Date of Issuance of Cheque and its Effect on Acquittal in Section 138 of the Negotiable Instruments Act, 1881

Date of Issuance of Cheque and its Effect on Acquittal in Section 138 of the Negotiable Instruments Act, 1881  

In an interesting case [Ghanshyam D. Katira v. Sanjay J. Ganatra [2015] GCtR 6582 (Bombay)], the defence of the accused in case under Section 138 of Negotiable Instruments Act, 1881 is that he had not taken any loan of Rs.1,50,000 from the complainant. 

It was held that when cheque No.440855 had been issued in the year 1998, the possibility of the next cheque – bearing No. 440856 – having been issued in the year 2006 – i.e. after a gap of eight years – is rather remote; and this aspect is capable of rendering the version of the accused, plausible. The accused was acquitted.

The other issue noted was that there is also some confusion as to whether the loan in question was given by the complainant in his capacity as a 'money lender'.  It is not only because the same has been described as a 'friendly loan', but also because the money lenders business is being done by the complainant in the name of 'Harshal Money Lender'.   The cheque has not been issued in favour of 'Harshal Money Lender'. 

HC noted that the version of the complainant about the date, on which a loan was advanced to the accused, and the   date   on   which   the   accused   gave   a   cheque   towards   the purported repayment thereof, cannot be relied upon.   The story put forth by the complainant cannot be accepted as true.

Cheque Dishonour under S.138 of Negotiable Instruments Act, 1881 and Statutory Presumption Explained by Supreme Court

Cheque Dishonour under S.138 of Negotiable Instruments Act, 1881 and Statutory Presumption Explained by Supreme Court

Dealing with a case of S.138 of Negotiable Instruments Act, 1881, it is held that the statutory presumption attached to the issuance of a cheque, being one made in discharge of a legally enforceable debt or liability, is required to be accorded due weight.

Mohit Bansal v. MGI Developers and Promoters [2026] GCtR 38 (SC)

Company's Directors and Criminal Liability of Directors of a Company

Company's Directors and Criminal Liability of Directors of a Company

In case of Gunmala Sales Pvt Ltd v. Anu Mehta [2014] GCtR 6455 (SC) dealing with a case of Negotiable Instruments Act, 1881 it was held at page nos. 42 and 43 that "when in view of the basic averment process is issued the complaint must proceed against the Directors. Complaint cannot be quashed for the asking. For quashing of a complaint it must be shown that no offence is made out at all against the Director." 

"But, if any Director wants the process to be quashed by filing a petition under Section 482 of the Code of Criminal Procedure, 1973 on the ground that only a bald averment is made in the complaint and that he is really not concerned with the issuance of the cheque, he must in order to persuade the High Court to quash the process either furnish some sterling uncontrovertible material or acceptable circumstances to substantiate his contention. He must make out a case that making him stand the trial would be abuse of the process of court."

Negotiable Instruments Act, 1881 and "Cheque Dishonour" : SC Explains the Principles

Negotiable Instruments Act, 1881 and Cheque Dishonour : SC Explains the Principles

In case of Damodar S. Prabhu v. Sayed Babalal H [2010] GCtR 6297 (SC) it was held that it may be noted here that Section 143 of the Negotiable Instruments Act, 1881 makes an offence under Section 138 of NI Act, 1881 triable by a Judicial Magistrate First Class (JMFC). After trial, the progression of further legal proceedings would depend on whether there has been a conviction or an acquittal. 

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. Finally, if the application for compounding is made before the Supreme Court, the figure would increase to 20% of the cheque amount. 

It should be mandatory for the complainant to disclose that no other complaint has been filed in any other court in respect of the same transaction. Such a disclosure should be made on a sworn affidavit which should accompany the complaint filed under Section 200 of the Code of Criminal Procedure, 1973. If it is found that such multiple complaints have been filed, orders for transfer of the complaint to the first court should be given, generally speaking, by the High Court after imposing heavy costs on the complainant for resorting to such a practice.

Presence of Complainant in Cheque Dishonour Cases under S.138 of Negotiable Instruments Act, 1881 : Directions Issued

Presence of Complainant in Cheque Dishonour Cases under S.138 of Negotiable Instruments Act, 1881 : Directions Issued

In an important development, directions have been issued regarding presence of complainant in cases under S.138 of Negotiable Instruments Act, 1881 before issuing process.

It has been directed at page no. 13 of Ultimate Computer Care v. S.M. K. Systems [2025] GCtR 1264 (Madurai, Madras) that "before issuing process, the Magistrate is not bound to call upon the complainant to remain present before the Court and to examine him upon oath. As a rule, the Magistrate may rely upon the verification in the form of affidavit filed by the complainant in support of the complaint, which shall be treated as a sworn statement, to issue process. In exceptional cases, such as where the Court entertains a genuine doubt about the veracity of the statements made in the complaint etc., it may summon the complainant and witnesses, if any and examine them on oath."

S.138, NI Act, 1881 [Dishonour of Cheque] : Onus to Prove / Examination of Witness & Legal Aspects

S.138, NI Act, 1881 [Dishonour of Cheque] : Onus to Prove / Examination of Witness & Legal Aspects

An important Judgment was passed on 21 September 2010 by Hon'ble Delhi High Court in Crl.A. 1136/2010. 

In V. S. Yadav v Reena [2010] GCtR 2169 (Delhi) it has been commented thus : - 

"It must be borne in mind that the statement of accused under Section 281 of Code of Criminal Procedure, 1973 or under Section 313 of Code of Criminal Procedure, 1973 is not the evidence of the accused and it cannot be read as part of evidence. The accused has an option to examine himself as a witness. Where the accused does not examine himself as a witness, his statement under Section 281 of S.313 cannot be read as evidence of the accused and it has to be looked into only as an explanation of the incriminating circumstance and not as evidence. There is no presumption of law that explanation given by the accused was truthful. In the present case, the accused in his statement stated that he had given cheques as security. If the accused wanted to prove this, he was supposed to appear in the witness box and testify and get himself subjected to cross examination. His explanation that he had the cheques as security for taking loan from the complainant but no loan was given should not have been considered by the Trial Court as his evidence and this was liable to be rejected since the accused did not appear in the witness box to dispel the presumption that the cheques were issued as security. Mere suggestion to the witness that cheques were issued as security or mere explanation given in the statement of accused under S.281, that the cheques were issued as security, does not amount to proof. Moreover, the Trial Court seemed to be obsessed with idea of proof beyond reasonable doubt forgetting that offence under Section 138 of N.I. Act was a technical offence and the complainant is only supposed to prove that the cheques issued by the respondent were dishonoured, his statement that cheques were issued against liability or debt is sufficient proof of the debt or liability and the onus shifts to the respondent/ accused to show the circumstances under which the cheques came to be issued and this could be proved by the respondent only by way of evidence and not by leading no evidence.

"Mere pleading not guilty and stating that the cheques were issued as security, would not give amount to rebutting the presumption raised under Section 139 of N.I. Act. If mere statement under Section 313 of Code of Criminal Procedure, 1973 or under Section 281 of accused of pleading not guilty was sufficient to rebut the entire evidence produced by the complainant/ prosecution, then every accused has to be acquitted. But, it is not the law. In order to rebut the presumption under Section 139 of N.I Act, the accused, by cogent evidence, has to prove the circumstance under which cheques were issued. It was for the accused to prove if no loan was taken why he did not write a letter to the complainant for return of the cheque. Unless the accused had proved that he acted like a normal businessman/prudent person entering into a contract he could not have rebutted the presumption under Section 139 of N.I. Act. If no loan was given, but cheques were retained, he immediately would have protested and asked the cheques to be returned and if still cheques were not returned, he would have served a notice as complainant. Nothing was proved in this case."

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Delhi

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Sec.138 of Negotiable Instruments Act, 1881 : HC Explains Important Legal Aspects

Sec.138 of Negotiable Instruments Act, 1881 : HC Explains Important Legal Aspects

An important Judgment was passed by Hon'ble Punjab and Haryana High Court on 10 February 2015. 

In context of Negotiable Instruments Act, 1881, in Nitin Chadha v Swastik Vegetable Products Pvt Ltd [2015] GCtR 3011 (P&H) it was held thus : - 

"As per procedure adopted by the Bank, different type of cheques are issued by adopting different methods, which is reproduced as under:- 

Open cheque or bearer cheque: The issuer of the cheque would just fill the name of the person to whom the cheque is issued, writes the amount and attaches his signature and nothing else. This type of issuing a cheque is also called bearer type cheque also known as open cheque or uncrossed cheque. The cheque is negotiable from the date of issue to three months. The issued cheque turns stale after the completion of three months. It has to be revalidated before presenting to the bank. 

A crossed cheque or an account payee cheque: It is written in the same as that of bearer cheque but issuer specifically specifies it as account payee on the left hand top corner or simply crosses it twice with two paralled lines on the right hand top corner. The bearer of the cheque presenting it to the bank should have an account in the branch to which the written sum is deposited. It is safest type of cheques. 

A self Cheque: A self cheque is written by the account holder as pay self to receive the money in the physical form from the brach where he holds his account. 

Pay yourself cheque: The account holder issues this type of crossed cheque to the bank asking the bank to deduct money from his account into bank’s own account for the purpose of buying banking products like drafts, pay orders, fixed deposit receipts or for depositing money into other accounts held by him like recurring deposits and loan accounts. 

Post dated cheque: (PDC): A PDC is a form of a crossed or account payee bearer cheque but post dated to meet the said financial obligation at a future date. Various types of cheques based on their functionality: 

Local cheque: A local cheque is a type of cheque which is valid in the given city and a given branch in which the issuer has an account and to which it is connected. The producer of the cheque in whose name it is issued can directly go to the designated bank and receive the money in the physical form. If a given city’s local cheque is presented elsewhere it shall attract some fixed banking charges. Although these type of cheques are still prevalent, especially with nationalised banks. It is slowly stated to be removed with at par cheque type. 

At par cheque: With the computerisation and networking of bank branches with its headquarters, a variation to the local cheque has become common place in the name of at par cheque. At par cheque is a cheque which is accepted at par at all its branches across the country. Unlike local cheque it can be presented across the country without attracting additional banking charges. 

Banker’s cheque. It is a kind of cheque issued by the bank itself connected to its own funds. It is a kind of assurance given by the issuer to the client to alley your fears. The personal account connected cheques may bounce for want of funds in his account. To avoid such hurdles, sometimes, the receiver seeks banker’s cheque. 

Travelers’ cheque: They are a kind of an open type bearer cheque issued by the bank which can be used by the user for withdrawal of money while touring. It is equivalent to carrying cash but in a safe form without fear of losing it. 

Gift cheque: This is another banking instrument introduced for gifting money to the loved ones instead of hard cash.

The offence under Section 138 of the Act is not like the offence under IPC." 

Kindly note that full text Judgments of Hon'ble Punjab and Haryana high Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link 

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Section 138 of Negotiable Instruments Act, 1881 : Supreme Court Highlights an Important Aspect

Section 138 of Negotiable Instruments Act, 1881 : Supreme Court Highlights an Important Aspect

An important Judgment was passed by Hon'ble Supreme Court on 10 March 1999.

In context of Negotiable Instruments Act, 1881, it has been commented in Saketh India Pvt Ltd v M/s India Securities Ltd [1999] GCtR 2978 (SC) thus : - 

"Section 138 of the Act inter alia provides that where any cheque drawn by a person is returned by the Bank unpaid, such person shall be deemed to have committed an offence, however, it will apply, if conditions mentioned in clauses (a), (b) and (c) are satisfied. Section 142 further provides that Court shall take cognizance of any offence punishable under Section 138 on a written complaint made by the payee or the holder in due course, if such complaint is filed within one month of the date on which the cause of action arises. A month is to be reckoned according to the British Calendar as defined in the General Clauses Act, 1897."

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link 

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Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.  

S.138, NI Act, 1881 : Supreme Court Untangles the Effect

 S.138, NI Act, 1881 : Supreme Court Untangles the Effect

Section 138 of Negotiable Instruments Act, 1881 has an important role regarding issue related to cheque. An important Judgment was passed by Hon'ble Supreme Court on 11 January 2010. 

In context of Section 138 of Negotiable Instruments Act and Code of Criminal Procedure, 1973, in Mandi Co-Op Bank Ltd v Nimesh B Thakore [2023] GCtR 2941 (SC) it was commented thus : - 

"It may be noted that the provisions of sections 143, 144, 145 and 147 expressly depart from and override the provisions of the Code of Criminal Procedure, the main body of adjective law for criminal trials. The provisions of section 146 similarly depart from the principles of the Indian Evidence Act. Section 143 makes it possible for the complaints under section 138 of the Act to be tried in the summary manner, except, of course, for the relatively small number of cases where the Magistrate feels that the nature of the case is such that a sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily. It is, however, significant that the procedure of summary trials is adopted under section 143 subject to the qualification “as far as possible”, thus, leaving sufficient flexibility so as not to affect the quick flow of the trial process. ......."

"It is not difficult to see that sections 142 to 147 lay down a kind of a special code for the trial of offences under Chapter XVII of the Negotiable Instruments Act and sections 143 to 147 were inserted in the Act by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 to do away with all the stages and processes in a regular criminal trial that normally cause inordinate delay in its conclusion and to make the trial procedure as expeditious as possible without in any way compromising on the right of the accused for a fair trial.”

"The case of the complainant in a complaint under section 138 of the Act would be based largely on documentary evidence. The accused, on the other hand, in a large number of cases, may not lead any evidence at all and let the prosecution stand or fall on its own evidence. In case the defence does lead any evidence, the nature of its evidence may not be necessarily documentary; in all likelihood the defence would lead other kinds of evidences to rebut the presumption that the issuance of the cheque was not in the discharge of any debt or liability. This is the basic difference between the nature of the complainant’s evidence and the evidence of the accused in a case of dishonoured cheque."

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S.138, NI Act, 1881 and the Role of Magistrate

 S.138, NI Act, 1881 and the Role of Magistrate

Section 138 of Negotiable Instruments Act, 1881 is an important provision.

Hon'ble Bombay High Court has passed an important Judgment on 7 December 2010. 

In context of Section 138 of said Act, in Rajesh Bhalchandra Chalke v State of Maharashtra [2010] GCtR 2940 (Bombay), it was explained thus : -

"After addition of section 145 NI Act in the statute book, it is open to the Magistrate to issue process on the basis of the contents of the complaint, the 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 CrPC, it is thereafter open to the Magistrate, if he thinks it 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. But then 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 NI Act." 

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Then entering the date of Judgment.

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S.138, NI Act, 1881 : Costs Imposed on Complainant

S.138, NI Act, 1881 : Costs Imposed on Complainant

Section 138 of Negotiable Instruments Act, 1881 has its own significance. 

In the case citation [2021] GCtR 3379, the issue was related to allegations under Section 138 of the said Act. 

The complainant and accused had business dealings among them. Later on, cheque was issued by the accused person which got dishonoured. Then, the complainant filed a complaint before the Ld. Judicial Magistrate. At the earlier stage of these proceedings, it was found that the complaint was not maintainable. After referring earlier judgments of Hon'ble Supreme Court, finally costs were imposed on the complainant in this case related to Section 138 of Negotiable Instruments Act, 1881. 

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S.138, NI Act, 1881 : Accused Gets Acquittal From HC

 S.138, NI Act, 1881 : Accused Gets Acquittal From HC

Section 138 of Negotiable Instruments Act, 1881 is in important provision. 

In case citation [2018] GCtR 2939, the person who was facing accusation of committing offence under Section 138 has been acquitted and the complaint was dismissed. 

It was alleged that in discharge of liability, accused had issued multiple cheques which got dishonoured. The complainant argued that he has issued notice to the accused as well, despite which accused did not made the payment. During the proceedings, cheque return memo was also exhibited.

After hearing both side, the accused was found entitled to acquittal. 

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Delhi

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S.138, NI Act, 1881 : Summons Against Accused Quashed

 S.138, NI Act, 1881 : Summons Against Accused Quashed 

Section 138 of Negotiable Instruments Act, 1881 is an important provision.

In case citation [2019] GCtR 2938, the summons which was issued against a person accused of committing the offence under Section 138 of Negotiable Instruments Act, 1881 was ultimately quashed. The complainant has alleged that the cheque was dishonoured and he has also issued notice. 

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link 

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Then entering the date of Judgment.

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Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.    

S.138, NI Act, 1881 and Signing a Blank Cheque : The Legal Aspects

S.138, NI Act, 1881 and Signing a Blank Cheque : The Legal Aspects

In an issue arising out of Section 138 of Negotiable Instruments Act, 1881, it has been commented at Mojj Engineering Systems Ltd v A.B. Sugars Ltd [2008] GCtR 2935 (Delhi) thus: - 

 

"Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young Vs. Grote (1827) 4 Bing. 253 it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield Vs. Lord Londesborough (1895-1899) All ER Rep 282 it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths Vs. Dalton [1940] 2 KB 264 where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments."

"The question whether the consideration for which the cheque was issued was ultimately satisfied or whether the cheque was wrongly sought to be encashed, are all issues that must also be decided at the trial."

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Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. 

Section 138 of NI Act

 Section 138 of NI Act 

Section 138 of N.I Act, 1881 uses following words : -

Cheque drawn by a person on an account maintained by him 

For payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability 

Returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank 

Deemed to have committed an offence 

S.138, NI Act, 1881 : Supreme Court Explains the Provision

 S.138, NI Act, 1881 : Supreme Court Explains the Provision

An important Judgment has been passed by Hon'ble Supreme Court on 11 July 2001. 

In the context of Negotiable Instruments Act, 1881, it has been commented at page 6 of Hiten P. Dalal v Bratindranath P. Banerjee [2001] GCtR 2791 (SC) thus : - 

"Presumptions are rules of evidence and do not conflict with the presumption of innocence, because by the latter all that is meant is that the prosecution is obliged to prove the case against the accused beyond reasonable doubt. The obligation on the prosecution may be discharged with the help of presumptions of law or fact unless the accused adduces evidence showing the reasonable possibility of the non-existence of the presumed fact."

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost (without any charges except internet data) from the official website at the link 

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Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction. 

 

S.138, NI Act, 1881 : An Important View of Supreme Court

 S.138, NI Act, 1881 : An Important View of Supreme Court 

In context of Negotiable Instruments Act, 1881, an interesting Judgment has been passed by Hon'ble Supreme Court on 6 February 2019.

It has been commented at page 9, 15 and 10 of Bir Singh v Mukesh Kumar [2019] GCtR 1772 (SC) thus : - 

"The presumption contemplated under Section 139 of the Negotiable Instruments Act, is a rebuttable presumption. However, the onus of proving that the cheque was not in discharge of any debt or other liability is on the accused drawer of the cheque."

"Section 139 introduces an exception to the general rule as to the burden of proof and shifts the onus on the accused. The presumption under Section 139 of the Negotiable Instruments Act is a presumption of law, as distinguished from presumption of facts. Presumptions are rules of evidence and do not conflict with the presumption of innocence, which requires the prosecution to prove the case against the accused beyond reasonable doubt."

"The onus to rebut the presumption under Section 139 that the cheque has been issued in discharge of a debt or liability is on the accused and the fact that the cheque might be post dated does not absolve the drawer of a cheque of the penal consequences of Section 138 of the Negotiable Instruments Act."

"A meaningful reading of the provisions of the Negotiable Instruments Act including, in particular, Sections 20, 87 and 139, makes it amply clear that a person who signs a cheque and makes it over to the payee remains liable unless he adduces evidence to rebut the presumption that the cheque had been issued for payment of a debt or in discharge of a liability. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted."

"If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence."

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost from the official website at the link https://main.sci.gov.in/judgments - Then entering the date of Judgment, for example, as  6 February 2019.

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Delhi

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On S.138 of NI Act, 1881 : A View of HC in Nov 2022

 On S.138 of NI Act, 1881 : A View of HC

There was an interesting judgment passed by Hon'ble Delhi High Court on 14 November 2022 in context of Negotiable Instruments Act, 1881.

It has been commented at page 11 of Guneet Bhasin v State of NCTD [2022] GCtR 1770 (Delhi) thus : 

"If there is any infirmity in the cheque return memo, it does not render entire trial under section 138 of the NI Act as nullity."

Kindly note that full text Judgments of Hon'ble Delhi High Court can be downloaded absolutely free of cost from the official website at the link 

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Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.  

S.138 of NI Act, 1881 : A View of HC

 S.138 of NI Act, 1881 : A View of HC

An important Judgment was passed by Hon'ble Jammu and Kashmir and Ladakh High Court on 21 October 2022. 

In context of Negotiable Instruments Act, 1881, it has been noted at page 11 in Ab. Rasheed Bhat v HDFC Bank Ltd [2022] GCtR 1769 (J&K&L)  thus : - 

"Production of original Power of Attorney is necessary at the time of taking cognizance of the complaint under Section 138 of NI Act, is not the correct position of law."

Kindly note that full text Judgments of Hon'ble Jammu and Kashmir and Ladakh High Court can be downloaded absolutely free of cost from the official website at the link 

https://jkhighcourt.nic.in/ 

Then going to Srinagar Wing - Then entering case number as CRM(M) No.88/2020.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.   

S.138 of NI Act, 1881 : A Crucial View of Supreme Court

  S.138 of NI Act, 1881 : A Crucial View of Supreme Court

In the context of Negotiable Instruments Act, 1881, an important Judgment was passed on 26 September 2012 by Hon'ble Supreme Court.

It has been commented at page numbers 10, 11, 24, 25, 31, 32, 33, 34 of MSR Leathers v S. Palaniappan [2012] GCtR 2732 (SC) thus : - 

"Proviso to Section 138, however, is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonour of a cheque can constitute an offence and become punishable. The first condition is that the cheque ought to have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make a demand for the 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."

"The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque."

"While a complaint based on a default and notice to pay must be filed within a period of one month from the date the cause of action accrues, which implies the date on which the period of 15 days granted to the drawer to arrange the payment expires, there is nothing in Section 142 to suggest that expiry of any such limitation would absolve him of his criminal liability should the cheque continue to get dishonoured by the bank on subsequent presentations. So long as the cheque is valid and so long as it is dishonoured upon presentation to the bank, the holder’s right to prosecute the drawer for the default committed by him remains valid and exercisable."

"By reason of a fresh presentation of a cheque followed by a fresh notice in terms of Section 138, proviso (b), the drawer gets an extended period to make the payment and thereby benefits in terms of further opportunity to pay to avoid prosecution. Such fresh opportunity cannot help the defaulter on any juristic principle, to get a complete absolution from prosecution."

"A prosecution based on a second or successive default in payment of the cheque amount should not be impermissible simply because no prosecution based on the first default which was followed by a statutory notice and a failure to pay had not been launched. If the entire purpose underlying Section 138 of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason."

"Neither the courts nor the parties stand to gain by institution of proceedings which may become unnecessary if cheque amount is paid by the drawer. The magistracy in this country is over-burdened by an avalanche of cases under Section 138 of Negotiable Instruments Act."

"Prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act."

Kindly note that full text Judgments of Hon'ble Supreme Court can be downloaded absolutely free of cost from the official website at the link https://main.sci.gov.in/judgments - Then entering the date of Judgment, for example, as 26 September 2012.

Written by 

Vishal

Delhi

Notice : Copyright of above blog and its content including headline vests with Vishal. Above should Not be reproduced in any form in newspapers/websites/Ph.D. thesis/College projects/ law firms' newsletters/law journals/books/book chapters without prior written permission. Fair use should be in terms of Copyright Act, 1957. Any violation will make violator liable for Pecuniary compensation with interest towards the author irrespective of the profit made. All disputes shall be subject to Delhi Jurisdiction.