Whether Complaint u/s 138 of NI Act can be quashed if there is mismatch of signature of accused?

 If the drawer intentionally tampers the cheque or issues the cheque with difference in signature etc., the cheques will be definitely returned. Even after service of statutory notice, if the amounts involved in the cheque are not paid by the drawer of the cheque, then his intentions are prima facie clear, to the effect that he would be tampering with the cheques only with an oblique motive. If, in such case, the person in whose favour the cheques are issued is not allowed to prosecute the matter under Section 138 of the Negotiable Instruments Act, the very purpose of enacting Section 138 of the N. I. Act would be frustrated. The drawer of the cheque will have to take abundant precaution while issuing the cheques so that the cheques should be honoured and contractual obligations are fulfilled. In case, if the drawer issues cheques as in the case on hand, he will be doing so in circuitous manner in order to save his skin, only to take advantage of the absence of specific words under Section 138 of the Negotiable Instruments Act.

Karnataka High Court

Dinesh Harakchand Sankla vs Kurlon Ltd. And Ors. on 27 September, 2005

Equivalent citations: IV (2006) BC 91, 2006 134 CompCas 295 Kar

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Whether Mismatch of Signature can constitute offence U/S138 of NI Act?

The Supreme Court of India (the “Supreme Court”) in its recent judgment in the case of M/s Laxmi Dyechem vs. State of Gujarat & Ors [1] has extended the ambit of Section 138 of Negotiable Instruments Act, 1881 (the “Act”) to dishonor of cheques due to mismatch of signature of drawer on the cheque with the specimen signature available with the bank.

Background:

One of the respondents in the case issued several cheques signed by its authorised signatory in favour of Laxmi Dyechem. Several of these cheques were dishonoured by the bank on the ground that the signatures on the cheques were incomplete or that the signatures of the drawer did not match the specimen signatures available with the bank. The cheques remained unpaid despite notice being served upon the respondents under Section 138 of the Act. The trial court took cognizance of the matter and one of the signatories of the cheque filed a Special Criminal Application before the Gujarat High Court (the “High Court”).

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