Legal Updates: S.138 of Negotiable Instruments Act

Showing posts with label S.138 of Negotiable Instruments Act. Show all posts

Monday, May 1, 2023

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."

Written by

Vishal

Delhi

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Saturday, April 8, 2023

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

https://phhc.gov.in/home.php?search_param=case

Then entering the Case Number , for example, as Crl. Misc. No. M-37492 of 2012.

Written by

Vishal

Delhi

Wednesday, April 5, 2023

Section 138 of NI Act, 1881 : Supreme Court Highlights a Crucial Legal Aspect of the Provision

Section 138 of NI Act, 1881 : Supreme Court Highlights a Crucial Legal Aspect of the Provision

An important Judgment was passed by Hon'ble Supreme Court on 22 November 2012 which dealt with Section 138 of Negotiable Instruments Act, 1881.

It has been commented at page 27 of Indra Kumar Patodia v Reliance Industries Ltd [2012] GCtR 2962 (SC) thus : -

"Complaint under Section 138 of the Act without signature is maintainable when such complaint is verified by the complainant and the process is issued by the Magistrate after due verification."

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

https://main.sci.gov.in/judgments

Then entering the date of Judgment, for example, as 21 August 2009.

Written by

Vishal

Delhi

Monday, April 3, 2023

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."

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

https://main.sci.gov.in/judgments

Then entering the date of Judgment, for example, as 11 January 2010.

Written by

Vishal

Delhi

Sunday, April 2, 2023

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.

Written by

Vishal

Delhi

S.138, NI Act, 1881 : Mens Rea is not Necessary

S.138, NI Act, 1881 : Mens Rea is not Necessary

A recent judgment has been passed on 28 March 2023 in context of Negotiable Instruments Act, 1881.

It has been commented at page 4 and 5 of Swapnil Sohane v Sunil Arora [2023] GCtR 726 (Jabalpur, MP) thus : -

"In the prosecution under section 138 of NI Act the mens rea i.e. fraudulent or dishonest intention at the time of issuance of cheque is not required to be proved. But, in prosecution under section 420 of IPC the issue of mens rea can be relevant."

One can download judgments of Hon'ble MP High Court absolutely free of cost from the following link : -

https://mphc.gov.in/judgement-orders

Then entering, case number, for example as Criminal Revision 136 of 2019.

Written by

Vishal

Delhi

Saturday, March 18, 2023

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

https://main.sci.gov.in/judgments

Then entering the date of Judgment, for example, as 11 July 2001.

Written by

Vishal

Delhi

Thursday, March 9, 2023

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

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

In context of Negotiable Instruments Act, 1881, an important Judgment was passed on 1 August 2014 by Hon'ble Supreme Court.

It has been commented at page 20, 21 of Dashrath Rupsingh Rathod v State of Maharashtra [2014] GCtR 2731 (SC) thus : -

"The infusion of the concept of ‘cause of action’ into the criminal dispensation has led to subsequent confusion countenanced in High Courts."
"Courts are enjoined to interpret the law so as to eradicate ambiguity or nebulousness, and to ensure that legal proceedings are not used as a device for harassment, even of an apparent transgressor of the law. Law’s endeavour is to bring the culprit to book and to provide succour for the aggrieved party but not to harass the former through vexatious proceedings. Therefore, precision and exactitude are necessary especially where the location of a litigation is concerned."

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 1 August 2014.

Written by

Vishal

Delhi

S.138 of N.I. Act, 1881 : An Important Principle by Supreme Court

Negotiable Instruments Act, 1881 : An Important Principle by Supreme Court

Many interesting Judgments were pronounced by Hon'ble Supreme Court on 7 May 2010.

In context of Negotiable Instruments Act, 1881, it has been commented at page 21 and 22 of Rangappa v Sri Mohan [2010] GCtR 1697 (SC) thus : -

"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 defendant-accused cannot be expected to discharge an unduly high standard of 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."
"The accused can rely on the 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."

Written by

Vishal

Delhi