviso (c) is not maintainable.
Therefore the payee or the holder in due course of the cheque may file a fresh
complaint within one month from the date of decision in the criminal case and,
in that event, delay in filing the complaint will be treated as having been
condoned under the proviso to cl. (b) of S. 142 of Act. This direction shall be
deemed to be applicable to all such pending cases where the complaint does
not proceed further in view of the aforesaid finding (Para 42)
30 Judgments on Negotiable Instruments Act.
A HOLDER IN DUE COURSE has the locus standi to file the complaint
under section 138 of Negotiable Instruments Act.
2016 (3) GLH 194 ( 2016 (4) GLR 3419 2016
CrLJ 4055 )
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Ratilal Harmanbhai Patel Vs. State of Gujarat and Ors.
Criminal Misc. Application (For Quashing & Set Aside Fir/Order) No. 18025
of 2014 and Criminal Misc. Application Nos. 19615 to 19618 of 2014
(A) Negotiable Instruments Act,1881Sections
8, 9 and 138′
Holder in due
course’ is a bona fide transferee for valueConjoint
reading of Sections 8, 9
and 138 would include “holder in due course” as he alone would be entitled to
initiate the criminal proceedings under Section 138Section
138 postulates that
where any cheques were drawn by a person on an account maintained by him
for payment of any amount of money to any other person from out of his
account for the discharge of his liability, is returned by the Bank as the same is
insufficient to honour the cheque, such person shall be deemed to have
committed the offencePrima
facie case made out against the accused to put
him to trial for the offence under section 138.
31 Judgments on Negotiable Instruments Act.
Complaint Need
not be signed by complainant
2013 CRI. L. J. 1179
Indra Kumar Patodia Vs. Reliance Industries Ltd.
SUPREME COURT
Coram : 2 P. SATHASIVAM AND RANJAN GOGOI , JJ. ( Division Bench )
Criminal Appeal No. 1837 with 1838 of 2012 (arising out of S.L.P. (Cri.) No.
8255 with 9537 of 2010), D/22
11
2012.
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.141 , S.142 COMPLAINT
Complaint
of dishonour of cheque Need
not necessarily be
signed by complainant Complaint
sans signature of complainant is
maintainable.
The complaint of dishonour of cheque need not necessarily be signed by
complainant. The only requirement that S. 142 provides is that the complaint
must necessarily be in writing and the complaint can be presented by the payee
or holder in due course of the cheque. The definition of complaint as stated in
Section 2(d) of Cri. P.C. provides that the same needs to be in oral or in
writing. The non obstante clause in Section 142 (a) is restricted to exclude two
things only from the Code i.e. (a) exclusion of oral complaints and (b)
exclusion of cognizance on complaint by anybody other than the payee or the
holder in due course. None of the other provisions of the Criminal P.C. are
excluded by the said non obstante clause. The Magistrate is therefore required
to follow the procedure under Section 200 of the Criminal P.C. once he has
taken the complaint of the payee/holder in due course and record statement of
the complainant and such other witnesses as present at the said date. Here, the
Code specifically provides that the same is required to be signed by the
complainant as well as the witnesses making the statement. Mere presentation
of the complaint is only the first step and no action can be taken unless the
process of verification is complete. The Magistrate thereafter has to consider
the statement on oath, that is, the verification statement under Section 200 and
the statement of any witness, and then decide whether there is sufficient
ground to proceed. No prejudice is caused to the accused for nonsigning
the
complaint as the statement made on oath and signed by the complainant
32 Judgments on Negotiable Instruments Act.
safeguards the interest of the accused. (Paras 12 , 13 , 15)
Apart from the above writing does not presuppose that the same should be
signed. This becomes clear when S. 2 (d) of Criminal PC is contrasted with
provisions such as Ss. 61, 70, 154, 164, 281 of Code. A perusal of these
sections show that the legislature has made it clear that wherever it required a
written document to be signed, it should be mentioned specifically in the
section itself, which is missing both from Section 2 (d) of Criminal P.C. as
well as section 142 of Act. Even General Clauses Act, 1897 too draws a
distinction between writing and signature and defines them separately. If the
legislature intended that the complaint under the Act, apart from being in
writing, is also required to be signed by the complainant, the legislature would
have used different language and inserted the same at the appropriate place.
(Paras 13 , 14 , 15)
(C) Criminal P.C. (2 of 1974) , S.2(d) COMPLAINT
Written
complaint Need
not be signed by complainant. (Para 13)
(D) Negotiable Instruments Act (26 of 1881) , S.138 , S.142 DISHONOUR
OF CHEQUE Complaint
of dishonour of cheque Limitation
Starting
point
Is
date of filing of complaint Not
date of taking cognizance. (Para 18)
(E) Negotiable Instruments Act (26 of 1881) , S.142 DISHONOUR
OF
CHEQUE Non
obstante clause Exclusion
of provisions of Criminal P.C. Limited
only to exclusion of oral complaint and cognizance of complaint made
by person other than payee or holder in due course of cheque. (Para 13)
Words and Phrases Writing
Does
not include signing. (Paras 13 , 14)
33 Judgments on Negotiable Instruments Act.
Complaint Can
be filed through power of attorney holder
2014 CRI. L. J. 576
A. C. Narayanan Vs. State of Maharashtra
SUPREME COURT
Coram : 3 P. SATHASIVAM , C.J.I. MRS. RANJANA PRAKASH DESAI
AND RANJAN GOGOI , JJ. ( Full Bench )
Criminal Appeal No. 73 of 2007 with Criminal Appeal No. Nil of 2013
(arising out of S. L. P. (Cri.) No. 2724 of 2008), D/13
9
2013.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.142 DISHONOUR
OF CHEQUE Dishonour
of cheque Complaint
Filing
of, through power
of attorney is perfectly legal and competent.
The attorney holder cannot file a complaint in his own name as if he was the
complainant, but he can initiate criminal proceedings on behalf of his
principal. Where the payee is a proprietary concern, the complaint can be filed
(i) by the proprietor of the proprietary concern, describing himself as the sole
proprietor of the “payee”; (ii) the proprietary concern, describing itself as a
sole proprietary concern, represented by its sole proprietor; and (iii) the
proprietor or the proprietary concern represented by the attorney holder under
a power of attorney executed by the sole proprietor. Thus, Filing of complaint
petition under Section 138 of N. I. Act through power of attorney is perfectly
legal and competent. (Paras 24 , 26)
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.142 , S.145 Criminal
P.C. (2 of 1974) , S.200 DISHONOUR
OF CHEQUE ISSUE
OF
PROCESS Dishonour
of cheque Issuance
of process Power
of attorney
holder possessing due knowledge of transaction Can
depose and verify
on complaint in order to prove its contents Complainant
is required to
make specific assertion as to knowledge of power of attorney holder in
impugned transaction.
From a conjoint reading of Sections 138, 142 and 145 of the N. I. Act as well
as Section 200 of Criminal Procedure Code, it is clear that it is open to the
Magistrate to issue process on the basis of the contents of the complaint,
34 Judgments on Negotiable Instruments Act.
documents in support thereof and the affidavit submitted by the complainant in
support of the complaint. Once the complainant files an affidavit in support of
the complaint before issuance of the process under Section 200 of Criminal
Procedure Code, it is thereafter open to the Magistrate, if he thinks fit, to call
upon the complainant to remain present and to examine him as to the facts
contained in the affidavit submitted by the complainant in support of his
complaint. However, it is a matter of discretion and the Magistrate is not
bound to call upon the complainant to remain present before the Court and to
examine him upon oath for taking decision whether or not to issue process on
the complaint under Section 138 of the N. I. Act. For the purpose of issuing
process under Section 200 of the Code, it is open to the Magistrate to rely upon
the verification in the form of affidavit filed by the complainant in support of
the complaint under Section 138 of the N. I. Act. It is only if and where the
Magistrate, after considering the complaint under Section 138 of the N. I. Act,
documents produced in support thereof and the verification in the form of
affidavit of the complainant, is of the view that examination of the complainant
or his witness(s) is required, the Magistrate may call upon the complainant to
remain present before the Court and examine the complainant and/or his
witness upon oath for taking a decision whether or not to issue process on the
complaint under Section 138 of the N. I. Act. Thus, the Power of Attorney
holder can depose and verify on oath before the Court in order to prove the
contents of the complaint. However, the power of attorney holder must have
witnessed the transaction as an agent of the payee/holder in due course or
possess due knowledge regarding the said transactions. (Paras 22 , 26)
(C) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Complaint
filed through power of attorney Functions
under general power of attorney cannot be delegated to another
person without specific permission.
The attorney holder can sign and file a complaint on behalf of the complainantpayee.
However, whether the power of attorney holder will have the power to
further delegate the functions to another person will completely depend on the
terms of the general power of attorney. As a result, the authority to subdelegate
the functions must be explicitly mentioned in the general power of
attorney. Otherwise, the subdelegation
will be inconsistent with the general
power of attorney and thereby will be invalid in law. Nevertheless, the general
power of attorney itself can be cancelled and be given to another person. Thus,
the functions under the general power of attorney cannot be delegated to
35 Judgments on Negotiable Instruments Act.
another person without specific clause permitting the same in the power of
attorney. Nevertheless, the general power of attorney itself can be cancelled
and be given to another person. (Paras 25 , 26)
2015 CRI. L. J. 147
Vinita S. Rao Vs. M/s. Essen Corporate Services Pvt. Ltd.
SUPREME COURT
Coram : 2 Mrs. RANJANA PRAKASH DESAI AND N. Vs. RAMANA , JJ.
( Division Bench )
Criminal Appeal Nos. 20652066
of 2014 (arising out of Special Leave
Petition (Cri.) Nos. 46824683
of 2012), D/17
9
2014.
(A) Negotiable Instruments Act (26 of 1881) , S.138 Criminal
P.C. (2 of
1974) , S.200 NEGOTIABLE
INSTRUMENT Dishonour
of cheque Complaint
Filed
by power of attorney Plea
that power of attorney was not
produced Neither
raised before trial court nor before first appellate court Entertaining
such belated argument for first time by High Court Not
proper.
(Para 13)
(B) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Complaint
Filed
by power of attorney As
a matter of practice, power of attorney filed along with vakalat filed in matter And
not with list of documents listing other exhibits pertaining to merits of
case In
circumstances, nonmentioning
of power of attorney is not unusual On
this basis no conclusion can be drawn that the said document was not on
record Moreover
question of fact raised for first time before High Court cast
shadow of doubt on its truthfulness. (Paras 14 , 16)
(C) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Complaint
Can
be filed through power
of attorney holder. (Para 19)
(D) Negotiable Instruments Act (26 of 1881) , S.138 Criminal
P.C. (2 of
1974) , S.200 EVIDENCE
EVIDENCE
Dishonour
of cheque Complaint
36 Judgments on Negotiable Instruments Act.
filed through power of attorney In
the facts of this case, where the sworn
statement of power of attorney holder of appellant, is recorded at presummoning
stage Thus
plea that appellant should have also filed a presummoning
affidavit cannot be entertained. (Para 22)
(E) Negotiable Instruments Act (26 of 1881) , S.138 Criminal
P.C. (2 of
1974) , S.200 EVIDENCE
EVIDENCE
EVIDENCE
Dishonour
of
cheque Complaint
Filed
through power of attorney Complainant
herself
has stepped in witness box Therefore
there is no need for power of attorney
holder to examine himself as witness.
(F) Negotiable Instruments Act (26 of 1881) , S.138 EVIDENCE
Dishonour
of cheque Complaint
Question
whether cheques were issued for crystallized
liability or legally recoverable debt Not
dealt with at all by High Court Matter
remanded.(Para 24)
37 Judgments on Negotiable Instruments Act.
2015 CRI. L. J. 1434
A. C. Narayanan Vs. State of Maharashtra
SUPREME COURT
Coram : 2 SUDHANSU JYOTI MUKHOPADHAYA AND S. A. BOBDE ,
JJ. ( Division Bench )
Criminal Appeal No. 73 of 2007 with 1437 of 2013, D/28
1
2015.
(A) Negotiable Instruments Act (26 of 1881) , S.138 NEGOTIABLE
INSTRUMENT DISHONOUR
OF CHEQUE Dishonour
of cheque Complaint
Allegedly
filed by power of attorney holder Except
mentioning
in cause title no mention of, or reference to Power of Attorney in body of said
complaint Nor
was it exhibited as part of said complaint In
list of evidence
there is just mere mention of “Power of Attorney” without date or any other
particulars No
whisper in verification statement about filing of complaint as
Power of attorney holder Order
issuing process by Magistrate did not
mention perusal of power of attorney In
facts taking cognizance by
Magistrate, held not proper Further
putting onus on accused rather than
complainant was also not proper.
(B) Negotiable Instruments Act (26 of 1881) , S.138 COGNIZANCE
OF
OFFENCE Dishonour
of cheque Complaint
Allegedly
filed by employee
of company claiming to be general Power of Attorney of complainant
company Complaint
was not signed either by Managing Director or
Director of Company Subsequently
‘R’ Deputy General Manager of
Company gave evidence on behalf of company though he does not know
anything Nothing
on record to suggest that he was authorized by Managing
Director or any Director Acquittal
of accused, held in facts, was proper.
38 Judgments on Negotiable Instruments Act.
Presumption u/S 118 and 139
(2010) 11 SCC 441
Rangappa Vs. Sri Mohan.
CRIMINAL APPEAL NO. 1020 OF 2010
SUPREME COURT. (FULL BENCH)
” 14. In light of these extracts, we are in agreement with the respondentclaimant
that the presumption mandated by Section 139 of the Act does indeed
include the existence of a legally enforceable debt or liability. To that extent,
the impugned observations in Krishna Janardhan Bhat (supra) may not be
correct. However, this does not in any way cast doubt on the correctness of the
decision in that case since it was based on the specific facts and circumstances
therein. As noted in the citations, this is of course in the nature of a rebuttable
presumption and it is open to the accused to raise a defence wherein the
existence of a legally enforceable debt or liability can be contested. However,
there can be no doubt that there is an initial presumption which favours the
complainant. Section 139 of the Act is an example of a reverse onus clause that
has been included in furtherance of the legislative objective of improving the
credibility of negotiable instruments. While Section 138 of the Act specifies a
strong criminal remedy in relation to the dishonour of cheques, the rebuttable
presumption under Section 139 is a device to prevent undue delay in the course
of litigation. However, it must be remembered that the offence made
punishable by Section 138 can be better described as a regulatory offence since
the bouncing of a cheque is largely in the nature of a civil wrong whose impact
is usually confined to the private parties involved in commercial transactions.
In such a scenario, the test of proportionality should guide the construction and
interpretation of reverse onus clauses and the accused/defendant cannot be
expected to discharge an unduly high standard or proof. In the absence of
compelling justifications, reverse onus clauses usually impose an evidentiary
burden and not a persuasive burden. Keeping this in view, it is a settled
position that when an accused has to rebut the presumption under Section 139,
the standard of proof for doing so is that of ‘preponderance of probabilities’.
Therefore, if the accused is able to raise a probable defence which creates
doubts about the existence of a legally enforceable debt or liability, the
prosecution can fail. As clarified in the citations, the accused can rely on the
39 Judgments on Negotiable Instruments Act.
materials submitted by the complainant in order to raise such a defence and it
is conceivable that in some cases the accused may not need to adduce evidence
of his/her own. ”
2014 CRI. L. J. 2304
John K. Abraham Vs. Simon C. Abraham
SUPREME COURT
Coram : 2 SURINDER SINGH NIJJAR AND FAKKIR MOHAMED
IBRAHIM KALIFULLA , JJ. ( Division Bench )
Criminal Appeal No. 2043 of 2013 (arising out of S.L.P. (Cri.) No. 9505 of
2011), D/5
12
2013.
Negotiable Instruments Act (26 of 1881) , S.138 , S.118 , S.139 DISHONOUR
OF CHEQUE Dishonour
of cheque Complainant
alleging
that accused borrowed a sum of Rs. 1,50,000/from
him and issued a cheque
for said sum which was dishonoured For
drawing presumption under S.
118 r.w. S. 139 burden is heavily upon complainant Complainant
not sure
as to who wrote cheque nor aware as to when and where existing transaction
took place for which cheque was issued by accused Defects
in evidence of
complainant as noted by trial court brushed aside by High Court without
assigning any valid reason Conviction
of accused therefore, not proper.
(Paras 9 , 10)
2008 CRI. L. J. 1172
Krishna Janardhan Bhat Vs. Dattatraya G. Hegde
SUPREME COURT
Coram : 2 S. B. SINHA AND H. S. BEDI , JJ. ( Division Bench )
Criminal Appeal No. 518 of 2006, D/11
1
2008.
40 Judgments on Negotiable Instruments Act.
(A) Negotiable Instruments Act (26 of 1881) , S.139 DISHONOUR
OF
CHEQUE Presumption
under Section
139 merely raises presumption in
favour of holder of cheque that same has been issued for discharge of any debt
or other liability Existence
of legally recoverable debt Is
not a matter of
presumption under S. 139.(Para 21)
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.139 DISHONOUR
OF CHEQUE Dishonour
of cheque Defence
Proof
Accused
not required
to step into witnessbox
He
may discharge his burden on basis of materials
already brought on record Question
whether statutory presumption rebutted
or not Must
be determined in view of other evidences on record.
(C) Negotiable Instruments Act (26 of 1881) , S.139 DISHONOUR
OF
CHEQUE DOCTRINES
Presumption
under Rebuttal
Duty
of Court Presumption
of innocence as human rights and doctrine of reverse burden
introduced by S. 139 Should
be delicately balanced It
largely depends on
factual matrix of each case.
2017 (1) GLR 266
INDRAVADAN NAVNEETLAL SHETH Vs. STATE OF GUJARAT
AND ANR.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138, 139 & 118 Dishonour
of cheque Sec.
139 providing for presumption that holder of
cheque received it towards discharge of debt or other liability Held,
unless
said presumption rebutted by cogent evidence raising of some doubt about
existing of debt/liability would not absolve accused from his liability Conviction
confirmed.
41 Judgments on Negotiable Instruments Act.
2015 (1) GLR 597
High Court of Gujarat
Ramilaben Jasubhai Patel Vs. Rasiklal Chunilal Kothari
N. I. Act Section – 118 & Evidence Act Section 73
Held that
There is no presumption, however, as to the execution of the instrument. The
presumption statutorily raised u/s 118 would come into operation only after
and provided that the factum of execution of the instrument is admitted or
established in accordance with rule of evidence in view of clear dispute
regarding execution of pro note by accused in w/s the burden rests on the
complainant to prove signature and contents of it.
2017 (1) GLH 288
ALOKBHAI PRAVINCHANDRA DESAI MANAGING PARTNER OF
M/S YASH CHEMICALS Vs. JAYENDRABHAI BHOGILAL
THAKKAR.
Negotiable Instruments Act, 1881 S.
138 Complainant
has proved that he
has borrowed money from other persons to lend it to the accused The
defence
witness who is the accountant of the accused proves that the accused had given
cheques to complainant in his presence No
entry in account books of accused
becomes immaterial Statutory
presumption not rebutted by the accused Accused
defence that cheque taken under threat is having no substance Conviction
uphel.
42 Judgments on Negotiable Instruments Act.
2013 CRI. L. J. 3288
Laxmi Dyechem, M/s. Vs. State of Gujarat
SUPREME COURT
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.139 DISHONOUR
OF CHEQUE Dishonour
of cheque Presumption
under S. 139 Category
of
‘stop payment cheques’ Would
be a category of cases which would be subject
to rebuttal Hence,
it would be an offence only if drawer of cheque fails to
discharge burden of rebuttal. (Paras 27 , 28 , 29)
(C) Negotiable Instruments Act (26 of 1881) , S.138 , S.139 DISHONOUR
OF CHEQUE Dishonour
of cheque Presumption
under S. 139 Category
of
‘stop payment’ instruction to bank as cheque in question returned due to
mismatching of signatures Petitioner
neither raised nor proved to contrary
that cheques were not for discharge of lawful debt Plea
of rebuttal envisaged
under S. 139 not attracted. (Para 30)
2014 (3) GLR 2611.
Taramanidevi Purushottamdasji Mahota Vs. State Of Gujarat.
Negotiable Instruments Act, 1881 S.
118, 138, 139 Code
of Criminal
Procedure, 1973 S.
482 dishonour
of cheque complainant
alleged that
accused gave cheque of Rs. 2 crore and gave instructions to Bank to stop payment
criminal
complaint filed after serving notice plea
to quash the complaint considering
contents of the cheque, it is not clear as to for what purpose the
cheque was given complainant
in first notice stated that the amount was due
towards dissolution of HUF while in second notice it is stated that the amount is
due towards professional and personal services held,
from facts of the case it
appears that some signed blank cheques would have been left with complainant no
presumption u/s 138 of Act of 1881 could be made complaint
quashed application
allowed.
43 Judgments on Negotiable Instruments Act.
Computation of Limitation Period
2013 CRI. L. J. 4195
Econ Antri Ltd. Vs. Rom Industries Ltd
SUPREME COURT
Coram : 3 P. SATHASIVAM , C.J.I., Smt. RANJANA PRAKASH DESAI
AND RANJAN GOGOI , JJ. ( Full Bench )
Criminal Appeal No. 1079 of 2006, D/26
8
2013.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.142 Limitation
Act
(36 of 1963) , S.12 General
Clauses Act (10 of 1897) , S.9 DISHONOUR
OF CHEQUE BAR
OF LIMITATION Dishonour
of cheque Complaint
Limitation
Computation
Limitation
Act, S.12 which provides for exclusion
of day from which limitation starts does not apply S.
9 of General Clauses
Act however applies and first day of period of limitation stipulated in S. 142
had to be excluded.
2014 CRI. L. J. 1671
Rameshchandra Ambalal Joshi Vs. State of Gujarat
SUPREME COURT
Coram : 2 CHANDRAMAULI Kr. PRASAD AND JAGDISH SINGH
KHEHAR , JJ. ( Division Bench )
Criminal Appeal No. 434 of 2014, (@ Special Leave Petition (Cri.) No. 7595
of 2011), D/18
2
2014.
Negotiable Instruments Act (26 of 1881) , S.138 , Proviso (a) General
Clauses Act (10 of 1897) , S.3(35) , S.9 DISHONOUR
OF CHEQUE GENERAL
CLAUSES Dishonour
of cheque Six
months for presentation of
cheque Month
does not mean 30 days Computation
of six months period To
be done by excluding day on which cheque was drawn and including last
44 Judgments on Negotiable Instruments Act.
day Cheque
drawn on 31st Dec. Presented
to bank on 30 June of following
year Is
within period of six months Cannot
be said that complaint of
dishonour is not maintainable.
Proviso (a) to S. 138 provides that the cheque should be presented within six
months from the date on which it is drawn. Word month has been defined
under S. 3(35) of General Clauses Act to mean a month reckoned as per British
calendar. Period of six months cannot therefore be calculated on 30 days basis.
(Para 15)
As regards computation of six months period S. 9 of General Clauses Act has
to be pressed in service Proviso (a) to Section 138 of the Act uses the
expression “Six months from the date on which it is drawn”. Once the word
‘from’ is used for the purpose of commencement of time, in view of section 9
of the General Clauses Act, the day on which the cheque is drawn has to be
excluded and the last day within which such act needs to be done is to be
included. In other words, six months period stipulated in S. 138 would expire
one day prior to the date in the corresponding month and in case no such day
falls, the last day of the immediate previous month. For calculating period of
six months for cheque drawn on 31122005
the first day i.e. 31122005
has
to be excluded and the period of six months will be reckoned from the next day
i.e. from 112006;
meaning thereby that according to the British calendar, the
period of six months will expire at the end of the 30th day of June, 2006. Since
in the instant case the cheque was presented on 3062006,
it was presented
within the period prescribed. The prosecution launched cannot therefore, be
said to be time barred. (Paras 21 , 26)
45 Judgments on Negotiable Instruments Act.
Condonation of Delay
2017 (1) GLR 370
SUNIL KANUBHAI GOSWAMI Vs. STATE OF GUJARAT AND ANR.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138 & 142 Limitation
Condonation
of delay Complaint
filed seven days beyond
limitation period/30 days from arising of cause of action Held,
in absence
of explanation for delay the Court cannot condone delay Complaint
timebarred
Orders
by the Courts below confirmed.
Therefore, there is delay of 7 days in filing such complaint. Though proviso to
Sec. 142 empowers the Court to condone such delay, it is clear that the
cognizance of the complaint may be taken by the Court after the prescribed
period as aforesaid only if the complainant satisfies the Court that he had
sufficient cause for not filing the complaint within such period. Therefore, it is
mandatory for the complainant to plead and prove that there was sufficient
cause for not filing the complaint within prescribed period. (Para 6)
46 Judgments on Negotiable Instruments Act.
Summary trial proceedings
2014 CRI. L. J. 3119 ( AIR 2014 SUPREME COURT 2528 )
Indian Bank Association Vs. Union of India
SUPREME COURT
Coram : 2 K. S. RADHAKRISHNAN AND VIKRAMAJIT SEN , JJ.
( Division Bench )
Writ Petition (Civil) No. 18 of 2013, D/21
4
2014.
Negotiable Instruments Act (26 of 1881) , S.138 , S.143 , S.145 DISHONOUR
OF CHEQUE SUMMARY
TRIAL Dishonour
of cheque Summary
trial Directions
given to trial Court to follow procedures for
speedy and expeditious disposal of cases falling under S. 138.
Section 143 empowers the Court to try cases for dishonour of cheques
summarily in accordance with the provisions of Sections 262 to 265 of the
Code of Criminal Procedure, 1973, S. 143 of the Act as amended by the
Amendment Act, 2002 stipulating that notwithstanding anything contained in
the Code of Criminal Procedure, all offences contained in Chapter XVII of the
Negotiable Instruments Act dealing with dishonour of cheques for
insufficiency of funds, etc. shall be tried by a Judicial Magistrate and the
provisions of Sections 262 to 265, Cr.P.C. prescribing procedure for summary
trials, shall apply to such trials and it shall be lawful for a Magistrate to pass
sentence of imprisonment for a term not exceeding one year and an amount of
fine exceeding Rs. 5,000/and
it is further provided that in the course of a
summary trial, if it appears to the Magistrate that the nature of the case
requires passing of the sentence of imprisonment exceeding one year, the
Magistrate, after hearing the parties, record an order to that effect and
thereafter recall any witness and proceed to hear or rehear the case in the
manner provided in Criminal Procedure Code. Many of the directions given by
the various High Courts, are worthy of emulation by the Criminal Courts all
over the country dealing with cases under Section 138 of the Negotiable
Instruments Act, for which the following directions are being given.:(
1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when
the complaint under Section 138 of the Act is presented, shall scrutinize the
47 Judgments on Negotiable Instruments Act.
complaint and, if the complaint is accompanied by the affidavit, and the
affidavit and the documents, if any, are found to be in order, take cognizance
and direct issuance of summons.
(2) MM/JM should adopt a pragmatic and realistic approach while issuing
summons. Summons must be properly addressed and sent by post as well as by
email
address got from the complainant. Court, in appropriate cases, may take
the assistance of the police or the nearby Court to serve notice to the accused.
For notice of appearance, a short date be fixed. If the summons is received
back unserved,
immediate follow up action be taken.
(3) Court may indicate in the summon that if the accused makes an application
for compounding of offences at the first hearing of the case and, if such an
application is made, Court may pass appropriate orders at the earliest.
(4) Court should direct the accused, when he appears to furnish a bail bond, to
ensure his appearance during trial and ask him to take notice under Section
251, Cr.P.C. to enable him to enter his plea of defence and fix the case for
defence evidence, unless an application is made by the accused under Section
145(2) for recalling
a witness for crossexamination.
(5) The Court concerned must ensure that examinationinchief,
crossexamination
and reexamination
of the complainant must be conducted within
three months of assigning the case. The Court has option of accepting
affidavits of the witnesses, instead of examining them in Court. Witnesses to
the complainant and accused must be available for crossexamination
as and
when there is direction to this effect by the Court. (Paras 18 , 21)
48 Judgments on Negotiable Instruments Act.
2014 CRI. L. J. 1953
Mehsana Nagrik Sahkari Bank Ltd. Vs. Shreeji CAB Co.
SUPREME COURT
Coram : 2 H. L. GOKHALE AND MADAN B. LOKUR , JJ. ( Division
Bench )
Criminal Appeal Nos. 968971
of 2013 (arising out of S.L.P. (C) Nos. 43814384
of 2012), D/12
7
2013.
Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE SUMMARY
TRIAL Dishonour
of cheque Summary
trial
proceedings Evidence
recorded in full and not in summary manner Order
of High Court directing a fresh recording of evidence by successor Magistrate Not
proper.
49 Judgments on Negotiable Instruments Act.
Denovo Trial
(2014) 10 SCC 494
J. V. Baharuni and Anr. etc. Versus State of Gujarat and Anr etc.
The Hon’ble Supreme Court Held
in Para 43
the
procedure prescribed for
cases under Section 138 of the Act was flexible and applicability of Section
326 (3) of the Cr. P. C. in not acting on the evidence already recorded in a
summary trial did not strictly apply to the scheme of Section 143 of the Act.
2014 (1) GLR 623
YOGESHWAR OIL INDUSTRIES Vs. POL WORLD PVT. LTD.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138 & 143 Held,
where trial of case proceeded as summons case mere nonrecording
of
reasons for conducting trial as summons case and not as summary case would
not entitle accused to seek ‘denovo’
trial Order
by trial Court set aside.
2015GLR32572,
2016RCR(
Cri)2514.
Ushmaben Dineshbhai Gohel Vs. State Of Gujarat.
Code of Criminal Procedure, 1973 S.
326(3), 482 Negotiable
Instruments Act,
1881 S.
138 private
complaint whether
evidence recorded in summary case
by a predecessor Court, can be used for contradiction before the successor Court learned
Judge held that whenever the successor Court orders a de novo trial,
statements of the complainant recorded by the predecessor Court cannot be used
for contradicting the complainant or his witnesses, if any challenged
held,
whenever successor Court orders a de novo trial, statements of witnesses
recorded by predecessor can be used for contradicting those witnesses their
previous statements do not become inadmissible or nonexistent
on account of the
de novo trial permitting
the defence to contradict the witnesses with their
previous statements in the deposition recorded by the predecessor Judge would
50 Judgments on Negotiable Instruments Act.
not amount to relying on the evidence by the successor Judge recorded by the
predecessor Judge impugned
order quashed and set aside application
allowed.
51 Judgments on Negotiable Instruments Act.
Offence by Company
AIR 2016 SUPREME COURT 1750 2016 CrLJ 2362
SUPREME COURT OF INDIA
Standard Chartered Bank Vs. State of Maharashtra and Others Etc.
Criminal Appeal Nos. 271273
of 2016 (Arising out of S.L.P.(Crl.) Nos.484486
of 2016)
(a) Negotiable Instruments Act, 1881 – Section 138 and 141 – In case of a
Company, a constructive liability is created on the persons responsible for the
conduct of the business of the company – However, vicarious liability of other
persons will not only arise if the Company is not prosecuted. (Para 12)
(b) Negotiable Instruments Act, 1881 – Section 138 and 141 r/w sections 203
and 204, Code of Criminal Procedure, 1973 – Complaint must contain
material to enable the Magistrate to make up mind for issuing process –
Only direct involvement of an officer of a Company would make such officer
liable under section 141(2) – Liability arises on account of conduct, act or
omission by an officer and not merely on account of his holding office or
position in a company – The accused being in charge of, and responsible for
the conduct of business of the company must be specifically averred in the
complaint u/s 141 – The specific averment may be direct or indirect. (Para
15, 17, 18)
(c) Code of Criminal procedure, 1973 – Section 482 r/w section 141,
Negotiable Instruments Act, 1881 – Complaint prosecuting the Company –
Specifically attributing liability of Chairman, Managing Director and while
time Directors asserting that they were responsible for day to day business of
the Company – Complaint making out case against respondent Nos. 2 and 3,
wholetime
Director and Executive Director – Meeting the test laid down in
(2015) 1 SCC 103. (Para 33, 34)
52 Judgments on Negotiable Instruments Act.
2015 CRI. L. J. 285
Gunmala Sales Private Ltd. Vs. Anu Mehta
SUPREME COURT
Coram : 2 Smt. RANJANA PRAKASH DESAI AND N. Vs. RAMANA , JJ.
( Division Bench )
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.141 NEGOTIABLE
INSTRUMENT Dishonour
of cheque Offence
by Companies Directors
who are not signatories to cheques It
is necessary to specifically aver in
complaint that such Directors are in charge of and responsible for conduct
of company’s business at relevant time when offence was committed.
(Para 28)
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.141 DISHONOUR
OF CHEQUE CRIMINAL
PROCEEDINGS CRIMINAL
PROCEEDINGS Dishonour
of cheque Offence
by Companies Complaint
containing basic averment that Director was in charge of and responsible for
conduct of company’s business at relevant time Magistrate
can issue
process against such Director High
Court may refuse to quash complaint
moreso when such basic averment in complaint is sufficient to make out a case
against Director.
2015 CRI. L. J. 1165
Pooja Ravinder Devidasani Vs. State of Maharashtra
SUPREME COURT
Coram : 2 SUDHANSU JYOTI MUKHOPADHAYA AND N. Vs.
RAMANA , JJ. ( Division Bench )
Criminal Appeal Nos. 26042610
of 2014 (arising out of Special Leave
Petition (Cri.) Nos. 91339139
of 2010), D/17
12
2014.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , S.141 NEGOTIABLE
53 Judgments on Negotiable Instruments Act.
INSTRUMENT DISHONOUR
OF CHEQUE Dishonour
of cheque Vicarious
liability Appellant
was neither Director of accusedcompany
Nor
incharge
of or involved in daytoday
affairs of company at time of
commission of alleged offence No
evidence on record to show that there is
any act committed by appellant No
reasonable inference can be drawn that
appellant could be vicariously held liable for offence she was charged Appellant
resigned from Board of Directors much before issuance of cheques Continuation
of proceedings against appellant under S. 138 and S. 141 being
abuse of process of law, liable to be quashed.
(2010) 3 SCC 330
National Small Industries Corporation Limited Vs. Harmeet Singh
Paintal and another
Section – 141 – Offences by Company – Vicarious liability.
“39. From the above discussion, the following principles emerge:
(i) The primary responsibility is on the complainant to make specific
averments as are required under the law in the complaint so as to make the
accused vicariously liable. For fastening the criminal liability, there is no
presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The
criminal liability can be fastened only on those who, at the time of the
commission of the offence, were in charge of and were responsible for the
conduct of the business of the company.
(iii) Vicarious liability can be inferred against a company registered or
incorporated under the Companies Act, 1956 only if the requisite statements,
which are required to be averred in the complaint/petition, are made so as to
make accused therein vicariously liable for offence committed by company
along with averments in the petition containing that accused were incharge
of
and responsible for the business of the company and by virtue of their position
they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and
54 Judgments on Negotiable Instruments Act.
not inferred.
(v) If accused is Managing Director or Joint Managing Director then it is not
necessary to make specific averment in the complaint and by virtue of their
position they are liable to be proceeded with.
(vi) If accused is a Director or an Officer of a company who signed the
cheques on behalf of the company then also it is not necessary to make specific
averment in complaint.
(vii) The person sought to be made liable should be incharge of and
responsible for the conduct of the business of the company at the relevant time.
This has to be averred as a fact as there is no deemed liability of a Director in
such cases.”
2017 GRI L. J. 2076.
SATISH MENON Vs. STATE OF GUJARAT AND OTHER.
High Court of Gujarat.
Negotiable Instruments Act ( 26 of 1881), Ss. 138, 141 Criminal
P. C. (2 of
1974), Ss. 482, 227 Dishonour
of Cheque Offence
by Company Quashing
of proceedings Issuance
of cheque towards discharging liability by company
Accused
one of Directors Plea
that he had already resigned from Company Tendering
of resignation, question of fact To
be decided by trial court by
leading evidence Accused
cannot be discharged at preliminary stage.
2016 4 Crimes (HC) 413
GUJARAT HIGH COURT
Nikhil P. Gandhi Vs. State of Gujarat and Ors.
Criminal Misc. Application (For Quashing & Set Aside Fir/Order) No.968 of
2014 with Criminal Misc. Application Nos.1067, 1754 and 1756 of 2014
55 Judgments on Negotiable Instruments Act.
Decided on 15.6.2016
(A) Negotiable Instruments Act, 1881—Sections 138 and 141 read with
Sections 5, 6 and 20—Dishonour of cheque—Offence by company—A signed
blank cheque leaf was given to complainant—It is possible for drawer of a
cheque to give a blank cheque signed by him to payee and consent either
impliedly or expressly to said cheque being filled up at a subsequent point in
time and present the same for payment by drawee. (Para 50)
(B) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—
By reason of Section 138 of N.I. Act, a legal fiction had been created—A legal
fiction, although is required to be given full effect, yet has its own limitations
—It cannot be taken recourse to for any purpose other than one mentioned in
statute itself—Section 138 provides for a penal provision—A penal provision
created by reason of a legal fiction must receive strict construction—Such a
penal provision, enacted in terms of legal fiction drawn, would be attracted
when a cheque is returned by bank unpaid—Before a proceeding thereunder is
initiated, all legal requirements therefor must be complied with—Court must
be satisfied that all ingredients of commission of an offence under said
provision have been complied with. (Para 92)
(C) Negotiable Instruments Act, 1881—Section 138—Dishonour of cheque—
Whenever a blank cheque or postdated cheque is issued, a trust is reposed that
cheque will be filled in or used according to understanding or agreement
between parties—If there is a prima facie reason to believe that said trust is not
honoured, then continuation of prosecution under Section 138 of N.I. Act
would be abuse of process of law—It is in interest of justice that parties in
such cases are left to civil remedy. (Para 93)
(D) Negotiable Instruments Act, 1881—Sections 138 and 141—Dishonour of
cheque—Offence by company—An authorized signatory is very much liable
to be prosecuted along with company for the offence under Section 138 of N.I.
Act—However, it would all depend on facts of each case—Presently, account
on which cheque was drawn was not closed upon instructions issued by drawer
but same was upon instructions of new management—Much before statutory
notice was issued i.e. almost eight years before issue of statutory notice,
drawer of cheque had ceased himself to be Managing Director of company—
There could be many circumstances under which a Director of a company who
drew cheque, may have to quit office—Sometimes company itself would
56 Judgments on Negotiable Instruments Act.
relieve Director—In case in hand, entire management would change and a new
management may take over affairs of company—Accused had not drawn
cheque in question in his personal capacity but in his capacity as a Managing
Director of company—Applicant held no position whatsoever of company
when cause of action in fact accrued against company—There is no cogent
material on record to fasten any vicarious liability so far as other accused are
concerned who are Nonexecutive
Directors including Office Bearers
concerned with Accounts Department of company—Order of issuance of
process under Section 138 of N.I. Act quashed. (Paras 55, 68, 70, 74, 81, 91
and 94)
(E) Judicial Discipline—Binding Precedent—A judgment cannot be read like a
Statute—Construction of a judgment should be made in light of factual matrix
involved therein—What is more important is to see issues involved in a given
case and context wherein observations were made by Court while deciding the
case—Observation made in a judgment should not be read in isolation and out
of context. (Para 76)
2016 (3) GLH 672 ( 2016 (4) GLR 2994 )
RITESH GARODIA Vs. STATE OF GUJARAT & Ors.
Negotiable Instruments Act, 1881—Sections 138 and 141—Criminal
Procedure Code, 1973—Section 482—Dishonour of cheque—Issuance of
summons—Offence by company—Every person at the time of commission of
offence was Incharge and was responsible to company for conduct of business
shall be deemed to be guilty of offence and liable to be proceeded—Issuance
of summons is a serious step against person concerned and it requires proper
application of mind before issuance of it—Applicant is merely a brother of
Director of accused–company—He is not a signatory to cheques in question—
Complaint qua present applicant quashed.
2016 0 Supreme (Guj) 1194
Anilkumar Amarchand Vs. Ashish B. Zode and Ors.
57 Judgments on Negotiable Instruments Act.
Criminal Misc. Application Nos. 3988, 3989, 3991, 3993 and 4669 of 2011
Decided On : 08072016
The trial Court shall carry out proper verification before issuing summons in a
criminal case under Section 138 of Negotiable Instruments Act – In terms of
Section 200 of the Cr.P.C., the Court should take care to see that the
complainant makes a statement on oath as to how the offence has been
committed and as to how the accused persons are responsible therefor.
For fastening the criminal liability, there is no presumption that every Director
knows about the transaction. Section 141 does not make all the Directors liable
for the offence. The criminal liability can be fastened only on those who, at the
time of the commission of the offence, were in charge of and were responsible
for the conduct of the business. It
is necessary to specifically aver in the
complaint under section 141 that at the time the offence was committed, the
person accused was in charge of and responsible for the conduct of the
business of the company. Such an averment is an essential requirement of
section 141 and has to be made in the complaint.
2014 CRI. L. J. 3884
Anil Gupta Vs. Star India Pvt. Ltd.
SUPREME COURT
Coram : 2 SUDHANSU JYOTI MUKHOPADHAYA AND Vs. GOPALA
GOWDA , JJ. ( Division Bench )
Criminal Appeal No. 1364 of 2014 (arising out of SLP (Cri.) No. 7039 of
2007), D/7
7
2014.
(A) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Drawer
of cheque alone falls within ambit
of S. 138, whether human being or a body corporate or even a firm. (Para
10)
(B) Negotiable Instruments Act (26 of 1881) , S.141 , S.138 DISHONOUR
58 Judgments on Negotiable Instruments Act.
OF CHEQUE Offences
by company Dishonour
of cheque Proceeding
initiated against company and its Managing Director Managing
Director of
company cannot be prosecuted alone Complaint
against company already
quashed Order
of High Court that proceeding against appellantManaging
Director can be continued even in absence of company Liable
to be set aside.
AIR 2015 SUPREME COURT 2579
Mainuddin Abdul Sattar Shaikh Vs. Vijay D. Salvi
Coram : 2 PINAKI CHANDRA GHOSE AND UDAY UMESH LALIT , JJ.
Criminal Appeal No. 1472 of 2009, D/6
7
2015.
(A) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Liability
Cheque
drawn by respondent in
his personal capacity and not by company of which he is Managing Director Company
is not liable even if it is for discharging dues of company Respondent
being drawer of cheque is alone liable for offence under S. 138.
2015 (2) GLR 1584
MODERN DENIM LIMITED THROUGH ARUN TRILOKNATH
BHARGAVA AND ORS. Vs. STATE OF GUJARAT AND ANR.
(A) Criminal Procedure Code, 1973 (2 of 1974) Sec.
482 Negotiable
Instruments Act, 1881 (26 of 1881) Secs.
138 & 141 Complaint
against
nonsignatory
Directors of company Held,
when there are averments in
complaint that said Directors were incharge
of daytoday
business of
company and were responsible for conduct of business of company, issue of
process against them proper Further,
when there are specific averments as
aforesaid it is for Directors to furnish concrete material to show that said
averments not acceptable.
59 Judgments on Negotiable Instruments Act.
Offence by Partnership Firm
2016 (3) GLR 1991
OANALI ISMAILJI SADIKOT Vs. STATE OF GUJARAT AND ANR.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138, 141 & 142 Dishonour
of cheque Offence
by partnership firm Held,
in absence of
partnership firm being arraigned as accused prosecution against partners not
maintainable As
commission of offence by partnership firm is an express
condition precedent to attract vicarious liability of partners.
(B) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138, 141 & 142 Criminal
Procedure Code, 1973 (2 of 1974) Sec.
319 Infirmity
in complaint
of partnership firm not being arraigned as accused Held,
same cannot be
cured by subsequent seeking of impleadment of partnership firm Further,
Sec. 319 of Cr.P.C. has no application in such case Order
by Chief Judicial
Magistrate confirmed.
2016Crimes(
HC)1812,
2016JX(
Guj)0545.
Ankit Pradipbhai Kapadia Vs. State Of Gujarat.
Negotiable Instruments Act, 1881 S.
138, 141 Code
of Criminal Procedure,
1973 S.
482 dishonour
of cheque quashing
of complaint whether
the
complaint is maintainable in the absence of the partnership firm being a legal
entity held,
relying on the case of U.P. Pollution Control Board v. M/s. Modi
Distillery, for maintaining the prosecution u/S. 141 of the Act, arraigning of a
company as accused is imperative other
categories of offenders can only be
brought in the dragnet on the touchstone of vicarious liability as the same has
been stipulated in the provision itself further
relying on case of Raghubhai
Lakshminarayan v. M/s Fine Tube, accused No. 1 was not Company within
meaning of S. 141 of Negotiable Instruments Act, question of an employee being
preceded against in terms thereof would not arise respondent
was aware of
difference between a ‘partnership firm’ and a ‘business concern’ thus
in the
absence of the partnership firm being a juristic person or a legal entity,
applicant, in his capacity as one of the partners, cannot be proceeded for the
60 Judgments on Negotiable Instruments Act.
offence alleged, by virtue of S. 141 of the Negotiable Instruments Act impugned
proceedings quashed application
allowed.
2016JX(
Guj)061,
2016AIJEL_
HC0233883.
Kiritbhai Patel Vs. State Of Gujarat
Code of Criminal Procedure, 1973 S.
482 Negotiable
Instruments Act, 1881 S.
138, 141 dishonour
of cheque complaint
against partners of the partnership
firm quashing
of complaint it
is clear that the complainant himself has stated in
the complaint that both the accused are partners of partnership firm however,
partnership firm is not joined as an accused by the complainant in the
impugned complaint held,
when respondent no. 2 original complainant has not
joined the partnership firm as an accused in the impugned complaint, this Court
can exercise the powers u/s. 482 of the Cr.P.C. for quashing and setting aside the
impugned complaint complaint
quashed and set aside qua the present applicant
only application
allowed.
2015 (1) GLR 848
RATISHBHAI D. RAMANI Vs. STATE OF GUJARAT AND ANR.
(A) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
138 & 141 Criminal
Procedure Code, 1973 (2 of 1974) Sec.
482 In
case of cheque
issued on behalf of partnership firm Held,
complaint not maintainable
without joining partnership firm as accused Complaint
quashed under Sec.
482 of Cr.P.C.
61 Judgments on Negotiable Instruments Act.
Complaint for dishonour of cheque filled by an Unregistered Partnership
Firm is maintainable.
2017 (2) GLH 312
RUTURAJ AYURVEDIC GRUH UDHYOG ( THROUGH RES.NO.2)
Vs. NAVNITLAL AND COMPANY THROUGH DEVANG
MANOJBHAI GANDHI.
Negotiable Instruments Act, 1881 S.
138 Indian
Partnership Act, 1932 S.
69 (2) Dishonour
of cheque complaint
by an unregistered partnership firm maintainability
A
careful reading of Section 69 (2) of the Partnership Act
shows that an unregistered partnership firm is barred from filing a civil suit
and there is no bar as such to file a complaint for enforcing criminal liability
on the part of the person who has issued the cheque Even,
when the cheque is
issued by a partner of an unregistered firm for legally recoverable debt or
otherwise or if such a cheque is dishonoured when it was presented for
encashment, it attracts criminal liability Complaint
for dishonour of cheque
filled by an unregistered partnership firm is maintainable.
62 Judgments on Negotiable Instruments Act.
Compensation
AIR 2014 SUPREME COURT 771
Somnath Sarkar Vs. Utpal Basu Mallick
Coram : 2 T. S. THAKUR AND VIKRAMAJIT SEN , JJ.
Criminal Appeal No. 1651 of 2013 (arising out of S. L. P. (Cri.) No. 6191 of
2011), D/7
10
2013.
Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE JUDGMENT
Dishonour
of cheque Compensation
to holder of
cheque Has
to be paid out of fine Awarding
certain amount as compensation
and further sum in lieu of sentence Both
sums added together going beyond
twice the amount of cheque Offends
limit for fine prescribed in S. 138 Amount
imposed in lieu of sentence reduced.
2012 CRI. L. J. 846
R. Vijayan Vs. Baby
SUPREME COURT
Coram : 2 R. Vs. RAVEENDRAN AND R. M. LODHA , JJ. ( Division Bench
)
Criminal Appeal No. 1902 of 2011 (arising out of S. L. P. (Cri.) No. 2586 of
2007), D/11
10
2011.
(A) Criminal P.C. (2 of 1974) , S.357 Negotiable
Instruments Act (26 of
1881) , S.138 DISHONOUR
OF CHEQUE CRIMINAL
PROCEDURE Payment
of compensation When
fine too imposed on accused Compensation
could be paid out of fine There
is no need to award separate
compensation Only
where sentence does not include fine but only
imprisonment and court finds that person who suffered loss or injury by reason
of act of accused Court
permitted to award compensation under S. 357(3) Fine
imposed by Magistrate for offence under S. 138 Not
permissible for him
63 Judgments on Negotiable Instruments Act.
to award any compensation under S. 357. (Para 9 , 10)
(B) Negotiable Instruments Act (26 of 1881) , S.143 (as inserted by
Amendment Act No. 55 of 2002) Criminal
P.C. (2 of 1974) , S.29 SUMMARY
TRIAL MAGISTRATE
Power
of Court to try case summarily
Power
of Magistrate to impose fine beyond Rs. 5000/S.
143 of Act
empower magistrate to pass a sentence of imprisonment for a term exceeding 1
year and amount of fine exceeding Rs. 5000/in
case of conviction in
summary trial under that section Hence,
ceiling as to amount of fine
stipulated under S. 29(2) of Criminal P. C. removed. (Para 12)
K.A. Abbas Vs. Sabu Joseph
(from Kerala High Court)
Hon’ble Supreme Court
Hon’ble Mr. Justice P. Sathasivam and Hon’ble Mr. Justice H.L. Dattu.
The Hon’ble Supreme Court has recommended to trial courts that they, besides
convicting the accused in cheque bounce cases, award compensation to the
complainants to meet the ends of justice.
“It is an important provision but courts have seldom invoked it. Perhaps due to
ignorance of the object of it. It empowers the court to award compensation to
victims while passing a judgment of conviction. In addition to conviction, the
court may order the accused to pay some amount by way of compensation to
the victim who has suffered by the action of the accused.”
“This power of courts to award compensation is not ancillary to other
sentences but it is in addition thereto. This power is intended to do something
to reassure the victim that he or she is not forgotten in the criminal justice
system. It is a measure of responding appropriately to crime as well of
reconciling the victim with the offender. It is, to some extent, a constructive
approach to crimes. It is indeed a step forward in our criminal justice system.
We, therefore, recommend to all courts to exercise this power liberally so as to
meet the ends of justice in a better way.”
“Sometimes the situation becomes such that no purpose will be served by
64 Judgments on Negotiable Instruments Act.
keeping a person behind bars. Instead, directing the accused to pay
compensation to the victim or affected party can ensure delivery of total
justice. Therefore grant of compensation is sometimes in lieu of sending a
person behind bars or in addition to a very light sentence of imprisonment.”
65 Judgments on Negotiable Instruments Act.
Defence Cheque
given as Security
2015 CRI. L. J. 2408
HMT Watches Ltd. Vs. M. A. Abida
SUPREME COURT
Coram : 2 DIPAK MISRA AND PRAFULLA C. PANT , JJ. ( Division Bench
)
Criminal Appeal Nos. 471, 472 of 2015 (arising out of SLP (Cri) Nos. 5295,
5800 of 2014), D/19
3
2015.
HMT Watches Ltd. Vs. M. A. Abida and another.
(A) Criminal P.C. (2 of 1974) , S.482 DISHONOUR
OF CHEQUE Disputed
question of fact Proceedings
under S. 138 of Negotiable
Instruments Act, 1881 Plea
by accused that cheques were given as security
Order
of High Court quashing proceedings by accepting plea of accused Not
legal Question
whether cheques were given as security or not, or whether
there was outstanding liability or not is a question of fact which could have
been determined only by trial court after recording evidence of parties High
Court should not have expressed its view on disputed questions of fact in a
petition under S. 482.
(B) Criminal P.C. (2 of 1974) , S.482 NEGOTIABLE
INSTRUMENT DISHONOUR
OF CHEQUE Powers
of High Court Proceedings
under S.
138 of Negotiable Instruments Act Question
whether signatory of demand
notice was authorized by complainant company or not Such
plea was
controverted by complainant It
could not be examined by High Court in its
jurisdiction under S. 482.
(C) Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque By
Bank with endorsement “Payment
stopped by the drawer” S.
138 gets attracted and offence would be
punishable thereunder.
66 Judgments on Negotiable Instruments Act.
2015 CRI. L. J. 2853
T. Vasanthakumar Vs. Vijayakumari
SUPREME COURT
Coram : 2 J. CHELAMESWAR AND PINAKI CHANDRA GHOSE JJ.
( Division Bench )
Criminal Appeal No. 728 of 2015 (arising out of SLP (Cri.) No. 8091 of 2011),
D/28
4
2015.
Negotiable Instruments Act (26 of 1881) , S.138 , S.139 DISHONOUR
OF
CHEQUE Dishonour
of cheque Appeal
against acquittal Cheque
as well
as signature on it not disputed by accused respondent Presumption
under S.
139 would be attracted Story
brought out by accused that cheque was given
to complainant long back in 1999 as a security to a loan; the loan was
repaid but complainant did not return security cheque Is
unworthy of credit,
apart from being unsupported by any evidence Mere
printed date on cheque
by itself cannot be conclusive of fact that cheque was issued in 1999 Order
of
High Court in acquitting accused is erroneous and set aside.
2015JX(
Guj)01024,
2015AIJEL_
HC0233657.
Mulchand Daulatraj Jain Vs. State Of Gujarat.
Code of Criminal Procedure, 1973 S.
374 Negotiable
Instruments Act, 1881 S.
138 dishonour
of cheque complaint
conviction
acquittal
of respondent
accused in an appeal revision
held,
cheque in question was given by
respondent/accused was supported by consideration therefore it cannot be said
that the cheque was given as a collateral security and lacks consideration Shanku
Concretes Private Limited (Supra) is no longer a good law in view of Judgment of
Apex court in the case of Balbhadurasinh Indrasinhji Zala matter
remanded back
to the lower Appellate Court for fresh consideration revision
allowed.
67 Judgments on Negotiable Instruments Act.
Substitution of Complainant
2015 CRI. L. J. 3954
Gulf Asphalt Pvt. Ltd. Vs. D. S. K. Rao
GUJARAT HIGH COURT
Coram : 1 J. B. PARDIWALA , J. ( Single Bench )
Special Criminal Application (Quashing) No. 5562 of 2014, D/8
5
2015.
Negotiable Instruments Act (26 of 1881) , S.138 , S.142(a) Criminal
P.C. (2
of 1974) , S.200 DISHONOUR
OF CHEQUE COMPLAINT
Substitution
of complainant Permissibility
Substitution
of complainant at
a later stage in certain contingencies would not amount to seeking an
amendment in complaint Complaint
under S. 138 of Act of 1881 was lodged
by proprietary concern through its proprietor During
pendency of trial,
business of proprietary concern was taken over by private limited company Order
permitting said company to be substituted as a complainant in place of
original proprietary concern, is proper.
(Paras 21 , 31 , 41 )
68 Judgments on Negotiable Instruments Act.
No legal bar for instituting and proceeding with a complaint under S.138
against sick industrial company.
2015 CRI. L. J. 723
Kitply Industries Ltd., Assam Vs. State of Maharashtra
BOMBAY HIGH COURT
Coram : 1 REVATI MOHITE DERE , J. ( Single Bench )
Criminal Writ Petition No. 1609 of 2014, D/5
9
2014.
Sick Industrial Companies (Special Provisions) Act (1 of 1986) , S.15 , S.22A
Negotiable
Instruments Act (26 of 1881) , S.138 , S.142 NEGOTIABLE
INSTRUMENT DISHONOUR
OF CHEQUE Dishonour
of cheque Offence
by company Immunity
from legal proceedings to sick industrial
company Party
approaching BIFR or passing of order under S. 22 or S. 22A
of Act (1 of 1986) Does
not as natural consequence thereof result in quashing
of proceedings under S. 138 There
is no bar under Act (1 of 1986) to
institute proceedings alleging offence under S. 138 of Act (26 of 1881).
A perusal of the complaint filed by the respondent in instant case would reveal
that the offence under section 138 of the Negotiable Instruments Act is
complete and that there was no legal impediment for instituting and proceeding
with the case, as against the company, under Section 138 of the Negotiable
Instruments Act. There can be no dispute, that a criminal prosecution is neither
for recovery of money nor for enforcement of any security. S.138 of the
Negotiable Instruments Act is a penal provision. It entails a conviction and
sentence, at the end of the criminal proceedings. There is statutory
presumption under section 139 of the Negotiable Instruments Act, in favour of
the holder of the cheque. A prosecution under S. 138 of the Negotiable
Instruments Act is ultimately to bring the offender to suffer penal
consequences. Prosecution under Section 138 of the Negotiable Instruments
Act has not been excluded under the provisions of SICA, nor exemption has
been granted to sick companies from prosecution under the Negotiable
Instruments Act. Thus, merely because a party has approached the BIFR, by
itself is not sufficient to seek protection and claim that there is a legal bar for
instituting and proceeding with a complaint under S.138 of the Negotiable
69 Judgments on Negotiable Instruments Act.
Instruments Act. (Paras 18 , 20)
70 Judgments on Negotiable Instruments Act.
Failure to prove Source of Income
2015 CRI. L. J. 912
K. Subramani Vs. K. Damodara Naidu
SUPREME COURT
Coram : 2 Vs. GOPALA GOWDA AND C. NAGAPPAN , JJ. ( Division
Bench )
Criminal Appeal No. 2402 of 2014 (arising out of SLP (Cri.) No. 6197 of
2014), D/13
11
2014.
Negotiable Instruments Act (26 of 1881) , S.138 NEGOTIABLE
INSTRUMENT Dishonour
of cheque Complaint
Finding
by trial court on
consideration of entire oral and documentary evidence That
complainant
had no source of income to lend sum of Rs. 14 lakhs to accused He
failed
to prove that there is legally recoverable debt payable by accused to him Acquittal
of accused, was proper Order
by High Court remanding case for
retrial Liable
to be set aside.
71 Judgments on Negotiable Instruments Act.
Requirement of Proper Verification
2007 (3) Criminal Court Cases 577
Dr.Rajan Sanatkumar Joshi Vs Rajnikant Govindlal Shah & Anr.
High Court of Gujarat
Negotiable Instruments Act, 1881, S.138 Dishonour
of cheque Court
to
carry out proper verification before issuing process Verifications
required
are : (1) Verification of a complaint on oath which should be in a proper
manner i.e. all the facts necessary to constitute the offence must be borne out
from the verification; (2) If Company then person representing the Company
should be duly authorised; (3) Complete postal addresses of complainant and
accused; (4) Statement of the complainant that all the accused persons named
in the complaint are Directors/Partners and that they are liable under the Act
and to verify the status of accused and the extent of involvement in the
commission of offence; (5) That the accused is the signatory to the instrument
in question; (6) Fact of issuance of statutory notice and Court should insist for
some formal proof in the form of acknowledgement receipt etc.; (7) Whether
the concerned Firm/Company, Society/Institution, Partner/Director or
Proprietor are joined as parties or not; (8) Whether the complaint has been
filed within the period of limitation as prescribed under S.138 of the Act; (9)
Whether there are any specific allegations against each accused or not.
72 Judgments on Negotiable Instruments Act.
Demand Notice
2017 GRI L. J. 2838.
N PARAESWARAN UNNI Vs. G KANNAN AND ANOTHER
SUPREME COURT.
Negotiable Instruments Act ( 26 of 1881), Ss. 138, Proviso (b), 142 Demand
notice First
notice sent by regd. post at correct address within stipulated
period of 15 days Deemed
to have been served Second
reminder notice
cannot be construed as admission of nonservice
of first notice.
2014 CRI. L. J. 3937
Ajeet Seeds Ltd. Vs. K. Gopala Krishnaiah
SUPREME COURT
Coram : 2 Smt. RANJANA PRAKASH DESAI AND N. Vs. RAMANA , JJ.
( Division Bench )
Criminal Appeal No. 1523 of 2014 (arising out of Special Leave Petition (Cri.)
No. 8783 of 2013), D/16
7
2014.
Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE DISHONOUR
OF CHEQUE GENERAL
CLAUSES GENERAL
CLAUSES INHERENT
POWERS INHERENT
POWERS PRESUMPTION
PRESUMPTION
Dishonour
of cheque Complaint
It
is
not necessary to aver in complaint that notice was served upon accused Order
of High Court quashing complaint on ground that there was no proof either
that notice was served or it was returned unserved Is
erroneous and set aside.
Section 114 of the Evidence Act enables the Court to presume that in the
common course of natural events, the co
mmunication would have been
delivered at the address of the
1
2
73 Judgments on Negotiable Instruments Act.
addressee. Section 27 of the General Clauses Act gives rise to a presumption
that service of notice has been effected when it is sent to the correct address by
registered post. It is not necessary to aver in the complaint that in spite of the
return of the notice unserved, it is deemed to have been served or that the
addressee is deemed to have knowledge of the notice. Unless and until the
contrary is proved by the addressee, service of notice is deemed to have been
effected at the time at which the letter would have been delivered in the
ordinary course of business. In the present case, the complaint was filed
alleging that the cheque issued by the respondentaccused
for repayment of a
legally recoverable debt bounced. The High Court quashed the complaint on a
short ground that on reading verification of the complaint, it is explicit that
there are no recitals to demonstrate that the notice issued under Section 138 of
the Nl Act by the complainant was served upon the respondentaccused
on any
specific date. The High Court observed that there is no proof that either the
notice was served or it was returned unserved/unclaimed and that that there is
no averment in the complaint about the same. The High Court concluded that,
therefore, there could not be a cause of action to prosecute the accused under
Section 138 of the Nl Act. Held, the High Court clearly erred in quashing the
complaint on the ground that there was no recital in the complaint that the
notice under Section 138 of the Nl Act was served upon the accused. The High
Court also erred in quashing the complaint on the ground that there was no
proof either that the notice was served or it was returned unserved/unclaimed.
That is a matter of evidence.
2008 CRI. L. J. 452
Rahul Builders Vs. Arihant Fertilizers and Chemical
SUPREME COURT
Coram : 2 S. B. SINHA AND H. S. BEDI , JJ. ( Division Bench )
Criminal Appeal No. 525 of 2005, D/2
11
2007.
Negotiable Instruments Act, 1881, S.138 Dishonour
of cheque Notice
An
omnibus notice without specifying as to what was the amount due under
the dishonoured cheque does not subserve the requirement of law.
74 Judgments on Negotiable Instruments Act.
Dishonour of cheque Notice
Cheque
issued for part payment of outstanding
bills Cheque
dishonoured By
issuing notice demand made of payment of
pending bills and not cheque amount Held,
notice is not valid.
C.C.Alavi Haji Vs Palapetty Muhammed & Anr.
2007(2) Apex Court Judgments 526 (S.C.) : 2007(3) Civil Court Cases 001
(S.C.) : 2007(3) Criminal Court Cases 037 (S.C.)
Negotiable Instruments Act, 1881, S.138 Notice
Absence
of pleading that
notice was sent at the correct address of the drawer by registered post
acknowledgement due However,
returned envelope annexed to complaint and
thus it formed part of the complaint Returned
enveloped showed that it was
sent by registered post acknowledgement due to the correct address with
endorsement that ‘the addressee was abroad’ Held,
requirement of S.138 of
the Act is sufficiently complied with.
Negotiable Instruments Act, 1881, S.138 Notice
Claim
as to non receipt of
Drawer
can still make the payment of cheque amount within 15 days of the
receipt of summons and can absolve himself of prosecution u/s 138 of the Act If
drawer does not make payment of cheque amount within 15 days of the
receipt of summons then plea of proper service of notice is not available to
him.
AIR 2015 SUPREME COURT 2091
Kirshna Texport and Capital Markets Ltd Vs. Ila A. Agrawal
Coram : 2 PINAKI CHANDRA GHOSE AND UDAY UMESH LALIT , JJ.
Criminal Appeal No. 1220 of 2009, D/6
5
2015.
Negotiable Instruments Act (26 of 1881) , S.138 , S.141 DISHONOUR
OF
CHEQUE Dishonour
of cheque Offence
by company Issuance
of notice 75
Judgments on Negotiable Instruments Act.
There is no requirement of sending of individual notices to Directors of
Company.
S. 141 states that if the person committing an offence under S. 138 is a
Company, every director of such Company who was in charge of and
responsible to that Company for conduct of its business shall also be deemed
to be guilty.
S. 141 again does not lay down any requirement that in such eventuality the
directors must individually be issued separate notices under
S. 138 does not admit of any necessity or scope for reading into it the
requirement that the directors of the Company in question must also be issued
individual notices under S. 138 of the Act. Such directors who are in charge of
affairs of the Company and responsible for the affairs of the Company would
be aware of the receipt of notice by the Company under S. 138. Therefore
neither on literal construction nor on the touchstone of purposive construction
such requirement could or ought to be read into S. 138 of the Act.
AIR 2014 SUPREME COURT 3512
Pawan Kumar Ralli v. Maninder Singh Narula
Coram : 2 Mrs. RANJANA PRAKASH DESAI AND N. V. RAMANA , JJ.
Criminal Appeal No. 1684 of 2014 (arising out of Special Leave Petition (Cri)
No. 8924 of 2013), D/11
8
2014.
(A) Negotiable Instruments Act (26 of 1881) , S.138 , Proviso (b) DISHONOUR
OF CHEQUE Dishonour
of cheque Notice
Handwritten
notice containing all necessary ingredients and fulfilled mandatory
requirements under S. 138, Proviso (b) Constitute
valid notice.
2015 eGLR_HC 10006087
M/S. DILIPKUMAR NALINKANT GANDHI Vs. STATE OF
76 Judgments on Negotiable Instruments Act.
GUJARAT
CRIMINAL APPEAL 1719 of 2005
Decided on : 27/7/2015
“23.1 Examining the facts of the present case in the light of the above decision,
a perusal of the notice issued by the respondent under section 138 of the Act
(Exhibit22)
reveals that the complainant has called upon the accused to pay
the cheque amount of Rs.14,72,587=52 together with the interest and service
charges thereon as well as the cost of the notice. Thus, while the complainant
has specified the cheque amount, he has not specified the amount of interest,
service charges, costs, etc. However, since the demand for the cheque amount
is specific, the additional claims which are clearly severable, inasmuch as, no
amount is stated, would not invalidate the notice. Therefore, the said decision
does not come to the aid of the respondent, inasmuch as, in the present case, in
the notice, demand for an omnibus amount including the cheque amount and
other additional amount in respect of the interest, service charges, etc. has not
been made and in fact,the amount due under the different heads has been
specified in the notice. Therefore, the ingredients of clause(b) of the proviso to
section 138 of the N. I. Act, which requires the payee or the holder in due
course of the cheque, as the case may be, to make a demand for payment of the
said amount of money by giving a notice in writing, to the drawer of the
cheque, within thirty days of the receipt of information by him from the bank
regarding the return of the cheque as unpaid, stands duly satisfied.”
2014 (4) GLR 3504
NIRMALKUMAR M. JAIN Vs. STATE OF GUJARAT AND ORS.
(A) Criminal Procedure Code, 1973 (2 of 1974) Sec.
482 Negotiable
Instruments Act, 1881 (26 of 1881) Sec.
138 Dishonour
of cheques Notice
given demanding collective amount of four cheques but not stating amount of
each cheque Held,
notice bad in law Criminal
proceedings quashed.
77 Judgments on Negotiable Instruments Act.
2014 CRI. L. J. 2908
Charashni Kumar Talwani Vs. M/s. Malhotra Poultries
PUNJAB & HARYANA HIGH COURT
Coram : 2 HEMANT GUPTA AND FATEH DEEP SINGH , JJ. ( Division
Bench )
Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Multiple
cheques Consolidated
single
notice issued tantamount to commission of a single offence under Section 138
after prescribed period of receipt of notice Therefore,
a single complaint will
be maintainable for all these dishonoured cheques.
78 Judgments on Negotiable Instruments Act.
Accused cannot be allowed to tender his Evidence on Affidavit
2011 CRI. L. J. (Supp) 719
Mandvi Coop.
Bank Ltd. M/s. Vs. Nimesh B. Thakore
SUPREME COURT
Coram : 2 TARUN CHATTERJEE AND AFTAB ALAM , JJ. ( Division
Bench )
Criminal Appeal No. 72 of 2010 (arising out of SLP (Cri.) No. 3915 of 2006
and etc.), D/11
1
2010.
(A) Negotiable Instruments Act (26 of 1881) , S.145(2) DISHONOUR
OF
CHEQUE EXAMINATION
OF WITNESS EXAMINATION
OF
WITNESS EXAMINATION
OF WITNESS EXAMINATION
OF
WITNESS Scope
Person
giving evidence on affidavit On
being
summoned on application of accused Can
only be subjected to crossexamination
as to facts stated in affidavit It
is not open to accused to insist
that before crossexamination
he must first depose in examinationinchief.
(B) Negotiable Instruments Act (26 of 1881) , S.138 , S.143 , S.144 , S.145 ,
S.146 , S.147 DISHONOUR
OF CHEQUE Dishonour
of cheque Trial
Ss.
143 to 147 do not take away any substantive rights of accused Said
provisions are not substantive but procedural in nature Would
therefore
undoubtedly, apply to cases that were pending on date provisions came into
force. (Para 28)
(C) Negotiable Instruments Act (26 of 1881) , S.141(1) DISHONOUR
OF
CHEQUE INTERPRETATION
OF STATUTES INTERPRETATION
OF
STATUTES Evidence
on affidavit by complainant or his witness Omission
by legislature to incorporate word “accused”, with word “complainant” in S.
145(1) Said
word “accused” cannot be incorporated in S. 145(1) by High
Court Further
drawing analogy between evidence of complainant and accused
in case of dishonoured cheque Was
not proper Accused
cannot be allowed
to tender his evidence on affidavit.
79 Judgments on Negotiable Instruments Act.
Criminal Liability Cheque
issued from Joint Bank Account
2013 CRI. L. J. 3743
Aparna A. Shah Vs. M/s. Sheth Developers Pvt. Ltd
SUPREME COURT
Coram : 2 P. SATHASIVAM AND JAGDISH SINGH KHEHAR , JJ.
( Division Bench )
Criminal Appeal No. 813 of 2013 (arising out of S. L. P. (Cri.) No. 9794 of
2010),D/1
7
2003.
Negotiable Instruments Act (26 of 1881) , S.138 DISHONOUR
OF
CHEQUE Dishonour
of cheque Criminal
liability Drawer
of cheque
alone can be prosecuted Cheque
issued by husband of appellant from their
joint account Appellant
is not a drawer of cheque as she has not signed the
same Criminal
proceedings against appellant quashed.
80 Judgments on Negotiable Instruments Act.
Section. 20 – Filling the particulars of Blank Cheque
2010 (5) GLR 4136
HITENBHAI PAREKH, PROPRIETOR, PAREKH ENTERPRISES Vs.
STATE OF GUJARAT AND ANR.
Criminal Appeal No. 1189 of 2009 Decided
on : 6/10/2009
(B) Negotiable Instruments Act, 1881 (26 of 1881) Secs.
20, 87 & 139 Blank
cheque bearing signature of drawer delivered to payee In
such cases,
“there is an implied authority of the person receiving such cheque to complete
it by filing the blanks” Amount
so filled in would be the amount intended to
be paid by the drawer Held
further, onus of proving legally enforceable debts
has to be discharged by the complainant.
81 Judgments on Negotiable Instruments Act.
Application for getting opinion of hand writing expert in respect of hand
writing filled up in the body of the cheque by the Accused after recording
of Further Statement of accused – Long Delay – Liable to Reject
2017 eGLR_HC 10006108
RAKESHBHAI AMBALAL PATEL Vs. STATE OF GUJARAT AND
ORS.
“Further statement of the accused under Section 313 Cr.P.C was also recorded
on 05.03.2010, in which one question was asked by the learned trial judge, as
to whether the accused wanted to produce any documentary evidence. In
response to this question, affirmative answer was given by the accused. Vide
exh. 39 affidavit in chiefexamination
was submitted by the accused before the
trial Court on 11.05.2010 and he was also crossexamined
on the very same
date. Witness from the accused, namely, Bhikhabhai Somabhai Patel (Exh. 64)
was examined on 25.05.2010. His crossexamination
was also carried out.
Thereafter, on 16.03.2011, one application was submitted by the accused
for getting opinion of hand writing expert in respect of hand writing filled
up in the body of the cheque at Exh.12. Learned trial judge after hearing
both the sides was pleased to reject the application vide order dated
07.04.2011. The order passed by the learned trial judge was challenged in a
Revision Application preferred by the accused being Criminal Revision
Application No. 44 of 2011 before the learned District and Sessions Judge
Himatnagar at Sabarkantha. Learned judge after hearing both the parties was of
the view that there was no illegality or perversity in rejecting the application
Exh. 81 by the learned trial judge and by an order dated 03.08.2012 this
Revision Application was dismissed. It appears from the record that, however,
the complaint was lodged on 29.11.2007 and after examining the witnesses
from the prosecution side as well as from the defence, trial was almost over
and was fixed for hearing the arguments of the respective parties. Further
statement of the accused under Section 313 of the Cr.P.C was also recorded
and he was given an opportunity by the learned trial judge by asking a
question, as to whether he wanted to produce any documentary evidence and in
response to the said question asked to the accused, he had replied that certain
documentary evidence would be produced by him. But, no documentary
evidence were produced by the accused and instead of it an application vide
82 Judgments on Negotiable Instruments Act.
Exh. 81 was submitted by him requesting the Court to get the opinion of hand
writing expert filled up in the cheque at Exh.12. Right of the accused in getting
opinion of the hand writing expert, when he denies his hand writing in the
cheque is a valuable right and in a normal case it cannot be denied by the
Court, except the Court finds it fit and opine that just to delay the proceedings
the accused is trying hard. Also, it appears that after passing of five years
approximately from the filing of the complaint, the accused has tried by
submitting an application to get the opinion of hand writing expert filled up in
the body of cheque at Exh.12. He had an ample opportunity to submit such an
application at the initial stage during the course of the trial, but, after
completing the evidence from both the sides and further statement of the
accused under Section 313 CR.P.C, he was silent and did not submit any
application.”
“8. Hon’ble Supreme Court has also held that in such a case magistrate
should grant such request, unless he thinks that the object of the appellant is
vexation or to delay the criminal proceedings. Here also both the Courts below
have opined while passing their orders that the applicant has submitted
application vide Exh.81 after a long delay, and therefore, the order passed by
the learned judge of the trial Court cannot be said to be perverse or illegal, and
therefore, there is no substance in the present application and it requires
dismissal.”
83 Judgments on Negotiable Instruments Act.
No Vicarious Criminal Liability of Principal Cheque
issued by Power of
Attorney holder.
2017 (2) GLH 87
KRISHNA TRADING COMPANY, PROPRIETORSHIP FIRM Vs.
STATE OF GUJARAT.
Negotiable Instruments Act, 1881 S.
138 and S. 141 Power
of Attorney Act,
1882 S.
2 Dishonour
of Cheque Drawn
by Power of Attorney of a Drawer
liability
of a Drawer principal
cannnot be held liable for dishonor of a
cheque drawn by Power of Attorney holder it
is the Power of Attorney
holder, who has ordered payment, drawn and signed the cheque, liable to be
proceeded against for commission of an offence u/S. 138 when there is no
sufficient fund in the account In
the absence of any statutory provision, the
principles of vicarious criminal liability cannot be attributed upon the
principle when the cheque is dishonoured for want of sufficient fund
drawn and issued by the Power of Attorney holder The
authority granted
to the Power of Attorney holder cannot be presumed to be a power or an
authority to issue cheque when there is no fund in the account On
the facts of
the case, the complaint against the proprietary concern and proprietor who
gave the Power of Attorney is quashed.
84 Judgments on Negotiable Instruments Act.
Concurrent running of Sentences
2017 GRI L. J. 166.
Shyam Pal Vs. Dayawati Besoya and another.
SUPREME COURT.
Criminal P. C. (2 of 1974), S. 427 Negotiable
Instruments Act ( 26 of 1881),
S. 138 Concurrent
running of sentences Power
to direct is discretionary Accused
convicted for offence under S. 138 of N. I. Act, in respect of two
cases arising out of successive transaction in a series between same parties and
tried together Was
sentenced to simple imprisonment for 10 months and fine
of Rs. 6,50,000/as
compensation in both cases Considering
duration of
custody of accused as evidence by custody certificate of Dy. Superintendent of
prison to that effect Substantive
sentence of 10 months’ simple imprisonment
awarded to accused in both cases directed to run concurrently.
85 Judgments on Negotiable Instruments Act.
No dismissal of complaint Matter
should be decided on merits.
2015JX(
Guj)0719,
2015AIJEL_
HC0233039.
Hitesh Rasiklal Shah Vs. Mahavir Ghevarchad Chopra.
Negotiable Instruments Act, 1881S.
138 Code
of Criminal Procedure, 1973 S.
256, 378 dishonour
of cheque complaint
u/s 138 of NI Act complaint
dismissed for default by exercising powers u/s 256 of the Code and acquitted the
respondentaccused
application
for restoration of complaint dismissed revision
also dismissed challenged
complaint
was pending since 1996 and it was not
taken up till 2000 counsel
for the complainant could not remain present due to
earth quake objection
as to maintainability of appeal raised by the respondent notice
in the appeal was issued to respondent and opportunity of hearing was
granted to respondent therefore objection as to maintainability of appeal not
entertained instead
of dismissal of complaint on account of default it should
be decided on merits party
may not be made to suffer for the lapse on part of
the Advocate normally
the matter should be decided on merits rather than on
technicality as it provides an opportunity to both the sides complaint
ordered to
be restored appeal
allowed.
86 Judgments on Negotiable Instruments Act.
Just Punishment.
2015JX(
Guj)01507,
2015AIJEL_
HC0234636.
Lataben Dattraybhai Patil Vs. Vitthal Damu Chaudhary.
Code of Criminal Procedure, 1973 S.
357(3), 397 and 401 Negotiable
Instruments Act, 1881 S.
138 revision
principle
of just punishment husband
and wife advanced financial assistance to the tune of Rs. 2,50,000/to
respondent
no.2 respondent
gave three cheques each of Rs. 50,000/as
a repayment dishonour
of cheques complaint
conviction
Trial
Court ordered to suffer one
year simple imprisonment and impose fine of Rs. 1,00,000/accused
preferred
an appeal Appellate
Court set aside order of imprisonment and directed accused
to pay Rs. 1,80,000/to
complainant order
of Trial Court modified by Appellate
Court on the premises that accused is a medical practitioner and if he is sent to jail
then he would be precluded to practice on medical side in future inadequate
fine
and inadequate sentence challenge
held,
no justification in interference in an
order of imprisonment on the ground that accused is a doctor by profession ignorance
of punitive aspect by the lower Appellate Court error
committed by
the Lower Appellate Court by choosing not to award any sentence for the offence
u/s 138 of NI Act error
committed by Appellate Court in not granting the entire
cheque amount by way of compensation to the applicant/complainant principle
of just punishment is required to be followed in cases of dishonor of cheques
order
to undergo sentence for a period of two months and fine to the tune of Rs
2,50,000/imposed
upon the respondent/accused revision
partly allowed.
87 Judgments on Negotiable Instruments Act.
Burden of proof Preponderance
of probability.
(2013) 3 SCC 83
VIJAY Vs. LAXMAN & ANR.
SUPREME COURT.
” 9. Having heard the learned counsels for the contesting parties in the light of
the evidence led by them, we find substance in the plea urged on behalf of
the complainantappellant
to the extent that in spite of the admitted
signature of the respondentaccused
on the cheque, it was not available to
the respondentaccused
to deny the fact that he had not issued the cheque
in favour of the complainant for once the signature on the cheque is
admitted and the same had been returned on account of insufficient funds,
the offence under Section 138 of the Act will clearly be held to have been
made out and it was not open for the respondentaccused
to urge that
although the cheque had been dishonoured, no offence under the Act is made
out. Reliance placed by learned counsel for the complainantappellant
on the
authority of this Court in the matter of K.N. Beena vs. Muniyappan And Anr.
[1] adds sufficient weight to the plea of the complainantappellant
that the
burden of proving the consideration for dishonour of the cheque is not on the
complainantappellant,
but the burden of proving that a cheque had not been
issued for discharge of a lawful debt or a liability is on the accused and if he
fails to discharge such burden, he is liable to be convicted for the offence
under the Act. Thus, the contention of the counsel for the appellant that it is
the respondentaccused
(since acquitted) who should have discharged the
burden that the cheque was given merely by way of security, lay upon the
Respondent/ accused to establish that the cheque was not meant to be
encashed by the complainant since respondent had already supplied the milk
towards the amount. But then the question remains whether the High Court
was justified in holding that the respondent had succeeded in proving his case
that the cheque was merely by way of security deposit which should not have
been encashed in the facts and circumstances of the case since inaction to do
so was bound to result into conviction and sentence of the
Respondent/Accused.
88 Judgments on Negotiable Instruments Act.
10. It is undoubtedly true that when a cheque is issued by a person who has
signed on the cheque and the complainant reasonably discharges the burden
that the cheque had been issued towards a lawful payment, it is for the
accused to discharge the burden under Section 118 and 139 of the N.I. Act
that the cheque had not been issued towards discharge of a legal debt but was
issued by way of security or any other reason on account of some business
transaction or was obtained unlawfully. The purpose of the N.I. Act is clearly
to provide a speedy remedy to curb and to keep check on the economic
offence of duping or cheating a person to whom a cheque is issued towards
discharge of a debt and if the complainant reasonably discharges the burden
that the payment was towards a lawful debt, it is not open for the
accused/signatory of the cheque to set up a defence that although the cheque
had been signed by him, which had bounced, the same would not constitute
an offence. ”
89 Judgments on Negotiable Instruments Act.
Section 319 Cr.P.C. Section
142 N.I.Act. Limitation.
CRIMINAL APPEAL NO. 1534 OF 2017
(Arising out of SLP(Crl.) No.1439 of 2017)
SUPREME COURT (DB)
N. Harihara Krishnan Vs. J. Thomas.
Cheque in question was drawn on the account of DAKSHIN ( Company) and
Director is signatory Complainant
had initially failed to lodge the complaint
against DAKSHIN During
pendency complainant filed application under
Section 319 of Cr. P. C. to initiate prosecution against DAKSHIN Held
Application
filed beyond the period of limitation stipulated under Section 142 No
reason to condon the delay.
” 25. The question whether the respondent had sufficient cause for not filing
the complaint against DAKSHIN within the period prescribed under THE
ACT is not examined by either of the courts below. As rightly pointed out, the
application, which is the subject matter of the instant appeal purportedly filed
invoking Section 319 CrPC, is only a device by which the respondent seeks to
initiate prosecution against DAKSHIN beyond the period of limitation
stipulated under the Act.
26. No doubt Section 142 authorises the Court to condone the delay in
appropriate cases. We find no reason to condone the delay. The justification
advanced by the respondent that it is during the course of the trial, the
respondent realized that the cheque in question was drawn on the account of
DAKSHIN is a manifestly false statement. On the face of the cheque, it is
clear that it was drawn on account of DAKSHIN. Admittedly the respondent
issued a notice contemplated under clause (b) of the proviso to Section 138 to
DAKSHIN. The fact is recorded by the High Court. The relevant portion is
already extracted in para 16. “
If your cheque has been dishonoured in Chennai, India, you should take the following steps: Remember that cheque bouncing is a serious offense in India. It can result in legal action being taken against the issuer. It’s important to take swift action to protect your interests if you have received a dishonoured cheque. How to […]
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