Apex Law Journal
Apex Law Journal
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Editor

Neha Goel, Advocate

Advisory Board

S.C. Khunger, Advocate

Rohit Bansal, Advocate

Varinder Singh Kanwar, Advocate

Hittan Nehra, Advocate

Judgments on Negotiable Instruments Act, 1881

Tuesday, February 21, 2012
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320 — Held, Section 147 of the N.I. Act makes an offence under N.I. Act a compoundable one — But in order to make the offence compoundable the mode and manner of compounding such offences must be followed — In other words, the basic procedure of compounding an offence laid down in Section 320 of the Code will apply to compounding of an offence under N.I. Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320 — Contention that in view of non-obstante clause in Section 147 of N.I. Act, which is a special statute, the requirement of consent of the person compounding in Section 320 of the Code is not required in the case of compounding of an offence under N.I. Act, held, is not tenable — Section 147 will only override Section 320 (9) of the Code in so far as offence under Section 147 of N.I. Act is concerned.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Effect of — Pursuant to the insertion of Section 147, offence under the N.I. Act, which was previously non-compoundable in view of Section 320 sub-Section 9 of the Code has now become compoundable — That does not mean that the effect of Section 147 is to obliterate all statutory provisions of Section 320 of the Code relating to the mode and manner of compounding of an offence — Section 147 will only override Section 320 (9) of the Code in so far as offence under Section 147 of N.I. Act is concerned — Criminal Procedure Code, 1973, Section 320(9).

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138, 141 and 147 — Companies Act, 1956, Section 391 — Criminal Procedure Code, 1973, Section 320 — Compounding of an offence under Section 138 read with Section 141 — Held, sanction of a scheme under Section 391 of the Companies Act, 1956 does not amount to compounding of an offence under Section 138 read with Section 141 of the N.I. Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Procedure for compunding of and offence — No special procedure has been prescribed under the N.I. Act relating to compounding of an offence — In the absence of special procedure relating to compounding, the procedure relating to compounding under Section 320 shall automatically apply in view of clear mandate of sub-section (2) of Section 4 of the Code — Criminal Procedure Code, 1973, Sections 4(2) and 320.

 
Tuesday, December 06, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Cheque issued by the company, in the present case, dishonoured in the year 2004 — In reply to statutory notice accused no.3 informed the complainant that she had resigned from the directorship of the company long back in 1998 — This reply of the accused no.3 was not referred in the complaint — Held, the complainant was not justified in not referring the same in the complaint — Complainant has failed to specify or elaborate the role of the apellant-accused no.3 in the day to day affairs of the company — Appeal allowed — Criminal complaint against accused no.3 is quashed.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Cheque issued by the company — Dishonoured — Whether certified copy of annual return filed with the Registrar of Companies can be taken into consideration to establish the plea of the accused that she has resigned from Company as Director much earlier from the date when cheques were issued? — Held, yes — Certified copy of annual return is a public document — Companies Act, 1956, Sections 159, 163 and 610(3) — Evidence Act, 1872, Section 74(2).

 
Tuesday, November 22, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — A complaint under section 138 of the Act is in regard to criminal liability for the offence of dishonouring the cheque and not for the recovery of the cheque amount, (which strictly speaking, has to be enforced by a civil suit).

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal Procedure Code, 1973, Sections 29(2) and 143(1) — Dishonour of cheque — Imposition of fine — In regard to any prosecution for offences punishable under section 138 of the Act, a First Class Magistrate may impose a fine exceeding Rs.5000/-, the ceiling being twice the amount of the cheque.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Cheque for Rs. 20,000/- dishonoured — Magistrate levied a fine of Rs. 2000/- — Whether compensation could be awarded to the complainant under Section 357(3) of the Cr.P.C.? — Held, no — Criminal Procedure Code, 1973, Section 357(3).

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — The courts should, unless there are special circumstances, in all cases of conviction, uniformly exercise the power to levy fine upto twice the cheque amount (keeping in view the cheque amount and the simple interest thereon at 9% per annum as the reasonable quantum of loss) and direct payment of such amount as compensation — Direction to pay compensation by way of restitution in regard to the loss on account of dishonour of the cheque should be practical and realistic, which would mean not only the payment of the cheque amount but interest thereon at a reasonable rate.

 
Sunday, August 28, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Criminal liability of a partner in the firm — As regards the criminal liability of a partner in the firm, in light of the provisions contained in Section 141 of the N.I. Act, there has to be evidence that at the time the offence was committed, the partner was in-charge of and was responsible to the firm for the conduct of the business of the firm.   

 
Wednesday, August 10, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — There is a presumption with regard to consideration when a cheque has been paid by the drawer of the cheque.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — Presumption referred to in Section 139 is rebuttable.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — If the cheque is given towards any liability or debt which might have been incurred even by someone else, the person who is a drawer of the cheque can be made liable under Section 138 of the Act.

 
Tuesday, February 08, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Indian Penal Code, 1860, Section 420 — Criminal Procedure Code, 1973, Section 300(1) — Dishonour of cheque — Appellant already convicted under Section 138 of the Negotiable Instruments Act, 1881 — Held, he could not be tried again or punished on the same facts under Section 420 or any other provision of IPC or any other statute — Prosecution under Section 420, IPC will be barred by Section 300(1) of Cr.P.C. — Appeal allowed — Judgment of the High Court set aside.

 
Saturday, January 22, 2011
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal Procedure Code, 1973, Section 205 — Application seeking dispensation with the personal appearance of an accused — Held, the order of the Magistrate should be such which does not result in unnecessary harassment to the accused and at the same time does not cause any prejudice to the complainant — The Court must ensure that the exemption from personal appearance granted to an accused is not abused to delay the trial.

 
Thursday, August 05, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(1) — Insecticides Act, 1968, Section 33(1) — In the case of Monaben Ketanbhai Shah & Another v. State of Gujarat & Others (2004) 7 SCC 15, it has been held that provision contained in section 141(1) of the Negotiable Instruments Act, 1881 is para materia to section 33(1) of the Insecticides Act, 1968.

 
Monday, May 24, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Section 138 of the Act, held, can be attracted when a cheque is dishonoured on account of ‘stop payment’ instructions sent by the accused to his bank in respect of a post-dated cheque, irrespective of insufficiency of funds in the account — Goa Plast (Pvt.) Ltd. v. Chico Ursula D’Souza, (2003) 3 SCC 232 relied. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — Presumption under Section 139 — Held, is rebuttable in nature — It is it is open to the accused to raise a defence wherein the existence of a legally enforceable debt or liability can be contested.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — There can be no doubt that there is an initial presumption which favours the complainant.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 and Section 138 — Held, 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Notice — The very fact that the accused had failed to reply to the statutory notice under Section 138 of the Act leads to the inference that there was merit in the complainant’s version.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — Presumption mandated by Section 139 of the Act does not extend to the existence of a legally enforceable debt or liability.

 
Monday, May 10, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Object of — Held,the object of bringing Section 138 into the statute was to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments — It was to enhance the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficient arrangements made by the drawer, with adequate safeguards to prevent harassment of honest drawers — It is quite evident that the legislative intent was to provide a strong criminal remedy in order to deter the worryingly high incidence of dishonour of cheques — While the possibility of imprisonment up to two years provides a remedy of a punitive nature, the provision for imposing a ‘fine which may extent to twice the amount of the cheque’ serves a compensatory purpose — What must be remembered is that the dishonour of a cheque can be best described as a regulatory offence that has been created to serve the public interest in ensuring the reliability of these instruments — The impact of this offence is usually confined to the private parties involved in commercial transactions.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320 — Compounding of the offences — Held, in view of the non-obstante clause, the compounding of offences under the Negotiable Instruments Act, 1881 is controlled by Section 147 and the scheme contemplated by Section 320 of the Code of Criminal Procedure will not be applicable in the strict sense since the latter is meant for the specified offences under the Indian Penal Code.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320(9) — Compounding of the offences — Held, Section 147 of the Negotiable Instruments Act, 1881 is in the nature of an enabling provision which provides for the compounding of offences prescribed under the same Act, thereby serving as an exception to the general rule incorporated in sub-section (9) of Section 320 of the CrPC which states that ‘No offence shall be compounded except as provided by this Section’ — Section 147 will override the effect of Section 320(9) of the CrPC, especially keeping in mind that Section 147 carries a nonobstante clause.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Held, with respect to the offence of dishonour of cheques, it is the compensatory aspect of the remedy which should be given priority over the punitive aspect.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320 — Compounding of the offences — Held, Section 147 of the Act does not carry any guidance on how to proceed with the compounding of offences under the Act — Scheme contemplated under Section 320 of the CrPC cannot be followed in the strict sense.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 188 — Section 138 — Criminal Procedure Code, 1973, Section 200 — Dishonour of cheque — Practice of filing multiple complaints relatable to the same transaction — Submission of the learned Attorney General that complaints are being increasingly filed in multiple jurisdictions in a vexatious manner which causes tremendous harassment and prejudice to the drawers of the cheque. For instance, in the same transaction pertaining to a loan taken on an installment basis to be repaid in equated monthly installments, several cheques are taken which are dated for each monthly installment and upon the dishonor of each of such cheques, different complaints are being filed in different courts which may also have jurisdiction in relation to the complaint — Held, in light of this submission, it is held that 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 CrPC — 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 — These directions should be given effect prospectively.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 readwith Section 138 — Undue delay in compunding of the offence — Imposition of costs — Held, the graded scheme for imposing costs is a means to encourage compounding at an early stage of litigation — 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 — Bona fide litigants should of course contest the proceedings to their logical end.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 readwith Section 138 — In order to discourage litigants from unduly delaying the composition of the offence in cases involving Section 138 of the Act, the prayer of the learned Attorney General to frame guidelines for a graded scheme of imposing costs on parties who unduly delay compounding of the offence, held, is accepted — Following guidelines be followed:-

 

THE GUIDELINES


 (i) In the circumstances, it is proposed as follows:


 (a) That 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.

 
 Let it also be clarified that any costs imposed in accordance with these guidelines should be deposited with the Legal Services Authority operating at the
level of the Court before which compounding takes place. For instance, in case of compounding during the pendency of proceedings before a Magistrate’s Court or a Court of Sessions, such costs should be deposited with the District Legal Services Authority. Likewise, costs imposed in connection with composition before the High Court should be deposited with the State Legal Services Authority and those imposed in connection with composition before the Supreme Court should be deposited with the National Legal Services Authority. 

 
Wednesday, March 17, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — Held, the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of the business of the company — Every person connected with the company shall not fall within the ambit of the provision — Only those persons who were in-charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action — It follows from the fact that if a Director of a Company who was not incharge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions — The liability arises from being in-charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed — It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director — But the complaint should spell out as to how and in what manner Respondent No.1 was in-charge of or was responsible to the accused company for the conduct of its business — This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability — A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in-charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfillment of the requirements under Section 141.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — In order to fasten the vicarious liability in accordance with Section 141, the averment as to the role of the concerned Directors should be specific — The description should be clear and there should be some unambiguous allegations as to how the concerned Directors were alleged to be incharge of and was responsible for the conduct and affairs of the company.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(1) — Companies Act, 1956, Sections 5 and 291 readwith the definitions in clauses 24, 26, 30, 31 and 45 of Section 2 — Vicarious liability — Held, if the accused is not one of the persons who falls under the category of “persons who are responsible to the company for the conduct of the business of the company”, the list of which is provided below, then merely by stating that “he was in-charge of the business of the company” or by stating that “he was incharge of the day-to-day management of the company” or by stating that “he was in-charge of, and was responsible to the company for the conduct of the business of the company”, he cannot be made vicariously liable under Section 141(1) of the Act — A combined reading of Sections 5 and 291 of Companies Act, 1956 with the definitions in clauses 24, 26, 30, 31 and 45 of Section 2 of that Act would show that the following persons are considered to be the persons who are responsible to the company for the conduct of the business of the company:

 (a) the Managing Director/s;

 (b) the whole-time Director/s;

 (c) the Manager;

 (d) the Secretary; 

 (e) any person in accordance with whose directions or instructions the Board of Directors of the company is accustomed to act;

 (f) any person charged by the Board of Directors with the responsibility of complying with that provision; Provided that the person so charged has given his consent in this behalf to the Board;

 (g) where any company does not have any of the officers specified in clauses (a) to (c), any director or directors who may be specified by the Board in this behalf or where no director is so specified, all the directors:

Provided that where the Board exercises any power under clause (f) or clause (g), it shall, within thirty days of the exercise of such powers, file with the Registrar a return in the prescribed form.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 141(2) and 141(1) — Held, for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of Section 141 of the Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — Held, 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — Held, 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — 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 in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — Vicarious liability on the part of a person must be pleaded and proved and not inferred.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Vicarious liability — 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.

 
Monday, January 25, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 143, 144, 145, 146 and 147 — Criminal Procedure Code, 1973 — 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 — Evidence Act, 1872.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 145 — Evidence on affidavit — Held, section 145 allows for the evidence of the complainant to be given on affidavit, that is, in the absence of the accused — But the affidavit of the complainant (or any of his witnesses) may be read in evidence “subject to all just exceptions” — In other words, anything inadmissible in evidence, e.g., irrelevant facts or hearsay matters would not be taken in as evidence, even though stated on affidavit.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 145 — Criminal Procedure Code, 1973, Section 294 — Evidence on affidavit — Contention that when the complainant gives his evidence on affidavit, then the documents produced along with the affidavit(s) are not proved automatically and unless the accused admits those documents under section 294 of the Code of Criminal Procedure the documents must be proved by oral testimony — Held, not tenable — There is no reason why the affidavits should not also contain the formal proof of the enclosed documents — In case, however, the accused raises any objections with regard to the validity or sufficiency of proof of the documents submitted along with the affidavit and if the objections are sustained by the court it is always open to the prosecution to have the concerned witness summoned and get the lacuna in the proof of the documents corrected. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 143 to 147 — Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 — The provisions of sections 143 to 147 do not take away any substantive rights of the accused — These provisions are not substantive but procedural in nature and would, therefore, undoubtedly, apply to the cases that were pending on the date the provisions came into force.  

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 143 to 146 — Evidence Act, 1872, Section 165 — Held, the scheme of sections 143 to 146 does not in any way affect the judge’s powers under section 165 of the Evidence Act — As a matter of fact, section 145(2) expressly provides that the court may, if it thinks fit, summon and examine any person giving evidence on affidavit.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 143 to 146 — Criminal Procedure Code, 1973, Section 296(2) — Trial concerning a dishonoured cheque — Neither section 296(2) of the Code nor the decision in Naib Din [(2001) 8 SCC 578] has any relevance or application to the trial concerning a dishonoured cheque under sections 143 to 146 of the Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 145 — Whether the provisions of sub-sections (1) and (2) of section 145 of the Act would apply to proceedings that were pending on February 6, 2003, the date on which those provisions were inserted in the Act? — Held, yes.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 145(1) readwith Section 143 — Whether the right to give evidence on affidavit as provided to the complainant under section 145(1) of the Act is also available to the accused? — Held, no — On a bare reading of section 143 it is clear that the legislature provided for the complainant to give his evidence on affidavit and did not provide for the accused to similarly do so — The High Court, in the present case, was in error in taking the view, that on a request made by the accused the magistrate may allow him to tender his evidence on affidavit.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 145(2) — The extent of the right of the accused under section 145(2) of the Act: whether the right of the accused is limited to crossexamination of any person giving evidence on affidavit or is it open to the accused to insist that notwithstanding the evidence earlier given on affidavit, on coming to the court the complainant or his witness should first give deposition in examination-in-chief before being cross-examined by him? — Held, on being summoned on the application made by the accused the deponent of the affidavit (the complainant or any of his witnesses) can only be subjected to cross-examination as to the facts stated in the affidavit — The claim of the accused that on being summoned under section 145(2), the complainant or any of his witnesses whose evidence is given on affidavit must be made to depose in examination-inchief all over again plainly appears to be a demand for meaningless duplication, apparently aimed at delaying the trial — Further held, neither the legislative history of 296(2) nor any decision on that section can persuade us to hold that under section 145(2) of the Act, on being summoned at the instance of the accused the complainant or any of his witnesses should be first made to depose in examination-in-chief before cross-examination — Criminal Procedure Code, 1973, Section 296(2).

 
Saturday, January 23, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138(b) — Whether after the notice issued under clause (b) of Section 138 of the Negotiable Instruments Act, 1881, is received by the drawer of the cheque, the payee or holder of the cheque, who does not take any action on the basis of such notice within the period prescribed under Section 138 of the Act, is entitled to send a fresh notice in respect of the same cheque and, thereafter, proceed to file a complaint under Section 138 of the Act? — Held, no.

 
Thursday, January 07, 2010
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 read with Section 138 — It is true that the application under Section 147 of the Negotiable Instruments Act was made by the parties after the proceedings had been concluded before the Appellate Forum — However, Section 147 of the aforesaid Act, held, does not bar the parties from compounding an offence under Section 138 even at the appellate stage of the proceedings.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 — Criminal Procedure Code, 1973, Section 320 — Compounding of offences — Held, Section 147 of the N.I. Act, 1881, will have an overriding effect over the provisions of the Code relating to compounding of offences.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 147 read with Section 138 — Once a person is allowed to compound a case as provided for under Section 147 of the Negotiable Instruments Act, the conviction under Section 138 of the said Act should also be set aside.

 
Thursday, August 13, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — It is manifest that to constitute an offence under Section 138 of the Act, the following ingredients are required to be fulfilled:

 (i) a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account;

 (ii) The cheque should have been issued for the discharge, in whole or in part, of any debt or other liability;

 (iii) that cheque has 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; 

 (iv) that cheque is returned by the bank unpaid, either because of the amount of money standing to the credit of the 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 the bank;

 (v) the payee or the holder in due course of the cheque makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;

 (vi) the drawer of such cheque fails to make payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice;

Being cumulative, it is only when all the afore-mentioned ingredients are satisfied that the person who had drawn the cheque can be deemed to have committed an offence under Section 138 of the Act. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — In the present case, dishonoured cheque was issued from an account which was not maintained by accused — Held, the very first ingredient of Section 138 of the Act, i.e. a person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account, is not satisfied and consequently the case against the appellant for having committed an offence under Section 138 of the Act cannot be proved — Appeal allowed — Criminal complaint pending against the appellant is quashed.          

 
Wednesday, August 12, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — The position under section 141 of the Act can be summarized thus :

(a) If the accused is the Managing Director or a Joint Managing  Director, it is not necessary to make an averment in the  complaint that he is in charge of, and is responsible to the  company, for the conduct of the business of the company — It is  sufficient if an averment is made that the accused was the Managing Director or Joint Managing Director at the relevant  time — This is because the prefix ‘Managing’ to the word  ‘Director’ makes it clear that they were in charge of and are responsible to the company, for the conduct of the business of the company.

 (b) In the case of a director or an officer of the company who signed the cheque on behalf of the company, there is no need to make a specific averment that he was in charge of and was responsible to the company, for the conduct of the business of the company or make any specific allegation about consent, connivance or negligence — The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under sub-section (2) of Section 141.

 (c) In the case of a Director, Secretary or Manager (as defined in Sec. 2(24) of the Companies Act) or a person referred to in clauses (e) and (f) of section 5 of Companies Act, an averment in the complaint that he was in charge of, and was responsible to the company, for the conduct of the business of the company is necessary to bring the case under section 141(1) — No further averment would be necessary in the complaint, though some particulars will be desirable — They can also be made liable under section 141(2) by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub-section.

 (d) Other Officers of a company cannot be made liable under sub-section (1) of section 141 — Other officers of a company can be made liable only under sub-section (2) of Section 141, by averring in the complaint their position and duties in the company and their role in regard to the issue and dishonour of the cheque, disclosing consent, connivance or negligence.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 and 141 — Cheque issued by the Company — Dishonoured — Whether Deputy General Manger can be prosecuted under Section 141(1) of the Act? — Held, a Deputy General Manger is not a person who is responsible to the company for the conduct of the business of the company — He does not fall under any of the categories (a) to (g) listed in section 5 of the Companies Act — Therefore the question whether he was in charge of the business of the company or not, is irrelevant — He cannot be made vicariously liable under Section 141(1) of the Act — If he has to be made liable under Section 141(2), the necessary averments relating to consent/connivance/negligence should have been made — In this case, no such averment is made — Hence the first respondent, who was the Deputy General Manger, could not be prosecuted either under sub-section (1) or under subsection (2) of Section 141 of the Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(2) — If a person is to be made liable under sub-section (2) of section 141, then it is necessary to aver consent and connivance, or negligence on his part.  

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(1) — A person who can be made vicariously liable under sub-section (1) of Section 141 is a person who is responsible to the company for the conduct of the business of the company — Therefore, if a person does not meet the first requirement, that is being a person who is responsible to the company for the conduct of the business of the company, neither the question of his meeting the second requirement (being a person in charge of the business of the company), nor the question of such person being liable under sub-section (1) of section 141 does not arise — To put it differently, to be vicariously liable under subsection (1) of Section 141, a person should fulfill the ‘legal requirement’ of being a person in law (under the statute governing companies) responsible to the company for the conduct of the business of the company and also fulfill the ‘factual requirement’ of being a person in charge of the business of the company.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(1) — If the accused is not one of the persons who falls under the category of ‘persons who are responsible to the company for the conduct of the business of the company’, then merely by stating that ‘he was in charge of the business of the company’ or by stating that ‘he was in charge of the day to day management of the company’ or by stating that he was in charge of, and was responsible to the company for the conduct of the business of the company’, he cannot be made vicariously liable under section 141(1) of the Act. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141(2) — Even an officer who was not in charge of and was responsible to the company for the conduct of the business of the company can be made liable under sub-section (2) of Section 141 — For making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of section 141 of the Act.  

 
Wednesday, July 15, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Clauses (a), (b) and (c) of the proviso to Section 138, held, lay down conditions precedent for applicability of the main provision.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Held, Section 138 of the Act being penal in nature, indisputably, warrants strict construction.  

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 (b) — Dishonour of cheque — Notice — Held, Section 138(b) of the Act inter alia provides that the payee has to make demand for the payment of money by giving a notice “to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid” — So fifteen days are to be counted from the receipt of information regarding the return of the cheque as unpaid — Munoth Investments Ltd. v. Puttukola Properties Ltd. and Another [(2001) 6 SCC 588] relied.

 
Monday, June 15, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Whether return of a cheque by the bank on the ground that it was reported lost by the drawer would attract the penal provisions contained in Section 138 of the Negotiable Instruments Act, 1881? — Held, no — Appeal allowed. 


 
Saturday, May 16, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal Procedure Code, 1973, Section 178 — Territorial jurisdiction of a court to try an offence under Section 138 of the Negotiable Instruments Act, 1881 — Appellant (accused), in the present case, is a resident of Chandigarh — He carries on business in Chandigarh — Complainant, on the other hand, has a branch office at Chandigarh although his Head Office is at Delhi — Appellant and respondent entered into business transactions which were carried on only from Chandigarh — The cheque in question admittedly was issued and presented at Chandigarh — The cheque was dishonoured also at Chandigarh — The complainant-respondent issued a notice upon the appellant asking him to pay the amount from New Delhi — Question — Whether sending of notice from Delhi itself would give jurisdiction to Delhi Courts to entertain the complaint petition under Section 138 of the N.I. Act, 1881 ? — Held, no — Principle that the debtor must seek the creditor cannot be applied in a criminal case — Jurisdiction of the Court to try a criminal case is governed by the provisions of the Criminal Procedure Code and not on common law principle.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138, Provisos (b) & (c) — Clauses (b) and (c) of the proviso to Section 138 therefore must be read together.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Held, we cannot, as things stands today, be oblivious of the fact that a banking institution holding several cheques signed by the same borrower cannot only present the cheque for its encashment at four different places but also may serve notices from four different places so as to enable it to file four complaint cases at four different places — This only causes grave harassment to the accused — It is, therefore, necessary in a case of this nature to strike a balance between the right of the complainant and the right of an accused vis-à-vis the provisions of the Code of Criminal Procedure.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Notice — While issuance of a notice by the holder of a negotiable instrument is necessary, service thereof is also imperative — Only on a service of such notice and failure on the part of the accused to pay the demanded amount within a period of 15 days thereafter, commission of an offence under Section 138 of the Act, completes — Giving of notice, therefore, cannot have any precedent over the service.

 
Wednesday, February 11, 2009
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 118 — Whether in the absence of any rebuttal by the respondents to the fact that the promissory note was for consideration as required, which gave rise to the presumption under Section 118 of the Negotiable Instruments Act, the courts below were justified in holding that since the appellant had given evidence inconsistent with such presumption, no decree could be passed on the basis of such presumption ? — Held, no — Once the execution of the pronote has been proved, the appellant would be entitled to the benefit of the presumption under Section 118(a) of the Negotiable Instruments Act. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 118(a) — If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who would be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument — However, if the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour — Bharat Barrel & Drum Company Vs. Amin Chand Payrelal [(1993) 3 SCC 35] relied.        

 
Wednesday, August 13, 2008
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal liability of the appellant-accused under the provisions of Section 138 of the Act, held, is attracted only on account of the dishonour of the cheques issued in discharge of liability or debt, but not on account of issuance of security cheques.

 
Tuesday, August 12, 2008
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal Procedure Code, 1973, Section 243 — Dishonour of cheque — Appellant-accused filed an application under Section 243 of the Cr.P.C. for referring the cheque in question for examination by the Director of Forensic Science Laboratory for determining the age of his signature, contending that the respondent had obtained a signed cheque from him in the year 1999 as a security for a hand loan of Rs.50,000/- which had been paid back, but instead of returning the cheque, the same has been misused by entering a huge amount — Learned Magistrate dismissed the said application, opining that to prove the age of the writing on Ex.P-2 it is not necessary to send the Ex.P-2 to the handwriting expert — A revision application filed thereagainst has also been dismissed by the High Court, stating that the signature on the cheque is admitted — If it is so the petitioner cannot dispute the contents of the cheque in view of the provisions of Section 20 of Negotiable Instruments Act — Hence there is no need to refer the cheque for Hand Writing Expert — Held, application filed by the appellant was bonafide — When a contention has been raised that the complainant has misused the cheque, even in a case where a presumption can be raised under Section 118(a ) or 139 of the said Act, an opportunity must be granted to the accused for adducing evidence in rebuttal thereof — As the law places the burden on the accused, he must be given an opportunity to discharge it — An accused has a right to fair trial — He has a right to defend himself as a part of his human as also fundamental right as enshrined under Article 21 of the Constitution of India — The right to defend oneself and for that purpose to adduce evidence is recognized by the Parliament in terms of sub-section (2) of Section 243 of the Code of Criminal Procedure.

 
Saturday, July 12, 2008
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 139 — Existence of legally recoverable debt, held, is not a matter of presumption under Section 139 of the Act — It merely raises a presumption in favour of a holder of the cheque that the same has been issued for discharge of any debt or other liability.     

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138 and 139 — Dishonour of cheque — Complainant case was primarily accepted for the reason that the appellant-accused did not step into the witness box — Held, the courts below committed a serious error in proceeding on the basis that for proving the defence the accused is required to step into the witness box and unless he does so he would not be discharging his burden — Such an approach on the part of the courts, is not correct — An accused for discharging the burden of proof placed upon him under a statute need not examine himself — He may discharge his burden on the basis of the materials already brought on records — An accused has a constitutional right to maintain silence — Standard of proof on the part of an accused and that of the prosecution in a criminal case is different.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Cheque for Rs.1,50,000/- got dishonoured — The counter-foil of the cheque-book showed that not more than Rs.20,000/- had ever been withdrawn from the bank at a time — Held, the courts were required to draw inference as to the probability of the complainants advancing a sum of Rs.1.50 lacs on mere asking and that to without keeping any documentary proof — Even there was no witness — Further held, the purported story that the appellant-accused would himself come forward to return the amount by a cheque knowing fully well that he did not have any sufficient funds is difficult to believe.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Complaint — Settlement — During pendency of the complaint petition, accused issued fresh cheque for the second time in favour of the complainant for the purpose of arriving at settlement — Said fresh cheque also got dishonoured — Whether in such circumstances, the second complaint under Section 138 of the Negotiable Instruments Act, 1881 can be entertained? — Held, no — Second cheque was issued in terms of compromise — It did not create a new liability — As the compromise did not fructify, the same cannot be said to have been issued towards payment of debt.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Ingredients of — Held, ingredients of Section 138 of the Act are as under :

(i) that there is a legally enforceable debt;

(ii) that the cheque was drawn from the account of bank for discharge in whole or in part of any debt or other liability which presupposes a legally enforceable debt; and
 
 (iii) that the cheque so issued had been returned due to insufficiency of funds. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138 and 141 — Dishonour of cheque — Company, in the present case, issued a post-dated cheque dated 28th January, 1998 amounting to Rs.2,01,298/- in April, 1995 — Said cheque when presented to the bank by the appellant-complainant, got dishonoured — In the meantime, first respondent had resigned from the Directorship of the Company on or about 25th May, 1996 — Intimation about his resignation was given to the complainant in writing by the first respondent on several occasions — Complaint petition was filed on or about 20th August, 1998 and first respondent was impleaded one of the accused as a Director Incharge of the affairs of the Company on the date of commission of the offence — Held, a person who had resigned with the knowledge of the complainant in 1996 could not be a person incharge of the Company in 1998 when the cheque was dishonoured — He had no say in the matter of seeing that the cheque is honoured–He could not ask the Company to pay the amount — He as a Director or otherwise could not have been made responsible for payment of the cheque on behalf of the Company or otherwise.  

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — Section 141 of the Act provides for a constructive liability — A legal fiction has been created thereby — The statute being a penal one, should receive strict construction — It requires strict compliance of the provision — Specific averments in the complaint petition so as to satisfy the requirements of Section 141 of the Act are imperative — Mere fact that at one point of time some role has been played by the accused may not by itself be sufficient to attract the constructive liability under Section 141 of the Act.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 141 — What would be the effect of a post dated cheque vis-a-vis prosecution in terms of Section 141 of the Negotiable Instruments Act, 1881? — Held, when post dated cheques are issued and the same are accepted, although it may be presumed that the money will be made available in the bank when the same is presented for encashment, but for that purpose, the harsh provision of constructive liability may not be available except when an appropriate case in that behalf is made out.   

 
Friday, March 14, 2008
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — It may be true that even in a proceeding under Section 138 of the Negotiable Instruments Act, the accused could raise a defence that the cheques were not meant to be used towards discharge of a lawful liability or a debt, but the same by itself would not mean that in an appropriate case, a complaint petition cannot be allowed to be filed — Indian Penal Code, 1860.

 
Tuesday, November 13, 2007
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Notice — In the present case, a cheque for a sum of Rs.1,00,000/- drawn on Federal Bank Limited, Indore was issued by Respondent No.1 in favour of the appellant — Upon presentation of the said cheque, it was not honoured on the ground that Respondent No.1 had closed its account with the bank — A notice dated 31.10.2000 requesting to remit the payment within 10 days was sent to Respondent No.1 — Despite receipt of the said notice, Respondent No.1 did not make any payment — A complaint petition was filed on 11.12.2000 — An application was filed by Respondent No.1 for rejection of the said complaint inter alia on the ground that the notice issued by the appellant was not a valid one — The said application was rejected — A revision application filed thereagainst before the District and Sessions Judge, was also dismissed — The High Court, however, in exercise of its jurisdiction under Section 482 of the Code of Criminal Procedure (Code), quashed the criminal proceedings pending against Respondent No.1 on the ground that 15 days' notice having not been served upon Respondent No.1, the same was not valid in law — Held, Section 138 does not speak of a 15 days' notice — It contemplates service of notice and payment of the amount of cheque within 15 days from the date of receipt thereof — When the statute prescribes for service of notice specifying a particular period, it should be expressly stated — In absence of any such stipulation, it is difficult to hold that 15 days' notice was thereby contemplated — The High Court, therefore, was not correct in arriving at the aforementioned finding.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Notice — An omnibus notice without specifying as to what was the amount due under the dishonoured cheque would not subserve the requirement of law.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138, Proviso (b) — Dishonour of cheque — Notice — Unless a notice is served in conformity with Proviso (b) appended to Section 138 of the Act, the complaint petition would not be maintainable. 

 
Sunday, May 13, 2007
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138 and 141 — Cheque issued by company — Dishonoured — Whether Chairman and Director of company could be arrayed as accused ? — Held, Chairman and Director of company could be arrayed as accused if they were aware of the entire transaction i.e. issue and dishonour of cheque. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Criminal Procedure Code, 1973, Sections 204, 200 and 190 — Dishonour of cheque — Complaint — Summons were issued by the learned Magistrate by reason of an order dated 24.07.1999 — He recalled the said order — Held, he did not have any jurisdiction in that behalf — A Magistrate does not have and, thus, cannot exercise any inherent jurisdiction.

 
Saturday, January 13, 2007
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138, 141 — Cheque issued by Company — Dishonoured — Liability of Director — Held, merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act — A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business — The requirement of Section 141 is that the person sought to be made liable should be in charge 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.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 138, 141 — Cheque issued by Company — Dishonoured — Complaint — It is necessary to specifically aver in a complaint under Section 141 at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company — This averment is an essential requirement of Section 141 and has to be made in a complaint — Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.  

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of cheque — Complaint — If the prosecution is found to be frivolous or otherwise mala fide, the court may direct registration of case against the complainant for mala fide prosecution of the accused — The accused would also be entitled to file a suit for damages — Criminal Procedure Code,1973, Section 200.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 141 — It may be true that it is not necessary for the complainant to specifically reproduce the wordings of the section but what is required is a clear statement of fact so as to enable the court to arrive at a prima facie opinion that the accused are vicariously liable.

 
Monday, September 11, 2006
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — If a cheque is issued for security or for any other purpose the same would not come within the purview of Section 138 of the Act. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 118(a) and 139 — Presumptions both under Sections 118(a) and 139 of the Act are rebuttable in nature.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Sections 118(a) and 139 — The Court shall presume a negotiable instrument to be for consideration unless and until after considering the matter before it, it either believes that the consideration does not exist or considers the non-existence of the consideration so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that the consideration does not exist — For rebutting such presumption, what is needed is to raise a probable defence — Even for the said purpose, the evidence adduced on behalf of the complainant could be relied upon.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Complainant contending that cheque was issued in discharge of the debt — He, however, did not produced his books of accounts — Appellant-accused, on the other side contending that nothing is due and cheque was issued by way of security — Held, adverse inference has to be drawn against the complainant — Contention of Appellant-accused accepted — Conviction set-aside — Appeal allowed. 

 
Friday, August 11, 2006
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Notice — 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 — Complaint against the accused-drawer — Cannot be quashed on the ground that there was no service of notice — Appeals dismissed.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Notice — Whether the service of notice has been fraudulently refused by unscrupulous means is a question of fact to be decided on the basis of evidence — In such a case the High Court ought not to exercise its jurisdiction under Section 482 of the Code of Criminal Procedure — Criminal Procedure Code, 1973, S.482. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Notice — Whether in a case, where the postal endorsement shows that the notice could not be served on account of the non-availability of the addressee, a cause of action may still arise for prosecution of the drawer of the cheque on the basis of deemed service of notice under Clause (c) of proviso to Section 138 of the Act ? — Held, this question has to be answered by reference to the facts of each case and no rule of universal application can be laid down that in all cases where notice is not served on account of non-availability of the addressee, the Court must presume service of notice.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Notice demanding payment sent to drawer through registered post but received back “unclaimed” — Held, where the notice is returned by the addressee as unclaimed such date of return to the sender would be the commencing date in reckoning the period of 15 days contemplated in Clause (c) to the proviso of Section 138 of the Act — This would be without prejudice to the right of the drawer of the Cheque to show that he had no knowledge that the notice was brought to his address — General Clauses Act, Section 27.

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Notice — Refusal of notice amounts to service of notice. 

 
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Complaint filed after prescribed period — Held, discretion is given to the Court to take cognizance of the complaint even after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making the complaint within such period. 

 
Monday, April 03, 2006
Negotiable Instruments Act, 1881

Negotiable Instruments Act, 1881 — Section 138 — Dishonour of Cheque — Complaint — Accused-respondent praying for dropping of proceedings on the ground that they have made payment by way of bank drafts in lieu of the cheques which are subject matter of complaints — Held, such defence can only be considered at the time of trial and not at the time of issuing process — Proceedings, held, cannot be dropped. 

 
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