Legal Updates: Supreme Court on Negotiable Instruments Act

Showing posts with label Supreme Court on Negotiable Instruments Act. Show all posts

Monday, May 1, 2023

S.138, NI Act, 1881 : Supreme Court Highlights Crucial Legal Aspects

S.138, NI Act, 1881 : Supreme Court Highlights Crucial Legal Aspects

An important Judgment was passed on 25 May 2006.

In D. Vinod Shivappa v Nanda Belliappa [2006] GCtR 3176 (SC) it has been commented thus : -

"If a notice is issued and served upon the drawer of the cheque, no controversy arises. Similarly if the notice is refused by the addressee, it may be presumed to have been served. This is also not disputed. This leaves us with the third situation where the notice could not be served on the addressee for one or the other reason, such as his non-availability at the time of delivery, or premises remaining locked on account of his having gone elsewhere, etc. etc. If in each such case the law is understood to mean that there has been no service of notice, it would completely defeat the very purpose of the Act. It would then be very easy for an unscrupulous and dishonest drawer of a cheque to make himself scarce for some time after issuing the cheque so that the requisite statutory notice can never be served upon him and consequently he can never be prosecuted. There is good authority to support the proposition that once the complainant, the payee of the cheque, issues notice to the drawer of the cheque, the cause of action to file a complaint arises on the expiry of the period prescribed for payment by the drawer of the cheque. If he does not file a complaint within one month of the date on which the cause of action arises under clause (c) of the proviso to Section 138 of the Act, his complaint gets barred by time. Thus, a person who can dodge the postman for about a month or two, or a person who can get a fake endorsement made regarding his non- availability can successfully avoid his prosecution because the payee is bound to issue notice to him within a period of 30 days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. He is, therefore, bound to issue the legal notice which may be returned with an endorsement that the addressee is not available on the given address."
"We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee. In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the court shall presume service of notice. This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely, the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice."

Written by

Vishal

Delhi

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Thursday, April 13, 2023

Section 138 of Negotiable Instruments Act, 1881 : Supreme Court's Important Clarification on Provision

Section 138 of Negotiable Instruments Act, 1881 : Supreme Court's Important Clarification on Provision

An important Judgment was passed by Hon'ble Supreme Court on 5 October 2017 in context of S.138 of Negotiable Instruments Act, 1881.

It has emerged from Meters and Instruments Pvt Ltd v Kanchan Mehta [2017] GCtR 602 (SC) the following things : -

(a) The trial of cases relating to Section 138 of the Act must be with nature of Summary Trial unless reasons call for Summons Trial, which is always exceptional.

(b) The evidence of the complainant must be conducted within three months of assigning the case.

(c) Endeavour must be made to conclude the trial within six months from the date of filing of the complaint.

(d) The Trial, as far as practicable, must be held on a day to day basis unless reasons exist to do otherwise.

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 5 October 2017.

Written by

Vishal

Delhi

Saturday, April 8, 2023

Sec. 138 of Negotiable Instruments Act, 1881 : Supreme Court Explains the Legal Position

Sec. 138 of Negotiable Instruments Act, 1881 : Supreme Court Explains the Legal Position

An important Judgment was passed by Hon'ble Supreme Court on 10 October 2007.

In context of Negotiable Instruments Act, 1881, it has been commented in K. Prakashan v P.K. Surenderan [2007] GCtR 3013 (SC) that "the Act raises two presumptions; firstly, in regard to the passing of consideration as contained in Section 118 (a) therein and, secondly, a presumption that the holder of cheque receiving the same of the nature referred to in Section 139 discharged in whole or in part any debt or other liability."

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 10 October 2007.

Written by

Vishal

Delhi

Friday, April 7, 2023

Section 138 of Negotiable Instruments Act, 1881 : Supreme Court Lays Down Clear Principle

Section 138 of Negotiable Instruments Act, 1881 : Supreme Court Lays Down Clear Principle

An important Judgment was passed by Hon'ble Supreme Court on 17 September 2014.

It has been commented in Vinita S. Rao v Essen Corporate Services Pvt Ltd [2014] GCtR 2979 (SC) thus : -

"Complaint under Section 138 of the NI Act can be filed through the power of attorney holder."

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 17 September 2014.

Written by

Vishal

Delhi

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

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

Then entering the date of Judgment, for example, as 10 March 1999.

Written by

Vishal

Delhi

Monday, April 3, 2023

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

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

An important Judgment was passed by Hon'ble Supreme Court on 22 February 2001.

In context of Section 138 of Negotiable Instruments Act, 1881 in Shri Ishar Alloy Steels Ltd v Jayaswals Neco Ltd [2001] GCtR 2951 (SC) it was commented thus :

"Section 138 provides that where any cheque drawn by a person 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 the discharge, in whole or in part, of any debt or other liability, is 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, such person shall be deemed to have committed an offence punishable with imprisonment as prescribed therein subject to the conditions mentioned in clauses (a), (b) and (c) of the proviso."

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 22 February 2001.

Written by

Vishal

Delhi

Saturday, April 1, 2023

S.139, NI Act, 1881 : Supreme Court Spells out the Scope of Provision

An important judgment was passed by Hon'ble Supreme Court on 6 February 2019.

In context of Negotiable Instruments Act, 1881, it has been commented at page 16 of Bir Singh v Mukesh Kumar [2019] GCtR 1772 (SC) thus : -

"Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."

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

https://delhihighcourt.nic.in/judgment

Then entering the date of Judgment, for example, as 6 February 2019.

Written by

Vishal

Delhi

S.138, NI Act, 1881 : Supreme Court Sheds Light on the Provision

S.138, NI Act, 1881 : Supreme Court Sheds Light on the Provision

An important Judgment was passed by Hon'ble Supreme Court on 19 September 2016.

In context of Negotiable Instruments Act, 1881, in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited [2016] GCtR 2933 (SC), earlier one of M/s. Indus Airways Pvt. Ltd. & Ors. v M/s. Magnum Aviation Pvt. Ltd. & Anr [2014] GCtR 2931 (SC) was considered. In Sampelly, the appellant was the Director of a company which was engaged in power generation, while the respondent was a government enterprise engaged in renewable energy. The respondent agreed to advance a loan for setting up a power project and the agreement envisaged that post-dated cheques towards payment of installments of the loans would be given by way of security. The cheques having been dishonored, complaints were instituted under Section 138 which led to quashing petitions filed before the High Court.

The submission which was urged was that dishonor of the post-dated cheques given by way of security did not amount to a legally enforceable debt or liability under Section 138 in presentia.

After adverting to the decision in Indus Airways, it was held that if on the date of the cheque, a liability or debt exists or the amount has become enforceable, Section 138 would stand attracted and not otherwise.

The decision in Indus Airways was distinguished in Sampelly on the ground that in that case, the cheque had not been issued for discharge of a liability but as advance for a purchase order which was cancelled. On the other hand, in Sampelly, the cheque was for the repayment of a loan installment which had fallen due. It was noted that though the deposit of cheques towards the repayment of installments was described as a security in the loan agreement, the true test was whether the cheque was in discharge of an existing enforceable debt or liability or whether it was towards an advance payment without there being a subsisting debt or liability.

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 19 September 2016.

Written by

Vishal

Delhi

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

An important Judgment was passed on 7 April 2014.

In Indus Airways Private Limited v. Magnum Aviation Private Limited [2014] GCtR 2931 (SC), the issue was whether dishonour of post-dated cheques which were issued by the purchasers towards ‘advance payment’ would be covered by Section 138 of the Negotiable Instruments Act if the purchase order was cancelled subsequently. It was held that Section 138 would only be applicable where there is a legally enforceable debt subsisting on the date when the cheque is drawn.

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

https://delhihighcourt.nic.in/judgment

Then entering the date of Judgment, for example, as 7 April 2014.

Written by

Vishal

Delhi

S.138 of NI Act, 1881 : Supreme Court Lays Down Clear Principle

S.138 of NI Act, 1881 : Supreme Court Lays Down Clear Principle

An important Judgment was passed by Hon'ble Supreme Court on 11 October 2022.

In context of Negotiable Instruments Act, 1881, it has been commented in Dashrathbhai Trikambhai Patel v. Hitesh Mahendrabhai Patel [2022] GCtR 1504 (SC) thus: -

"Under Section 56 read with Section 15 of the Act, an endorsement may be made by recording the part-payment of the debt in the cheque or in a note appended to the cheque. When such an endorsement is made, the instrument could still be used to negotiate the balance amount. If the endorsed cheque when presented for encashment of the balance amount is dishonoured, then the drawee can take recourse to the provisions of Section 138. Thus, when a part-payment of the debt is made after the cheque was drawn but before the cheque is encashed, such payment must be endorsed on the cheque under Section 56 of the Act. The cheque cannot be presented for encashment without recording the part-payment. If the unendorsed cheque is dishonoured on presentation, the offence under Section 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment."

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

https://delhihighcourt.nic.in/judgment

Then entering the date of Judgment, for example, as 11 October 2022.

Written by

Vishal

Delhi

Saturday, March 18, 2023

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.

Written by

Vishal

Delhi