SUPREME COURTDirector of the company not responsible for its day-to-day affairs cannot be held liable for dishonour of cheque. (Para 10) Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 LiveLaw (SC) 237Section 138 – Maintainability of suit – Criminal law can be set in motion by anyone, even by a stranger or legal heir. A complaint under Section 138, preferred by the Power of Attorney...
SUPREME COURT
Director of the company not responsible for its day-to-day affairs cannot be held liable for dishonour of cheque. (Para 10) Susela Padmavathy Amma v. Bharti Airtel Ltd., 2024 LiveLaw (SC) 237
Section 138 – Maintainability of suit – Criminal law can be set in motion by anyone, even by a stranger or legal heir. A complaint under Section 138, preferred by the Power of Attorney Holder is held maintainable and also that such Power of Attorney Holder can depose as complainant. (Para 11) Rajesh Kumar v. Anand Kumar, 2024 LiveLaw (SC) 407
Section 138 - Amendment of Complaint - Cheque Date - Typographical Error - The appellant challenged the High Court's decision permitting the respondent to amend the complaint to correct the date on a cheque from 22.07.2010 to 22.07.2012. The application for amendment was filed after evidence had been tendered, and the learned Magistrate rejected the amendment on the grounds that the date had been consistently recorded as 22.07.2010 in both the complaint and the evidence. The legal notice issued before the complaint also mentioned the date 22.07.2010. The High Court allowed the amendment, but the Supreme Court found that the amendment was not justified since the original date was crucial for compliance with the statutory time frame and the financial status of the account. The High Court's order permitting the amendment was set aside, and the appeal was allowed. Munish Kumar Gupta v. Mittal Trading Company, 2024 LiveLaw (SC) 339
Section 143A - Mere filing of the cheque dishonor complaint under the Negotiable Instruments Act would not grant a right to a complainant to seek interim compensation under Section 143A (1) of the N.I. Act, as the power of the court to grant interim compensation, isn't mandatory but discretionary and needs to be decided after prima facie evaluating the merits of the case. (Para 14) Rakesh Ranjan Shrivastava v. State of Jharkhand, 2024 LiveLaw (SC) 235 : (2024) 4 SCC 419
Section 118 r/w. 139 - Even if a blank cheque leaf is voluntarily signed and handed over by the accused towards some payment would attract the presumption under Section 139 of the Act and in the absence of any cogent evidence to show that the cheque was not issued in discharge of the debt, the presumption would hold good. (Para 5) K. Ramesh v. K. Kothandaraman, 2024 LiveLaw (SC) 145
Section 118 r/w. 139 - Accused has signed the cheque. The only dispute is with regard to the age of the ink used in making the signature on the cheque and the age of the signature and contents of the cheque. It is immaterial that the cheque may have been filled in by any person other than the drawer, if the cheque is duly signed by the drawer. If the cheque is otherwise valid, the penal provisions of Section 138 would be attracted. If a signed blank cheque is voluntarily presented to a payee, towards some payment, the payee may fill up the amount and other particulars. This in itself would not invalidate the cheque. The onus would still be on the accused to prove that the cheque was not in discharge of a debt or liability by adducing evidence. (Para 5 & 6) K. Ramesh v. K. Kothandaraman, 2024 LiveLaw (SC) 145
Sections 138 and 141 - The Director of the company wouldn't be held liable for the dishonor of a cheque issued by the company pursuant to the retirement of the Director unless some credible evidence is brought on record proving the guilt of the director. The director could be held liable for the dishonor of the cheque after his retirement only when it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to a director. (Para 10) Rajesh Viren Shah v. Redington (India) Ltd; 2024 LiveLaw (SC) 119 : AIR 2024 SC 1047
Section 118(e) and 138 - If the accused is disputing the signature on the cheque, then the certified copies of the signatures from the bank could be summoned from the bank to compare the same with the signature appearing on the cheque. The indorsements on a cheque carry a presumption of genuineness as per Section 118(e) of the Act. Hence, it is incumbent upon the accused to lead evidence to rebut the presumption of genuineness of signatures. (Para 16) Ajitsinh Chehuji Rathod v. State of Gujarat, 2024 LiveLaw (SC) 64 : AIR 2024 SC 787
Section 118(e) and 138 - The accused had not taken any efforts to disprove his signature at the trial stage. No question was put to the witness from the bank regarding the genuineness of the signature. Also, the cheque was returned not on the grounds of any discrepancy in the signatures. If at all, the accused was desirous of proving that the signatures as appearing on the cheque issued from his account were not genuine, then he could have procured a certified copy of his specimen signatures from the Bank and a request could have been made to summon the concerned Bank official in defence for giving evidence regarding the genuineness or otherwise of the signature on the cheque. (Para 16) Ajitsinh Chehuji Rathod v. State of Gujarat, 2024 LiveLaw (SC) 64 : AIR 2024 SC 787
Section 138 - Accused persons filed an undertaking based on a settlement. Since the amount agreed was not paid, the interim protection, granted via suspension of sentence and bail, was withdrawn. Appeal dismissed with cost of Rs 5 lakhs and directed to surrender within a period of four weeks. Satish P. Bhatt v. State of Maharashtra, 2024 LiveLaw (SC) 16
Section 138 - Once the settlement has been arrived at and the complainant has signed the deed accepting a particular amount in full and final settlement of the default amount and the fine amount awarded by the Trial Court, the proceedings under Section 138 of the NI Act need to be quashed. (Para 4) Ghanshyam Gautam v. Usha Rani, 2024 LiveLaw (SC) 23
Section 138 - Question regarding the time-barred nature of an underlying debt or liability in proceedings under Section 138 of the NI Act is a mixed question of law and fact which ought not to be decided by the High Court exercising jurisdiction under Section 482 of the CrPC. (Para 7) Atamjit Singh v. State (NCT of Delhi), 2024 LiveLaw (SC) 76
Principles of compounding of offences - It is to be remembered that dishonour of cheques is a regulatory offence which was made an offence only in view of public interest so that the reliability of these instruments can be ensured. A large number of cases involving dishonour of cheques are pending before courts which is a serious concern for our judicial system. Keeping in mind that the 'compensatory aspect' of remedy shall have priority over the 'punitive aspect', courts should encourage compounding of offences under the NI Act if parties are willing to do so. (Para 6) New Win Export v. A. Subramaniam, 2024 LiveLaw (SC) 490
Section 143A - An authorized signatory of the company could not be considered as a 'drawer' of cheque, and therefore, could not be directed to pay the interim compensation to the complainant. (Para 30) Shri Gurudatta Sugars Marketing Pvt. Ltd. v. Prithviraj Sayajirao Deshmukh, 2024 LiveLaw (SC) 513
Section 138—Discrepancies in the interest rate were insufficient to discredit the principal amount due, especially when the respondent admitted to issuing the cheque. (Para 17 & 18) Sri Sujies Benefit Funds Ltd. v. M. Jaganathuan, 2024 LiveLaw (SC) 581
Sections 138, 139, 118(a); Code of Criminal Procedure, Section 391; Prohibition of Charging Exorbitant Interest Act, 2003 (Tamil Nadu) — Discrepancies in interest rates and the partial repayments did not sufficiently rebut the statutory presumption of liability—Respondent failed to demonstrate that the cheque was not for a legally enforceable debt—Even if the interest charged exceeded the rate allowed under the Tamil Nadu Act, this was not a ground to invalidate the entire debt. (Para 17 & 18) Sri Sujies Benefit Funds Ltd. v. M. Jaganathuan, 2024 LiveLaw (SC) 581
Sections 138 and 147 – Code of Criminal Procedure, 1973 - Section 320 and 482 – Compounding of Offence – Consent of Complainant – Mandatory Requirement. A.S. Pharma Pvt. Ltd. v. Nayati Medical Pvt. Ltd., 2024 LiveLaw (SC) 608
Section 138 and 139 – Acquittal upheld due to contradictions in the statements of the complainant, inability to show the financial capacity to advance the loan as well as the lack of acknowledgement of the loan in the Income Tax returns. Although the signature of the accused in the cheque was established, the presumption under Section 139 of the Negotiable Instruments Act 1881 is not attracted. “The liability of the defence in cases under Section 138 of the NI Act 1881 is not that of proving its case beyond reasonable doubt. An accused may establish non-existence of a debt or liability either through conclusive evidence that the concerned cheque was not issued towards the presumed debt or liability, or through adduction of circumstantial evidence vide standard of preponderance of probabilities. Since a presumption only enables the holder to show a prima facie case, it can only survive before a court of law subject to contrary not having been proved to the effect that a cheque or negotiable instrument was not issued for a consideration or for discharge of any existing or future debt or liability.” Sri Dattatraya v. Sharanappa, Criminal Appeal No. 3257 of 2024, Citation: 2024 LiveLaw (SC) 890
Section 148 – The official signatory of the company does not assume the status of a 'drawer of a cheque' to attract the liability for payment of compensation under Section 148 of the NI Act. Liability for payment of compensation as well as deposit to suspend the sentence pending the appeal could only be fastened upon the drawer of the cheque, and not on the company's official who acted as an authorized signatory of the company. Bijay Agarwal v. M/s Medilines, 2024 LiveLaw (SC) 948
Sections 138 and 141 – Director of a company cannot be held liable under Section 138 for dishonour of a cheque drawn on the company's account unless the company is arraigned as the principal accused, even if the cheque is issued by the director in discharge of personal debt. Bijoy Kumar Moni v. Paresh Manna & Anr., 2024 LiveLaw (SC) 1035
HIGH COURTS
ALLAHABAD HIGH COURT
Case Title: Ashok Sharma vs. State of U.P. and Another 2024 LiveLaw (AB) 81 [APPLICATION U/S 482 No. - 18652 of 2016]
Citation: 2024 LiveLaw (AB) 81
The Allahabad High Court has held that Section 142 of the Negotiable Instruments Act,1881 and Section 200 of the Criminal Procedure Code do not prescribe who can file a complaint on behalf of a company under Section 138 of the Negotiable Instruments Act,1881.
The Court held that when company is the payee, the complaint must be registered in the name of the company.
“Section 142 of the N.I.Act does not specify as to who should represent the company, if the company is the complainant. A company can be represented by an employee or even by a known employee, who is duly authorized and empowered to represent the company either by resolution or by a power of attorney,” held Justice Prashant Kumar.
Case title - Rajendra vs. State of U.P. and Another 2024 LiveLaw (AB) 83 [APPLICATION U/S 482 No. - 45953 of 2023]
Case citation: 2024 LiveLaw (AB) 83
In a significant ruling, the Allahabad High Court has held that a demand notice sent to the drawer of a cheque through 'email or WhatsApp' under Section 138 of the Negotiable Instrument for the dishonour of a cheque, is a valid notice and the same shall be deemed to be dispatched and served on the same date, if it fulfils the requirement of Section 13 of the Information Technology Act.
For context, Section 13 of the IT Act provides that as soon as the notice in electronic form is entered, a computer resource outside the control of the originator, it is deemed to be dispatched and as soon as the notice in electronic form is entered, the designated computer resource or enters the computer resources of the addressee, and then it is deemed to be served.
Case title - Jatan Kumar Singh Vs. State Of U.P. And Another 2024 LiveLaw (AB) 121 [APPLICATION U/S 482 No. - 2965 of 2021]
Case Citation: 2024 LiveLaw (AB) 121
The Allahabad High Court has held that when a cheque is returned unpaid by a Bank with an endorsement 'Account Closed', it would amount to 'dishonour of cheque' and constitute the commission of an offence under section 138 of the Negotiable Instruments Act.
A bench of Justice Anish Kumar Gupta further added that the return of the cheque by the drawee Bank alone constitutes the commission of offence under section 138 of the NI Act.
To conclude thus, the single judge relied upon Apex Court's judgments in the cases of NEPC Micon Ltd. vs. Magma Leasing Ltd (1999), wherein it was observed that when the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid, because the amount of money standing to the credit of that account, is insufficient to honour the cheque as envisaged under Section 138 of the Act.
Case Title: Sudesh Kumar vs. State of UP and another 2024 LiveLaw (AB) 149 [MATTERS UNDER ARTICLE 227 No. 7895 of 2023]
Case Citation: 2024 LiveLaw (AB) 149
The Allahabad High Court has held that the cause of action under Section 142(1)(b) of the Negotiable Instruments Act, 1881 arises after expiry of 15 days granted to the drawer to pay the amount to the payee/cheque holder under clause (c) of Section 138 of the Act.
Section 142(1) of the NI Act provides that a complaint must be made within 1 month of the date from which the cause of action arises under clause (c) of Section 138. Clause (c) of Section 138 provides that action under Section 138 may be initiated if the drawer of the cheque fails to pay the amount due to the payee/ holder of the cheque within 15 days from the date of notice. Further, Section 142(1)(b) provides that if sufficient cause is shown, delay in filing the complaint may be condoned by the Court.
Case title - Abhishek Mishra @ Pintu vs. State of U.P. and Another 2024 LiveLaw (AB) 175 [APPLICATION U/S 482 No. - 3099 of 2024]
Case Citation: 2024 LiveLaw (AB) 175
The Allahabad High Court has referred to a larger bench the question as to whether the dismissal of complaint u/s 138 of the Negotiable Instruments Act 1881 for want of prosecution will amount to acquittal u/s 256(1) CrPC, and same can be challenged in appeal u/s 378(4) CrPC or is that order revisable u/s 397 CrPC?
A bench of Justice Arun Kumar Singh Deshwal referred the matter to a larger bench while disagreeing with the order of a co-ordinate bench in the case of Vinay Kumar Vs. State of UP 2007 wherein it was observed that against the dismissal of complaint u/s 138 NI Act, an appeal lies u/s 378(4) CrPC and not a revision.
Case title - Gurmeher Singh vs. State of U.P. and Another 2024 LiveLaw (AB) 238
Case citation: 2024 LiveLaw (AB) 238
The Allahabad High Court has observed that the moratorium provisions contained in Section 14 of the Insolvency and Bankruptcy Code, 2016 prohibit the proceeding u/s 138/141 NI Act only against the corporate debtor and not against the natural persons like the directors of the company for their vicarious liability.
A bench of Justice Arun Kumar Singh Deshwal observed thus while dismissing a plea moved by one Gurmeher Singh challenging the proceeding of a Complaint Case u/s 138 NI Act pending before Addl. Civil Judge (J.D.), Gorakhpur.
Case title - Vijay Kumar vs. State Of Up Another 2024 LiveLaw (AB) 353
Case citation: 2024 LiveLaw (AB) 353
The Allahabad High Court has observed that if the cheque is dishonoured and returned with the endorsements - case referred to drawer, instruction for stoppage of payment, exceeds arrangement, insufficient fund, signature differed or mismatch or account closed - then it will be sufficient for prima facie case for issuing process under Section 138 NI Act.
A bench of Justice Arun Kumar Singh Deshwal added that despite the bank's above-mentioned endorsements for returning the cheque, summoning the cheque drawer under Section 138 of the NI Act is proper.
Case title - Archana Singh Gautam vs. State of U.P. and Another 2024 LiveLaw (AB) 384
Case citation: 2024 LiveLaw (AB) 384
The Allahabad High Court has ruled that cheques from the erstwhile 'Allahabad Bank' (which merged with 'Indian Bank' on April 1, 2020) became 'invalid' after September 30, 2021. Consequently, the dishonour of such cheques will not constitute an offence under Section 138 of the Negotiable Instruments Act.
A bench of Justice Arun Kumar Singh Deshwal observed thus in light of the mandate of Section 138 NI Act, the proviso (a) of which states that a cheque must be presented to the Bank 'during its validity'.
Case Title: Kishore Shankar Signapurkar v. State Of U.P. And Anr [APPLICATION U/S 482 No. - 4898 of 2019]
Case citation: 2024 LiveLaw (AB) 592
The Allahabad High Court has held that a company is juristic person can be summoned through the person in-charge of its affairs and if such a juristic person summoned through the person in-charge, it cannot be said that the company has not been summoned for trial under the Negotiable Instruments Act, 1881.
The Court held that once company is also made a party to the proceedings under Section 138 and 141 of the Act, if the signing Director signing the cheque is summoned, then it must be presumed that the company has been summoned.
CHHATTISGARH HIGH COURT
Case Title: Tarkeshwar Sahu v. Amit Lilhare
Citation: 2024 LiveLaw (Chh) 1
The Chhattisgarh High Court has clarified that appeal against the order of acquittal under Section 138 of the Negotiable Instruments Act, 1881 lies to the High Court under Section 378(4) of the Code of Criminal Procedure and not under proviso to Section 372 of the Code.
The Single Bench of Justice Deepak Kumar Tiwari was hearing a criminal revision filed by the revision-petitioner who was aggrieved by the judgment of acquittal passed in favour of the respondent by the Additional District Judge, Durg upholding the order of JMFC, Durg.
DELHI HIGH COURT
Case Title: Right Choice Marketing Solutions Jlt & Ors Vs State Nct Of Delhi & Anr.
Citation: 2024 LiveLaw (Del) 549
The Delhi High Court has made it clear that where a "foreign cheque" is deposited for encashment in India, the Court within whose jurisdiction it is so deposited shall have the jurisdiction to adjudicate on the complaint for its dishonour under Section 138 of the Negotiable Instruments Act, 1881 (NI Act).
Case Title: Aeiforia Constructions Pvt. Ltd. & Anr Vs Continental Carbon India Pvt. Ltd. & Anr.
Citation: 2024 LiveLaw (Del) 795
The Delhi High Court bench of Justice Anup Jairam Bhambhani has held that the issuance of summons under Section 138 of the Negotiable Instruments Act, 1881 requires a clear application of mind. The bench held that this application of mind must be evident upon reading the summoning order; the appellate or revisional court should not have to speculate about the considerations of the Magistrate who issued the summons.
Case Title: Mr. Sandip Vinodkumar Patel & Ors. Vs Stci Finance Ltd., & Anr.
Citation: 2024 LiveLaw (Del) 940
The Delhi High Court bench of Justice Amit Mahajan has held that independent, non-executive directors of an accused company cannot be held liable under Section 138 of the Negotiable Instruments Act, 1881, if the complaints do not include specific allegations detailing their active role in the offence.
Case title: RAJEEV KUMAR vs. THE STATE NCT OF DELHI & ANR.
Citation: 2024 LiveLaw (Del) 1055
The Delhi High Court had observed that the presentation of a cheque of a time-barred debt itself revives the debt under Section 25(3) of the Indian Contract Act, 1872. It stated that the furnishing of the cheque is in itself an acknowledgement of a debt or liability and thus in case of dishonour of the cheque, the creditor can enforce legal liability and the accused cannot claim that debt has been barred by limitation.
Case title: Sanat Kumar v/s Sanjay Sharma
Citation: 2024 LiveLaw (Del) 1075
While hearing a cheque bouncing case, the Delhi High Court reiterated that in respect of a sole proprietorship firm, the sole proprietor alone can be held responsible for cheques issued by the firm for repaying a debt.
Title: ASHOK KUMAR v. STATE & ANR.
Citation: 2024 LiveLaw (Del) 744
The Delhi High Court has recently said that the conduct of the litigants to keep the dispute alive for mala fide reasons has the tendency of keeping the docket of the Courts heavy to the detriment of other litigants whose cases have been pending for years.
Justice Amit Mahajan made the observation while quashing two complaints filed in 2016 under the Negotiable Instruments Act, 1881 against a man.
Case Title: Amit Jain vs. Sanjeev Kumar Singh & Anr (Crl.A. 1248/2019)
Citation: 2024 LiveLaw (Del) 926
While hearing a matter on cheque bounce under the Negotiable Instruments (NI) Act, the Delhi High Court recently said that it would be prudent for courts to acknowledge that friendly cash loans are provided between parties without an existing document trail, with accused often getting acquitted because the complainant is unable to prove the existence of a debt.
Case Title: M/S. Dhanlaxmi Sales Corporation Vs Boston Scientific India Pvt Ltd
Citation: 2024 LiveLaw (Del) 958
The Delhi High Court bench of Justice Prateek Jalan has held that correspondence from a party stating that ongoing proceedings under the Negotiable Instruments Act, 1881 barred initiation of arbitration implicitly acknowledged the existence of the arbitration clause.
HIMACHAL PRADESH HIGH COURT
Case Title: Satvir Singh Vs Rajesh Pathania
Citation: 2024 LiveLaw (HP) 51
The Himachal Pradesh High Court has ruled that under Section 147 of the Negotiable Instruments Act, 1881, offences can be compounded even after the recording of a conviction by the court.
Justice Sandeep Sharma delivered this judgment while hearing a petition under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, read with Section 147 of the Negotiable Instruments Act. The petitioner sought the compounding of an offence under Section 138 of the Act and requested that the judgment of conviction and order of sentence imposed by the Judicial Magistrate First Class, Shimla, be set aside.
Case Title: Tushar Sharma v. State Bank of India
Citation: 2024 LiveLaw (HP) 63
The High Court observed that both proceedings under section 138 and under the IBC could proceed simultaneously. The High Court further observed that the moratorium under section 14 of the IBC is applicable on corporate debtor's liabilities and not to the personal criminal liability of the individuals. It was further opined by the court that the section 138 proceedings are criminal in nature and not like a debt recovery process governed by the IBC.
JAMMU & KASHMIR AND LADAKH HIGH COURT
Case Title: Choudhary Piara Singh Vs Kuldeep Singh
Citation: 2024 LiveLaw (JKL) 33
The Jammu and Kashmir and Ladakh High Court ruled that criminal courts must prioritize compensating the complainant when imposing a fine on an accused convicted under Section 138 of the Negotiable Instruments Act (NI Act) for dishonoring cheques.
A bench comprising Justice M A Chowdhary stressed that for the compensatory aspect to be duly considered, the sentence imposed should align with the cheque amount, if not exceed it. This ensures that any fine imposed can be utilized to compensate the complainant, as per the provisions of Section 357 of the Criminal Procedure Code (CrPC) 1973, the bench underscored.
Case Title: Sh. Vaibhav Singh Vs Sh. Taushar Gaind
Citation: 2024 LiveLaw (JKL) 145
Quashing a complaint against a company director accused of dishonoring a cheque, the Jammu and Kashmir and Ladakh High Court observed that only the drawer of the cheque can be held liable under Section 138 of the Negotiable Instruments Act (NI Act).
Case Title: MUJEEB UL ASHRAF DAR Vs MUSHTAQ AHMAD WANI
Citation: 2024 LiveLaw (JKL) 197
Quashing an order of the Judicial Magistrate 1st Class (1st Additional Munsiff), Srinagar, for granting interim compensation under Section 143-A of the Negotiable Instruments Act (NI Act) the Jammu and Kashmir and Ladakh High Court emphasised on the proper application of mind on part of the Magistrate to decide the interim compensation.
Case Title: Mubashir Manzoor Vs Mushtaq Ahmad Wani
Citation: 2024 LiveLaw (JKL) 205
The Jammu and Kashmir and Ladakh High Court quashed three orders passed by the Chief Judicial Magistrate, Srinagar, awarding interim compensation to a complainant under Section 143-A of the Negotiable Instruments Act (NI Act). The Court held that interim compensation can be granted only after the accused pleads not guilty to the accusation and the Magistrate applies his mind to relevant factors.
Case Title: Gulzar Ahmad Malik Vs Tariq Ahmad Parray and another
Citation: 2024 LiveLaw (JKL) 211
The Jammu & Kashmir and Ladakh High Court delivered a judgment quashing a complaint against a petitioner under Section 138 of the Negotiable Instruments Act, 1881 stating that the intent at the time of issuance of the cheque does not need to be proven for Section 138, whereas it is vital for Section 420 IPC.
Case Title: Sheikh Owais Tariq Vs Satvir Singh
Citation: 2024 LiveLaw (JKL) 255
The Jammu & Kashmir and Ladakh High Court held that a complaint under Section 138 of the Negotiable Instruments Act, 1881, is maintainable even if a cheque is dishonoured with the reason 'Account Frozen'.
Justice Rajnesh Oswal, hearing the matter, examined whether the complaint for dishonour of a cheque on the ground of 'Account Frozen' is maintainable under Section 138 of the Act.
Case Title: Chowdhary Piara Singh Vs Sat Pal
Citation: 2024 LiveLaw (JKL) 296
Spotlighting the critical shift in evidentiary burden under Section 139 of the Negotiable Instruments Act, 1881 the Jammu and Kashmir and Ladakh High Court observed that once the complainant proves that a cheque was issued by the accused to discharge a debt, Section 139 mandates that the burden of proof shifts to the accused.
JHARKHAND HIGH COURT
Case Title: Ripunjay Prasad Singh v. The State of Jharkhand & Anr.
LL Citation: 2024 LiveLaw (Jha) 171
The Jharkhand High Court dismissed a petition filed by the Director of a company seeking to quash criminal proceedings for cheque bouncing under Section 138 of the Negotiable Instruments Act and said that not making the company a separate accused in the complaint would not be fatal for the prosecution.
The Court noted that while the company that issued the cheque was not named as an accused, the complainant had made the company's Director who had signed the cheque in question as an accused and had mentioned the company's name in Section 138 complaint petition in the accused persons column.
Case Title: Prashant Kumar Singh V. The State of Jharkhand
LL Citation: 2024 LiveLaw (Jha) 176
While hearing a cheque bouncing case, the Jharkhand High Court has reaffirmed that cognizance of offences under Section 142 of the Negotiable Instruments (NI) Act does not require a report to the police nor empowers the court to direct the police to investigate the complaint.
The court further clarified that under Section 142(1)(a) of the NI Act the cognizance of an offence punishable under Section 138 for cheque dishonour can only be taken upon a written complaint.
KARNATAKA HIGH COURT
Case Title: A Adinarayana Reddy AND S Vijayalakshmi & ANR
Case No: Criminal Petition No 5909 OF 2023
Citation No: 2024 LiveLaw (Kar) 68.
The Karnataka High Court has held that a single complaint made under Section 138 of the Negotiable Instruments Act, is maintainable for multiple cheques issued by the respondent/accused on the same cause of action.
A single judge bench of Justice M Nagaprasanna allowed the petition filed by complainant A Adinarayana Reddy and set aside the order dismissing the complaint filed under Section 138 of the Negotiable Instruments Act, against accused S Vijayalakshmi and another.
It said “When all the cheques were issued by the husband and wife for the same cause of action and cheques were dishonoured, a common notice was issued against the accused. Such being the case, instead of filing the multiple complaints, single complaint for dishonour of multiple cheques are maintainable.”
Case Title: Hemachandra M Kuppalli AND M/s R.B.Green Field & Others
Case No: WRIT PETITION No.12169 OF 2023
Citation No: 2024 LiveLaw (Kar) 108
The Karnataka High Court has directed that when a convict under the Negotiable Instruments Act offers himself for settlement of the dispute in appeal on the basis of which conviction is set aside, Courts shall mandatorily observe that deviation from the terms of compromise will automatically result in restoration of conviction order.
A single judge bench of Justice M Nagaprasanna said “Failing which, the accused who get away with conviction on compromise like in the case at hand, take advantage of the laborious rigmarole of procedure of getting the compromise decree executed.”
Case Title: G Hemanth Chandra AND M/s Infrathon Projects Pvt Ltd
Case No: CRIMINAL REVISION PETITION NO.247/2024
Citation No: 2024 LiveLaw (Kar) 123
The Karnataka High Court has held that a revision petition against an order passed under Section 148 (3) of the Negotiable Instruments Act, 1881, for the release of interim compensation, is not maintainable before the High Court.
A single judge bench of Justice H P Sandesh held “Here is a case of releasing of the amount, which is in deposit under Section 148(3) and the same does not amount to intermediate order and it is only an interlocutory order and hence, revision is not maintainable and the same can be challenged before the appropriate court by filing appropriate petition.”
Case Title: Bhuvaneshwari AND Prashanth Kumar
Case No: WRIT PETITION NO. 18433 OF 2023
Citation No: 2024 LiveLaw (Kar) 132.
The Karnataka High Court has held that a photostat copy of an unregistered agreement to sell cannot be admitted as secondary evidence in a trial under section 138 of the Negotiable Instruments Act, only because the accused claims the signature on the document is his.
A single judge bench of Justice S Vishwajith Shetty dismissed a petition filed by one Bhuvaneshwari challenging an order of the trial court 29.12.2022, dismissing his plea to permit him to mark the said document.
Case Title: M/S Durga Projects Inc Vs Sri. B.G. Babu Reddy
Case Number: Criminal Appeal No.434 Of 2014 (A) C/W Criminal Appeal No.433 Of 2014 (A)
Citation No: 2024 LiveLaw (Kar) 156
The Karnataka High Court single bench of Justice Anil B Katti held that simultaneous proceedings can be carried on under the Arbitration and Conciliation Act, 1996 and Section 138 of the Negotiable Instruments Act. The bench further held that a party cannot be acquitted solely on the basis of presence of an arbitration agreement.
Case Title: Rangaswamy AND Ravi Kumar
Case No: CRIMINAL REVISION PETITION NO. 841 OF 2020
Citation No: 2024 LiveLaw (Kar) 175
The Karnataka High Court has held that in a case of dishonour of cheque registered under the Negotiable Instruments Act when the defence of the accused is not believable, inference can be drawn by the court that he made a transaction with the complainant and issued a cheque for the said transaction.
A single judge bench of Justice S Rachaiah observed thus while dismissing a petition filed by one Rangaswamy challenging the order of the conviction passed by the trial court under Section 138 of the Act.
Case Title: Jithendra Kumar N M AND T Gururaj
Case No: CRIMINAL APPEAL NO.2158/2018
Citation No: 2024 LiveLaw (Kar) 243
The Karnataka High Court has held that there is presumption in favour of the complainant under Section 139 of the Negotiable Instruments Act, when in the reply notice issued by the accused to the complainant the transaction of availment of loan is admitted again calling upon the complainant to prove the transaction does not arise at all.
A single-judge bench of Justice Rajendra Badamikar reversed the order dated 30.08.2018 passed by the trial court acquitting accused T Gururaj who was charged with the offence punishable under Section 138 of the Act.
Case Title: Parvathamma M AND Chandrakala V
Case No: CRIMINAL APPEAL NO. 508 OF 2015
Citation No: 2024 LiveLaw (Kar) 274
The Karnataka High Court has said that the presumption against an accused under Section 113 of the Negotiable Instruments Act is a rebuttable presumption, but the said rebuttable presumption must be rebutted by adducing credible evidence, and merely raising a doubt is not sufficient.
A single judge bench of Justice Ramachandra D Huddar made the observation while allowing the appeal filed by Parvathamma M and setting aside the order passed by the trial court acquitting accused Chandrakala V, who was charged under Section 138 of the Act.
Case Title: A M Harish Gowda AND Chaluvaraju H S
Case No: CRIMINAL REVISION PETITION NO.619 OF 2021
Citation No: 2024 LiveLaw (Kar) 276
The Karnataka High Court has upheld the order of conviction handed down to an accused who was charged under Section 138 of the Negotiable Instruments Act.
A single judge bench of Justice V Srishananda while dismissing the petition filed by A M Harish Gowda, turned down his contention that the cheque issued in favour of one Prabhakar had been misused by the complainant Chaluvaraju H to file a false case against the accused.
The court said, “It is pertinent to note that said Prabhakar is not even examined on behalf of the accused, nor any material like counterfoil or cheque issuing register is placed on record so as to establish that the cheque has been issued in favour of Prabhakar.”
Case Title: Mathikere Jayaram Shantharam AND Pramod C
Case No: CRIMINAL PETITION No.2998 OF 2023
Citation No: 2024 LiveLaw (Kar) 284
The Karnataka High Court has observed that criminal proceedings should be restored if an accused does not adhere to settlement arrived at between parties in a case registered under Section 138 of the Negotiable Instruments Act, with an intention only to dodge the issue after settlement.
A single judge bench of Justice M Nagaprasanna dismissed a petition filed by one Mathikere Jayaram Shantharam questioning the order of the Magistrate court dated 17-01-2023, which issued a fine levy warrant and notice for attachment of personal properties of the accused.
Case Title: C Niranjan Yadav AND D Ravi Kumar
Case No: CRIMINAL REVISION PETITION NO.814 OF 2021
Citation No: 2024 LiveLaw (Kar) 313
The Karnataka High Court has held that a legal notice regarding dishonour of cheque under Section 138 of the Negotiable Instruments Act if sent by registered post to the address of the accused which is known to the complainant, would be deemed to have been served and it is for the accused to say as to why he could not receive the cover.
A single judge bench of Justice V Srishananda held thus while dismissing the petition filed by C Niranjan Yadav challenging an order by the trial court which had held him guilty under the Act and imposed a fine of Rs.75,000.
Case Title: Zaheda Inamdhar AND Dr Fatima Hassina Sayyedha
Case No: WRIT PETITION No.3519 OF 2024
Citation No: 2024 LiveLaw (Kar) 329
The Karnataka High Court has held that an accused has no right to tender his evidence by way of an affidavit in a proceedings initiated against him under the Negotiable Instruments Act.
A Single judge bench of Justice M Nagaprasanna allowed the petition filed by the complainant Zaheeda Inamdhar and set aside an order of the trial court permitting the filing of an affidavit by the accused Dr Fatima Hassina Sayeedha and rejecting Inamdhar's application filed under Section 311 of CrPC to cross-examine the accused.
Case Title: Lalji Kesha Vaid AND Dayanand R
Case No: CRIMINAL PETITION No.331 OF 2022.
Citation No: 2024 LiveLaw (Kar) 450
The Karnataka High Court has held that a complaint for offence punishable under Section 138 of the Negotiable Instruments Act would be maintainable, notwithstanding the civil suit filed for recovery of the money.
A single judge bench of Justice M Nagaprasanna held thus white dismissing a petition filed by one Lalji Kesha Vaid. It said “The complaint for offence punishable under Section 138 of the Act would be maintainable, notwithstanding recovery proceedings initiated by institution of a civil Suit, though both spring from the same cause of action.”
KERALA HIGH COURT
Case Title: Mathew Kunju Mathew v. K.V. Kuriakose & Anr. and connected matters
Citation: 2024 LiveLaw (Ker) 13
The Kerala High Court held that when a competent civil court finds that a dishonoured cheque, which was the subject matter for initiation of criminal proceedings under Section 138 of the Negotiable Instruments Act ('NI Act') was not supported by valid consideration, the conviction and sentence of the criminal court for the offence would not legally sustain.
"The presumption under Sections 118 ('Presumptions as to negotiable instruments') and 139 ('Presumption in favour of holder') of the NI Act is of no avail, when the cheques are proved to be not issued towards discharge of any legally enforceable debt," Justice Sophy Thomas observed.
Case title: Sasidharan A v Vijayan Unnithan
Citation: 2024 LiveLaw (Ker) 49
The Kerala High Court has upheld the acquittal order issued by the Trial Court under Section 138 of the Negotiable Instruments Act on finding that there was no evidence to prove that the cheque was dishonoured for want of sufficient funds.
Justice P.G. Ajithkumar observed that the Appellate Court will not interfere with the order of the Trial Court if it has been reasonably formed.
Case number: Padma Conductors Pvt Ltd. v MIRC Electronics
Citation: 2024 LiveLaw (Ker) 109
The Kerala High Court has stated that the prosecution has to examine a witness who had direct knowledge regarding the transaction, issuance and execution of the cheque to prove dishonour of the cheque.
The appellants approached the High Court with a criminal revision petition against the conviction in a cheque dishonour matter under Section 138 NI Act where the cheque was dishonoured for want of funds.
Justice A. Badharudeen observed that the examination of a witness who had no direct knowledge regarding the transaction or issuance of the cheque would be insufficient to discharge the initial burden cast upon the complainant to prove their case.
Citation: 2024 LiveLaw (Ker) 177
Case Title: Rahiya v. Jasna and ors.
The Kerala High Court has held that a complainant under the Negotiable Instruments Act cannot rely on the presumption that the holder of a negotiable instrument has paid consideration for it when his claim is inconsistent.
It upheld the acquittal of the accused upon noting that the complainant in the present case had failed to prove that the cheque had been issued in lieu of legally enforceable debt when called upon to do so by the trial court, due to suspicious circumstances surrounding the consideration for the negotiable instrument.
“The accused could discharge her initial onus of proof showing that the existence of consideration was doubtful. The onus now shifted to the complainant, who is obliged to prove it as a matter of fact” observed Justice K Babu.
Case title: P Sreenivasan v Babu Raj & Connected Case
Citation: 2024 LiveLaw (Ker) 208
The Kerala High Court has held that the Appellate Court has the statutory discretion to either order a deposit or waive the deposit of the fine or compensation amount under Section 148 of the Negotiable Instruments Act. The Court clarified that since the Appellate Court would be exercising statutory discretion, it would be legally obliged to give reasons for either ordering a deposit or waiving the deposit of fine or compensation amount.
While hearing an appeal against conviction for cheque dishonour under Section 138, the Appellate Court may under Section 148 direct the appellant to deposit a minimum of 20% of the compensation or fine amount as awarded by the Trial Court.
Case Title: Tomy T. J. v State of Kerala and Another
Citation: 2024 LiveLaw (Ker) 500
The Kerala High Court held that a Trial Court can compare the disputed handwriting and prove the handwriting of a person in a case where the accused had already admitted his signature in a cheque dishonour case.
In the present case, the accused was charged under Section 138 of the Negotiable Instruments Act and had claimed that while the signature on the offending cheque was his, the contents on the cheque were not filled by him.
Justice K. Babu invoked the trial court's power under Section 73 of the Evidence Act, and held: “Therefore if the accused makes a request for comparison of his admitted or proved writings with disputed writings, the Trial Court shall invoke Section 73 of the Evidence Act.”
Case Title: Santhosh K S v State of Kerala & Connected Cases
Citation: 2024 LiveLaw (Ker) 618
The Kerala High Court has cautioned against the delaying tactics used by the accused to prolong the proceedings under Section 138 of the Negotiable Instruments Act such as seeking forensic examination of the cheque and seeking expert opinions by summoning and examining private handwriting experts.
MADHYA PRADESH HIGH COURT
Madhya Pradesh HC Annual Digest 2024: NI Act
Title: M/S Banco Construction Pvt Ltd Vs Narmada Extrusions Ltd
Citation: 2024 LiveLaw (MP) 65
The Madhya Pradesh High Court single bench of Justice Anand Phatak held that proceedings under Section 138 of the Negotiable Instruments Act regarding dishonoring of cheques and arbitration are two proceedings moving in different jurisdictional realm and they are parallel in nature rather than overlapping. It held that “both may continue because scope of Section 138 of the N.I. Act is confined to the dishonoured cheques, whereas dispute between the parties appears to be such deep and exact depth can only be fathomed by the arbitrator where parties would have all opportunities to canvas their cause.”
The Applicant approached the Madhya Pradesh High Court (“High Court”) under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) seeking several reliefs. These included the filing of certified copies, the appointment of an independent arbitrator(s) as per arbitration agreement clause 14.7, asserting territorial jurisdiction for appointing an independent sole arbitrator, and any further orders deemed fit by the High Court.
Title: Anil Kumar v. Balwantsingh Sethi
Citation: 2024 LiveLaw (MP) 74
Madhya Pradesh High Court has iterated that the defect of mentioning incorrect dates of cheque in the complaint cannot be cured since there is no provision in the CrPC to amend the criminal complaint.
The single-judge bench of Justice Pranay Verma observed that the defect in the dates of the cheque is a 'substantial infirmity', especially when summons have already been issued to the accused and he has appeared before the trial court.
“…. The amendment if permitted would change the entire nature of the complaint as the date of the cheques itself would be altered. The facts proposed to be inserted by way of the amendment are not at all based upon subsequent events. If the amendment is permitted it would certainly cause prejudice to the accused….”, the bench sitting at Indore opined that the trial court has erred by allowing the amendments sought by the respondent.
Before dismissing the Section 482 Cr.P.C. application preferred by the accused, the court emphasised that the amendment to a limited extent was allowed in S.R. Sukumar since it did not change the original nature of the complaint. The facts proposed by the amendment in that particular case were based on subsequent events. Justice Verma, therefore, opined that the trial court had committed an error by allowing the application for making amendments to the original complaint filed under Section 138 of NI Act. Similarly, the accused had also challenged the trial court's order that rejected his Section 142 application (expiry of limitation period) before the High Court.
Title: Anurodh Mittal Vs Rehat Trading Company
Citation: 2024 LiveLaw (MP) 117
The Madhya Pradesh High Court bench of Justice Gurpal Singh Ahluwalia has held that merely because of the initiation of proceedings under the Insolvency and Bankruptcy Code, 2016 the signatory of the cheque cannot escape from his liability under the Negotiable Instruments Act, 1881.
The Applicant approached the Madhya Pradesh High Court (“High Court”) and filed an application under Section 482 of Cr.P.C. seeking relief of the examination of records in a case pending before the II Additional Session Judge and the quashing of a condition to deposit Rs.13,73,890. This condition was imposed in an application under Section 389 CrPC seeking suspension of the execution of the sentence, including the order to pay compensation, during the pendency of the appeal. The Petitioner argued that this condition was affected by an interim moratorium as per Section 96 of the Insolvency and Bankruptcy Code, 2016, initiated by the National Company Law Tribunal, Indore Bench.
The High Court held that the mere initiation of proceedings under the IBC, couldn't serve as a ground for the signatory of the cheque to evade liability. Therefore, it upheld the conviction recorded by the Trial Court and held that it wasn't invalidated by the initiation of proceedings under the IBC. Consequently, the High Court upheld that the Appellate Court didn't err in directing the Applicant to deposit Rs. 13,73,890 as a condition precedent for the suspension of the sentence.
MADRAS HIGH COURT
Case title - CR Balasubramanian vs. P Eswaramoorthi [Crl.O.P.No.947 of 2024]
Case Citation: 2024 LiveLaw (Mad) 44
The Madras High Court has directed the District Courts across the State of Tamil Nadu to not mechanically impose a condition of deposit of 20% of the compensation amount/cheque amount u/s.148 of the Negotiable Instruments Act.
For context, in an appeal against conviction for dishonour of cheque under Section 138 NI Act, the appellate court, as per Section 148 NI Act, has the power to grant suspension of sentence pending appeal with imposition of a condition for payment of a minimum 20% of compensation/fine amount as ordered by the trial court.
Case Title: Vikas Chudiwala v R Ravinder Kumar
Citation: 2024 LiveLaw (Mad) 49
The Madras High Court has referred to a division bench the question of whether the proprietor of concern would alone be considered as the drawer of a cheque when a prosecution has been initiated against the proprietary concern under Section 138 of the Negotiable Instruments Act.
Justice Anand Venkatesh noted that there were two contradictory views on the same issue and thus an authoritative pronouncement was necessary. This was more so since the provision was under criminal law and had to be given a strict interpretation.
Case Title: M/s Challani Rank Jewellery and Others v Ashok Kumar Jain
Citation: 2024 LiveLaw (Mad) 405
The Madras High Court recently observed that even if an account is blocked or frozen by the Enforcement Department or the Income Tax Department, a complaint under Section 138 of the Negotiable Instruments Act would be maintainable if the complainant is able to prove that dehors the freezing, the account did not have sufficient balance to honour the debt.
Justice G Jayachandran observed that the drawer of the cheque, in such cases could take a defence that the account was blocked or frozen. The court relied upon the Supreme Court's decision in Laxmi Dyechem v. State of Gujarat (2012) and held that issuing a cheque without sufficient fund to honour it is the genus of the crime and the complaint would be maintainable.
The court also observed that a single complaint under Section 138 of the Negotiable Instruments Act was maintainable when all the cheques were presented on the same day and were returned on the same day relying on the earlier decision of the Madras High Court in Suryakant V Kanakia v. Muthukumaran and Manjula v. Colgate Palmolive (India) Ltd.
Case Title: K. Sundari v. C. A. R. P. Mari
Citation: 2024 LiveLaw (Mad) 480
The Madras High Court recently quashed the proceedings initiated against a Principal of a college under Section 138 of the Negotiable Instruments for signing a cheque that was returned for “insufficient funds”.
While doing so, Justice Anand Venkatesh held that the Principal had not signed the cheque in his individual capacity, and since a college could not be equated to a company, vicarious liability under Section 141 of the Act would not come into effect in the present case.
The court explained that the concept of vicarious liability under Section 141 of the Act could not be applied in cases that did not fall under the ambit of a Company or a Partnership firm. The court noted that the Principal was only an authorised signatory and had signed the cheque in connection with the liability of the college. Thus, the court was inclined to quash the case against the Principal.
PUNJAB AND HARYANA HIGH COURT
Title: Surinder Singh v. Ram Dev
Citation: 2024 LiveLaw (PH) 312
The Punjab & Haryana High Court has made it clear that a bribe amount does not constitute as a legally enforceable liability under the Negotiable Instruments (NI) Act. Justice Manjari Nehru Kaul said, "A payment made as a bribe, being an illegal and immoral transaction, does not constitute a legally enforceable liability. Thus, the learned trial Court correctly concluded that no legally enforceable debt existed in this case, and the cheque issued in furtherance of an unlawful act cannot give rise to criminal liability under the Negotiable Instruments Act."
If Cheque Bounce Complaint Is Withdrawn, Continuing Proclamation Proceedings U/S 174A IPC Is Abuse Of Power: Punjab & Haryana High Court
Title: Jarnail Singh Bajwa v. State of Punjab
Citation: 2024 LiveLaw (PH) 324
The Punjab & Haryana High Court has reiterated that once the main petition of cheque bounce case under Section 138 of the Negotiable Instrument Act stands withdrawn in view of an amicable settlement between the parties, the continuation of proceedings under Section 174-A IPC is nothing but an abuse of the process of law.
Justice N.S. Shekhawat was hearing plea filed by Punjab realtor Jarnail Singh Bajwa, for quashing FIR under Section 174-A IPC. It was contended that a complaint of cheque bounce was lodged against Bajwa and the same was dismissed after parties entered into a settlement.
NI Act | Court Cannot Compel Complainant To Give Consent U/S 482 CrPC For Compounding Offence: Punjab & Haryana High Court
Case: SURINDER KUMAR BINDAL AND ANOTHER v. SATINDER NATH RADHEY SHYAM AND SONS
Citation: 2024 LiveLaw (PH) 212
The Punjab & Haryana High Court has dismissed the plea seeking direction to the complainant to compound the offence committed under the Negotiable Instrument Act (NI Act). The Court noted that the dispute between the parties is of over 1.73 crores which was outstanding as on March 03, 2016. Justice Kuldeep Tiwari said, "...this Court cannot compel the complainant to give his consent, or, in the alternative exercise its powers under Section 482 Cr.P.C, without the consent of the complainant, for ordering compounding of the offence by directing the petitioner to make payment of the cheque amount and/or the compensation amount, which the petitioners have now themselves offered before this Court."
S.96 Insolvency & Bankruptcy Code | When Proceeding Under NI Act Is Not In Respect Of Any Debt, It Can't Be Stayed: Punjab & Haryana High Court
Title: Jitender Singh Sodhi and another V. Deputy Commissioner of Income Tax and another
2024 LiveLaw (PH) 178
The Punjab & Haryana High Court has made it clear that when proceeding under Negotiable Act (NI Act) is not debt then it cannot be stayed under Section 96 of the Insolvency and Bankruptcy Code (IBC). According to Section 96 of the IBC, during the interim moratorium period, any legal action or proceeding pending in respect of 'any debt' shall be deemed to have been stayed.
RAJASTHAN HIGH COURT
Title: Lakhani Builders Pvt. Ltd & Ors. v. State of Rajasthan, Through PP & Anr.
Citation: 2024 LiveLaw (Raj) 7
Rajasthan High Court reiterated that the punishment on the drawer for a dishonoured cheque is secondary as far as Section 138 of the Negotiable Instruments Act is concerned. The court added that the primary concern would be the recovery of money since the conviction of an accused serves no significant purpose.
The single-judge bench of Justice Anil Kumar Upman, while quashing the entire criminal proceedings pending against a real estate company and its directors, pointed out that the complainants have already received the amount equivalent to the dishonoured cheque via RTGS transactions in two separate installments.
Title: Vimlesh Baregama v. Manglam Cement Ltd, S.B. Arbitration Application No. 23 of 2021
Citation: 2024 LiveLaw (Raj) 87
The High Court of Rajasthan, Jaipur Bench, held that an application seeking the appointment of an arbitrator would not be allowed if the parties had already entered into a full and final settlement, and the applicant had encashed the settlement amount without protest or objection. The Court held that in such cases, the dispute would be considered non-arbitrable.
Chief Justice Manindra Mohan Shrivastava's bench further clarified that a petition seeking the appointment of an arbitrator would be deemed frivolous if it fails to disclose the full and final settlement between the parties and the encashment of cheques issued as part of the settlement.
Case Title- Pankaj Anand Mudholkar v State of Rajasthan
Case Citation- 2024 LiveLaw (Raj) 134
The Rajasthan High Court reiterated that after resignation, directions cannot be made liable for dishonour of cheques that were issued by the company pursuant to the resignation. It further stated that to prove that the accused was responsible for the day-to-day affairs of the company, as required under Section 141 of the NI Act, repetition of the wordings used in the section to that effect is not enough, it had to be proved in what manner the person was in charge of the company's functioning.
The Court observed that Form 32 proved that the petitioners were not the directors of the company when the cheques were issued. Furthermore, they were nowhere involved in the company's affairs when the money was invested by the complainant. Apart from bald allegation that they were in charge of the affairs of the company, nothing was stated as to how they were in charge of and/or responsible for the conduct of the day-to-day business of the company.
Title: Mahaveer Prasad Suman v Lalit Mohan Sharma
Citation: 2024 LiveLaw (Raj) 137
Rajasthan High Court allowed a petition seeking amendment in a complaint under Section 138 of the NI Act and affidavit annexed to correct the typographical errors in relation to the dates of presentation and dishonour of cheque.
The bench of Justice Anil Kumar Upman relied upon the Supreme Court case of S.R. Sukumar v Sunaad Raghuram, in which it was held that even if there is no specific provision in CrPC to amend a complaint or a petition, petitions seeking such amendments to correct the curable infirmities can be allowed.
“If the amendment sought to be made relates to a simple infirmity which is curable by means of a formal amendment and by allowing such amendment, no prejudice could be caused to the other side, notwithstanding the fact that there is no enabling provision in the Code for entertaining such amendment, the Court may permit such an amendment to be made.”
Title: Ishak Mohammad v State of Rajasthan & Anr.
Citation: 2024 LiveLaw (Raj) 148
The Rajasthan High Court made it clear that in a case of cheque dishonor, it is to be seen is if the cheque was issued in relation to a valid loan and was dishonored without payment, even after giving notice.
The bench of Justice Arun Monga said whether the complainant, that is drawee of the cheque, had a license to lend on interest is not relevant in the case of cheque dishonor.
It thus upheld an order of the trial court dismissing drawer's application under Section 91 CrPC seeking the complainant to produce his Income Tax Return and money lending license.
Title: Vinay Suri v State of Rajasthan and other connected petition
Citation: 2024 LiveLaw (Raj) 303
The Jodhpur bench of the Rajasthan High Court quashed an FIR against three people booked for cheating and forgery, after the complainant claimed that the former wrongfully used a blank signed cheque that was given to his money-lender as security, and passed it to someone else by filling in a fake value.
A single judge bench of Justice Arun Monga ruled that "bearer cheques are negotiable instruments and the one who was in physical possession" of these cheques is "deemed to be its beneficiary owner", unless proved otherwise.
After perusing the records of the case, the Court observed that the only contention of the complainant was that the bearer cheques were not issued to the petitioners but to some other person. However, since bearer cheques assume beneficial ownership of the possessor, no criminal culpability could be made out.
Title: Omprakash Chauhan v State of Rajasthan & Anr.
Citation: 2024 LiveLaw (Raj) 325
The Jaipur bench of the Rajasthan High Court rejected a man's quashing petition booked in a cheque bouncing case sought on the ground of compromise between parties, after noting that the plea was in effect a "review" of an earlier revision petition which had already been dismissed by the court last year.
In doing so the high court refused to interfere with a coordinate bench's decision dismissing the man's review plea, who was sentenced to one year jail time in 2011 by the trial court, but was only arrested in September this year as he had contested the decision.
A single judge bench of Justice Sameer Jain in its order noted that a coordinate single judge bench of the high court after considering the compromise entered in between the parties, exercised its revisionary powers and, based on the same set of facts dismissed the man's plea on August 21, 2023.
Title: Amit Kumar Dave v State of Rajasthan & Anr.
Citation: 2024 LiveLaw (Raj) 327
The Jodhpur bench of the Rajasthan High Court has recently ruled that presence of accused particularly in cheque bouncing cases–which are semi-criminal/civil in nature, should not be ordinarily insisted upon, unless the trial court needs to either examine the accused or their statement is to be recorded.
A single judge bench of Justice Arun Monga said, "I am of the view that presence of an accused particularly in a matter of the kind in hand, where proceedings are semi criminal/civil in nature, should ordinarily not be insisted upon, if an application is moved for a particular hearing, unless the trial court needs to either examine the under-trial or his statement is to be otherwise recorded for proceeding further in the matter".
Title: Asha Devi v Narayan Keer & Anr.
Citation: 2024 LiveLaw (Raj) 333
Rajasthan High Court reiterated that Section 148 of the Negotiable Instruments Act should not be imposed in a situation where the condition of depositing 20% of the fine would amount to deprivation of the right of appeal of a person convicted under Section 138.
The bench of Justice Arun Monga made a reference to the Supreme Court case of Jamboo Bhandari v. M.P. State Industrial Development Corporation Ltd. & Ors. (2023) in which it was held that Section 148 should be given a purposive interpretation and where the court was satisfied that imposition of the condition would deprive the appellant of their right to appeal, exception could be made after recording reasons.
Title: Moolchand v Bhairulal
Citation: 2024 LiveLaw (Raj) 426
The Rajasthan High Court reiterated that where the complaint of cheque bouncing was filed before the expiry of stipulated timeline of 15 days under Section 138 of the Negotiable Instruments Act, the court could not take cognizance of such compliant.
However, the court while referring to Supreme Court decisions on the issue said that, in such case, the holder could register a second complaint on same cause of action within one month of receiving the order in the first complaint, as the complainant cannot be left remediless. It further said the very object of laying down of such a law was to curtail the practice of filing the pre-mature complaints. However, the court noted, that by grating liberty to file fresh complaint in cases where the complaints have already been filed before the expiry of the mandatory period of fifteen days in terms of Section 138 (c) of the Act, a balance has been struck so as to not make the complainant remediless.
