Leading judgments on dishonour of cheque

1)  Landmark judgment on Role of power of attorney in case of dishonour of cheque https://www.lawweb.in/2013/12/role-of-power-of-attorney-in-case-of.html

2)Landmark judgment on appreciation of electronic evidence in cheque dishonour case https://www.lawweb.in/2018/01/landmark-judgment-on-appreciation-of.html

3) Supreme Court judgment on premature complaint U/S 138 of NI Act https://www.lawweb.in/2014/09/premature-complaint-under-s-138-of-ni.html

4) Whether Mismatch of Signature can constitute offence U/S138 of NI Act? https://www.lawweb.in/2013/01/mismatch-of-signature-can-constitute.html

Print Page

Supreme Court: Section 143A of Negotiable Instruments Act on Interim Compensation is not retrospective

In our view, the applicability of Section 143A of the Act must, therefore, be held to be prospective in nature and confined to cases where offences were committed after the introduction of Section 143A, in order to force an Accused to pay such interim compensation.

23. We must, however, advert to a decision of this Court in Surinder Singh Deswal and Ors. v. Virender Gandhi MANU/SC/0793/2019 : (2019) 8 SCALE 445 where Section 148 of the Act which was also introduced by the same Amendment Act 20 of 2018 from 01.09.2018 was held by this Court to be retrospective in operation. As against Section 143A of the Act which applies at the trial stage that is even before the pronouncement of guilt or order of conviction, Section 148 of the Act applies at the appellate stage where the Accused is already found guilty of the offence Under Section 138 of the Act. It may be stated that there is no provision in Section 148 of the Act which is similar to Sub-Section (5) of Section 143A of the Act. However, as a matter of fact, no such provision akin to Sub-section (5) of Section 143A was required as Sections 421 and 357 of the Code, which apply post-conviction, are adequate to take care of such requirements. In that sense said Section 148 depends upon the existing machinery and principles already in existence and does not create any fresh disability of the nature similar to that created by Section 143A of the Act. Therefore, the decision of this Court in Surinder Singh Deswal MANU/SC/8202/2007 : (2007) 13 SCC 492 stands on a different footing.

24. In the ultimate analysis, we hold Section 143A to be prospective in operation and that the provisions of said Section 143A can be applied or invoked only in cases where the offence Under Section 138 of the Act was committed after the introduction of said Section 143A in the statute book. Consequently, the orders passed by the Trial Court as well as the High Court are required to be set aside. The money deposited by the Appellant, pursuant to the interim direction passed by this Court, shall be returned to the Appellant along with interest accrued thereon within two weeks from the date of this order.

IN THE SUPREME COURT OF INDIA

Criminal Appeal No. 1160 of 2019 

Decided On: 30.07.2019

 G.J. Raja Vs. Tejraj Surana

Hon'ble Judges/Coram:

U.U. Lalit and Vineet Saran, JJ.

Citation: AIR 2019 SC 3817,2019(5) MHLJ 761

Print Page

Supreme Court: S 148 of N I Act as amended in 2018 has retrospective effect

 Having observed and found that because of the delay tactics of unscrupulous drawers of dishonoured cheques due to easy filing of appeals and obtaining stay on proceedings, the object and purpose of the enactment of Section 138 of the N.I. Act was being frustrated, the Parliament has thought it fit to amend Section 148 of the N.I. Act, by which the first appellate Court, in an appeal challenging the order of conviction Under Section 138 of the N.I. Act, is conferred with the power to direct the convicted Accused - Appellant to deposit such sum which shall be a minimum of 20% of the fine or compensation awarded by the trial Court. By the amendment in Section 148 of the N.I. Act, it cannot be said that any vested right of appeal of the Accused - Appellant has been taken away and/or affected. Therefore, submission on behalf of the Appellants that amendment in Section 148 of the N.I. Act shall not be made applicable retrospectively and more particularly with respect to cases/complaints filed prior to 1.9.2018 shall not be applicable has no substance and cannot be accepted, as by amendment in Section 148 of the N.I. Act, no substantive right of appeal has been taken away and/or affected. Therefore the decisions of this Court in the cases of Garikapatti Veeraya (supra) and Videocon International Limited (supra), relied upon by the learned senior Counsel appearing on behalf of the Appellants shall not be applicable to the facts of the case on hand. Therefore, considering the Statement of Objects and Reasons of the amendment in Section 148 of the N.I. Act stated hereinabove, on purposive interpretation of Section 148 of the N.I. Act as amended, we are of the opinion that Section 148 of the N.I. Act as amended, shall be applicable in respect of the appeals against the order of conviction and sentence for the offence Under Section 138 of the N.I. Act, even in a case where the criminal complaints for the offence Under Section 138 of the N.I. Act were filed prior to amendment Act No. 20/2018 i.e., prior to 01.09.2018. If such a purposive interpretation is not adopted, in that case, the object and purpose of amendment in Section 148 of the N.I. Act would be frustrated. Therefore, as such, no error has been committed by the learned first appellate court directing the Appellants to deposit 25% of the amount of fine/compensation as imposed by the learned trial Court considering Section 148 of the N.I. Act, as amended.

IN THE SUPREME COURT OF INDIA

Criminal Appeal Nos. 917-944 of 2019 

Decided On: 29.05.2019

 Surinder Singh Deswal  Vs.  Virender Gandhi

Hon'ble Judges/Coram:

M.R. Shah and A.S. Bopanna, JJ.

Citation: AIR 2019 SC 2956

Print Page

Supreme Court: In cheque dishonour case, first notice will constitute cause of action if second notice was given beyond limitation

 In the present case, the facts narrated above indicate that the appellant issued a
legal notice on 31 December 2015. This was within a period of thirty days of the receipt
of the memo of dishonour on 4 December 2015. Consequently, the requirement
stipulated in proviso (b) to Section 138 was fulfilled. Proviso (c) spells out a requirement
that the drawer of the cheque has failed to make payment to the holder in due course or
payee within fifteen days of the receipt of the notice. The second respondent does not
as a matter of fact, admit that the legal notice dated 31 December 2015 was served on
him. The appellant has in the complaint specifically narrated the circumstance that
despite repeated requests to the postal department, no acknowledgment of the notice  was furnished. It was in these circumstances that the appellant issued a second notice
dated 26 February 2016. Cognizant as we are of the requirement specified in proviso
(b) to Section 138, that the notice must be issued within thirty days of the receipt of the
memo of dishonour, we have proceeded on the basis that it is the first notice dated 31
December 2015 which constitutes the cause of action for the complaint under Section
138.
11 The complaint was instituted on 11 May 2016. Under Section 142(1), a
complaint has to be instituted within one month of the date on which the cause of action
has arisen under clause (c) of the proviso to Section 1386. The proviso however
stipulates that cognizance of the complaint may be taken by the court after the
prescribed period, if the complainant satisfies the Court that he had sufficient cause for
not making a complaint within such period. Both in paragraphs 7 and 8 of the
complaint, the appellant indicated adequate and sufficient reasons for not being able to
institute the complaint within the stipulated period. These have been adverted to above.
The CJM condoned the delay on the cause which was shown by the appellant for the
period commencing from 6 April 2018. However, if paragraphs 7 and 8 of the complaint
are read together, it is evident that the appellant had indicated sufficient cause for
seeking condonation of the delay in the institution of the complaint. 
We are of the view that sufficient cause was shown by the appellant for condoning the delay
in instituting the complaint taking the basis of the complaint as the issuance of the first

legal notice dated 31 December 2015.
Reportable
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO(S). 000868 OF 2019

Birendra Prasad Sah Vs The State of Bihar 

Dr Dhananjaya Y Chandrachud, J
Dated:May 8, 2019.
Citation: (2019) 7 SCC 273

Print Page

Good legal article on Negotiable Instruments (Amendment) Act, 2018’

With the latest ‘The Negotiable Instruments (Amendment) Act, 2018’ being notified on 02-08-2018.

The following amendments have been made —

With respect to the Section 143 — now introduces a new proviso 143A, giving power to a Court to try an offence under S. 138 to order the drawer of cheque to pay interim compensation to the complainant in summary trials/summons case where he pleads not guilty to the accusations in the complaint. Furthermore, the interim compensation shall not exceed 20 % of amount of the cheque and shall be payable within 60 days from date of the order.

Recovery of fine shall be same as under Section 421 of the Code of Criminal Procedure, 1973.

In cases of acquittal, the Court is now empowered to direct the complainant to repay to the appellant the amount so released, at interest rates as prescribed by RBI.

Print Page

Whether it is necessary for legal heirs of deceased payee to obtain succession certificate for initiating prosecution for dishonour of cheque?

By demise of payee itself, it cannot be said that any of the heirs or legatees get right to issue notice under proviso (b) to Section 138 of the N.I. Act and then lodge a complaint under Section 142 (a) of the said Act as if he automatically enters into the shoes of the deceased payee.

31. When we consider the rights of the heirs or legatees to recover the amount of debt and securities of the deceased, we must also recognize right of the 

debtor and person holding security to have full indemnity and full discharge in case he makes payment to such legal heir or legatee. We find such indemnity and full discharge of liability provided to maker, acceptor or endorsee respectively of a negotiable instrument on payment under Section 82 of the N.I.Act.

32. So in my considered opinion, only a person who is authorized by succession certificate, letters of administration or probate granted by the court, is entitled to call upon the drawer to pay the amount of dishonour cheque, by issuing notice under proviso(b) of to Section 138 of the N.I.Act and he would be entitled to file complaint under Section 142 of the Act as he would be then really entering into the shoes of the deceased payee.1

Bombay High Court

Vishnupant S/O Chaburao Khaire vs Kailash S/O Balbhir Madan on 25 January, 2010

Bench: P. R. Borkar

Print Page

Supreme Court: Prosecution based on second or successive dishonour of cheque is permissible

 If the decision in Sadanandan Bhadran’s case (supra) is correct, there is no option for the holder to defer institution of judicial proceedings even when he may like to do so for so simple and innocuous a reason as to extend certain accommodation to the drawer to arrange the payment of the amount. Apart from the fact that an interpretation which curtails the right of the parties to negotiate a possible settlement without prejudice to the right of holder to institute proceedings within the outer period of limitation stipulated by law should be avoided we see no reason why parties should, by a process of interpretation, be forced to launch complaints where they can or may like to defer such action for good and valid reasons. After all, neither the courts nor the parties stand to gain by institution of proceedings which may become unnecessary if cheque amount is paid by the drawer. The magistracy in this country is over-burdened by an avalanche of cases under Section 138 of Negotiable Instruments Act. If the first default itself must in terms of the decision in Sadanandan Bhadran’s case (supra) result in filing of prosecution, avoidable litigation would become an inevitable bane of the legislation that was intended only to bring solemnity to cheques without forcing parties to resort to proceedings in the courts of law. While there is no empirical data to suggest that the problems of overburdened magistracy and judicial system at the district level is entirely because of the compulsions arising out of the decisions in Sadanandan Bhadran’s case (supra), it is difficult to say that the law declared in that decision has not added to court congestion.

33. In the result, we overrule the decision in Sadanandan Bhadran’s case (supra) and hold that prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section 138 of the Negotiable Instruments Act.

REPORTABLE

Supreme Court of India

Msr Leathers vs S. Palaniappan And Anr. on 26 September, 2012

Bench: R.M. Lodha, T.S. Thakur, Anil R. Dave

Print Page