Search By Topic: Cheque bounce cases

166. (P&H HC) 01-11-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Civil Procedure, 1908 (V of 1908), Section 60(1)(i), Order 21 -- Award of Lok Adalat in complaint u/s 138 NI Act – Execution of award/ decree -- Attachment of salary -- Salary of the JD-respondent cannot be attached for a period of more than 24 months where such attachment is made in execution of one and the same decree -- Argument of DH-petitioner that the salary should be continued to be attached cannot be accepted in view of the clear provisions of Section 60(1)(i) of CPC.

(Para 7)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Civil Procedure, 1908 (V of 1908), Section 55 Order 21 Rule 30  -- Award of Lok Adalat in complaint u/s 138 NI Act – Execution of award/ decree – Arrest of Judgment Debtor/ JD -- Argument that the JD-respondent ought to be arrested for non-compliance of the order passed by the Permanent Lok Adalat cannot be accepted in view of the fact that arrest would be a measure of last resort and in the case, some property of the JD-respondent already stands attached and the Executing Court has directed the JD-respondent to file an affidavit stating all the particulars regarding his moveable and immoveable properties.

(Para 7)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Civil Procedure, 1908 (V of 1908), Order 21 – Cheque bounce case -- Award of Lok Adalat in complaint u/s 138 NI Act – Execution of award -- Award passed by the Lok Adalat would be deemed to be a decree of the Civil Court executable by the Civil Court -- There can be no quarrel with the said proposition of law.

(Para 10)

167. (J&K&L HC) 01-11-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce complaint -- Cause of action – Demand Notice – Presumption of service -- Incorrect address -- Mere issuance of notice would not by itself give rise to a cause of action, same would arise only when the notice has been communicated to the drawer of the cheque and who fails to liquidate the cheque amount within the stipulated period -- Presumption of receipt of notice by drawer of the cheque can be raised only if the notice has been dispatched through registered post, to his correct address and such inference cannot be drawn if the notice has been sent on the incorrect address of the drawer of the cheque.

(Para 8)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Quashing of – Demand Notice – Service of – Ground of -- Whether the notice of demand has been actually received by the petitioner/accused can be determined only during the trial of the case -- Argument that the impugned complaint deserves to be quashed on the aforesaid ground is, therefore, without any merit.

(Para 11)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Quashing of -- Cognizance by Magistrate – Wrong mentioning of particulars of cheques and Memos -- Errors made by the ld. trial Magistrate in recording the particulars of the cheques and the memos cannot be termed as typographical in nature -- These errors are relating to essential aspects of the case and the same clearly reflects that the learned trial Magistrate, while passing the impugned order, has approached the case in a mechanical and negligent manner -- Impugned order passed by the learned trial Magistrate clearly reflects non-application of mind on his part and, as such, is not sustainable in law -- Impugned order, set aside and the case is remanded to the learned trial Court with a direction to pass a fresh order of cognizance on the basis of the material available before him after hearing the complainant/ respondent.

(Para 13-16)

176. (SC) 11-10-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case -- Loan account -- Security/ post-dated cheque – (i) Where the borrower agrees to repay the loan within a specified timeline and issues a cheque for security but defaults in repaying the loan within the timeline, the cheque matures for presentation. When the cheque is sought to be encashed by the debtor and is dishonoured, Section 138 of the Act will be attracted; (ii) However, the cardinal rule when a cheque is issued for security is that between the date on which the cheque is drawn to the date on which the cheque matures, the loan could be repaid through any other mode. It is only where the loan is not repaid through any other mode within the due date that the cheque would mature for presentation; and (iii) If the loan has been discharged before the due date or if there is an ‘altered situation’, then the cheque shall not be presented for encashment.

(Para 12)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Cheque bounce case – Security/ post-dated cheque – Interpretation of Section 138 of N.I. Act -- Interpretation must not permit dishonesty of the drawee of the cheque as well -- Though a post-dated cheque might be drawn to represent a legally enforceable debt at the time of its drawing, for the offence to be attracted, the cheque must represent a legally enforceable debt at the time of encashment -- If there has been a material change in the circumstance such that the sum in the cheque does not represent a legally enforceable debt at the time of maturity or encashment, then the offence u/s 138 is not made out.

(Para 16)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 15, 56, 138 – Cheque bounce case – Legal enforceable liability – Security/ post-dated cheque – Part payment – Endorsement on cheque – Requirement of -- Section 56 stipulates that if there is an endorsement on a negotiable instrument that a part of the sum mentioned in the cheque has been paid, then the instrument may be negotiated for the balance -- 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 -- Cheque cannot be presented for encashment without recording the part payment -- If the unendorsed cheque is dishonoured on presentation, the offence u/s 138 would not be attracted since the cheque does not represent a legally enforceable debt at the time of encashment.

(Para 29)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 56, 138 – Cheque bounce case – Security/ post-dated cheque – Part payment – Endorsement of – Requirement of -- (i) For the commission of an offence under Section 138, the cheque that is dishonoured must represent a legally enforceable debt on the date of maturity or presentation; (ii) If the drawer of the cheque pays a part or whole of the sum between the period when the cheque is drawn and when it is encashed upon maturity, then the legally enforceable debt on the date of maturity would not be the sum represented on the cheque; (iii) When a part or whole of the sum represented on the cheque is paid by the drawer of the cheque, it must be endorsed on the cheque as prescribed in Section 56 of the Act. The cheque endorsed with the payment made may be used to negotiate the balance, if any -- If the cheque that is endorsed is dishonoured when it is sought to be encashed upon maturity, then the offence under Section 138 will stand attracted;

(Para 30)

184. (Allahabad HC) 02-09-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Presumption that the cheque had been issued for a debt or liability – Rebuttal of presumption -- Section 138 deals with a cheque drawn by a person "for the discharge, in whole or in part, of any debt or other liability." -- The section does not say that the cheque should have been drawn for the discharge of any debt or other liability of the drawer towards the payee -- Thus in complaint u/s 138 of N.I. Act, the Court has to presume that the cheque had been issued for a debt or liability -- This presumption is rebuttable.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Presumption that the cheque had been issued for a debt or liability – Rebuttal of presumption -- Applicant being holder of cheque and the signature appended on the cheque having not been denied by the Bank, presumption shall be drawn that cheque was issued for the discharge of any debt or other liability -- Presumption u/s 139 is a rebuttable presumption.

(Para 10)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Service of notice -- It is not necessary to aver in the complaint that in spite of the return of the notice unserved, it is deemed to have been served or that the addressee is deemed to have knowledge of the notice -- Unless and until the contrary is proved by the addressee, the service of notice is deemed to have been effected at the time, at which the letter would have been delivered in the ordinary course of business.

(Para 11)

D. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Cheque bounce complaint – Service of notice -- Complaint cannot be thrown at the threshold even if it does not make a specific averment with regard to service of notice on the drawer on a given date -- Factum of disputed service of notice requires adjudication on the basis of evidence and the same can only be done and appreciated by the trial court.

(Para 16)

E. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 – Code of Criminal Procedure, 1973 (2 of 1974), Section 482 -- Cheque bounce complaint – Quashing of -- Stolen cheque – Ground of -- Submission that the cheque was stolen -- If the cheque was stolen, the applicant should have given information for the same to the Bank and also lodged an FIR regarding loss of the check -- However, there is nothing on record to show that the cheque was stolen and the information regarding missing of cheque was also not given to the bank -- However, after nearly one year, when opposite party no.2 came to know about the said complaint u/s 138 of N.I. Act, he sent a letter to the bank regarding missing of check book, but neither the details of check has been mentioned nor any complaint has been made regarding the same earlier -- All the submissions made is disputed questions of fact - Therefore, when the facts have to be established by way of evidence, High Court while exercising the powers u/s 482 of Cr.P.C., cannot interfere with such proceedings -- Hence, no grounds are made out for quashing of the proceedings u/s 138 of the NI Act -- Application dismissed.

(Para 17-19)

195. (Jharkhand HC) 10-08-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 118, 138, 139 – Cheque bounce case – Presumption as to issuance of cheque in discharge of debt or other liability -- Admission of issuance of cheque and signature -- Presumption envisaged u/s 118 read with Section 139 of NI Act would operate in favour of the complainant – Presumption is one of law and there under the court shall presume that the instrument was endorsed for consideration -- In absence of contrary evidence on behalf of the petitioner/ accused, the presumption under section 118 and 139 of the NI Act, goes in favour of the complainant.

(Para 10)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138, 139 – Cheque bounce case – Presumption as to issuance of cheque in discharge of debt or other liability -- Wrong cheque number in legal notice/ complaint – Effect of -- Original cheque was placed before the trial court and the same was exhibited -- Cheque as well as the signature has been accepted by the petitioner -- Thus, the presumption u/s 139 would operate and the wrong number of the cheque in the complaint and/or in the legal notice would not make any difference and has to be taken as typographical error.

(Para 11, 12)

C. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 – Conviction in cheque bounce case – Long pendency of case – Sentence of compensation -- Ld. Appellate Court has sustained the compensation amount of Rs.9 lakhs and sentenced of S.I. for a period of 1 year -- Having regard to the facts of the case and looking to the continuity of litigation, since the case is of the year 2009 and 13 years have elapsed; interest of justice would be sufficed if the sentence part is modified in lieu of compensation itself -- Sentence of one year modified to an amount of Rs.1 lakh over and above 9 lakhs compensation – Petitioner directed to pay the amount within a period of 10 weeks’, failing which the trial court shall proceed in accordance with law.

(Para 13)

199. (P&H HC) 21-07-2022

A. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Conviction in cheque bounce case – Revision -- Allegation of forgery against complainant -- Had that been the case, the accused would have certainly filed a criminal complaint in that regard -- No effort has been made to examine any expert either -- Further, there is no denial by the petitioner to the signatures upon the cheque -- Except bald assertion, the accused has not been able to raise a probable defence even while referring to the cross-examination of the complainant and his witnesses – No infirmity in the judgment of conviction passed by the Trial Court affirmed by the ld. Appellate Court – No merit, revision dismissed.

(Para 16)

B. Negotiable Instruments Act, 1881 (26 of 1881), Section 138 -- Code of Criminal Procedure, 1973 (2 of 1974), Section 401 -- Conviction in cheque bounce case -- Revision -- Reduction of sentence -- Cheque amounting Rs.4,58,000/- -- Sentenced to R.I. for one year, fine of Rs.5,000/- and in case default sentence of one month -- Conduct of the petitioner is extremely disturbing, firstly, did not appear at the time the Appeal was pending before the ASJ and was declared a proclaimed offender and was released on interim bail -- Petitioner continued as such for a period of approximately three years -- When the matter came up for hearing before High Court, an assurance was given that he would surrender and file a revision petition, however the petitioner was untraceable -- No mitigating circumstances for reducing his sentence.

(Para 8, 17, 18)