LiveLaw reported almost 7,000 orders and judgments in 2022 from various High Courts across the country. Here are some important decisions relating to the Negotiable Instruments Act, 1881:1. Director Can't Be Prosecuted U/S 138 NI Act When He Is Not Involved In Day To Day Affairs Of The Company: Allahabad High Court Case Title : Jatinder Pal Singh vs M/S Statcon Power...
LiveLaw reported almost 7,000 orders and judgments in 2022 from various High Courts across the country. Here are some important decisions relating to the Negotiable Instruments Act, 1881:
Case Title : Jatinder Pal Singh vs M/S Statcon Power Controls Ltd
Citation:2022 LiveLaw (AB) 107
The High Court has held that a director, who is not involved in the day to day affairs of a company, cannot be prosecuted for the offence under section 138 (Dishonour of cheque for insufficiency, etc., of funds in the account) of the Negotiable Instruments Act, 1881.
'It is clear from the perusal of the complaint that there is no specific averment that applicant is involved in day-to-day affairs of the company. There is only general allegation that applicant is a Director of the company. The documents filed by the applicant establishes that the applicant was a nominee Director and who has now resigned. Considering the aforesaid facts and the law propounded on the point it is clear that in absence of specific allegations about the applicant he can not be prosecuted for any offence under section 138 N.I. Act," Justice Syed Aftab Husain Rizvi held.
Case Title: Satvinder Jeet Singh Sodhi and Anr. v. State of Maharashtra
Citation: 2022 LiveLaw (Bom) 257
The Bombay High Court quashed criminal proceedings against independent non-executive directors of Tecpro Systems Ltd observing they were not responsible for day-to-day functioning of the company.
The court was dealing with an application requesting quashing of criminal proceedings before the trial court in a cheque bounce case under the Negotiable Instruments Act.
"Non-executive director not being a promoter of or key managerial persons shall be held liable, only in respect of such acts of omission or commission by a company which had occurred with his knowledge, attributable through Board processes, and with his consent or connivance or where he had not acted diligently", the court stated.
Case Title- Mr. Ashwin Ashokrao Karokar v. Mr. Laxmikant Govind Joshi
Citation - 2022 LiveLaw (Bom) 277
The Bombay High Court has said that courts don't have a duty to grant interim compensation to the complainant in a cheque bounce case. If interim compensation is granted, the judge has to record reasons for determining the amount of interim compensation.
The court said that the provisions of section 143-A of the Negotiable Instruments Act, 1881 are directory rather than mandatory.
Case Title: Nizar Noorali Rangara and Anr. v. State of Maharashtra and Ors.
Citation: 2022 LiveLaw (Bom) 310
Bombay High Court held that to determine whether a complaint under section 138 can be entertained when the company is in the process of winding up, the fact and circumstance of each case have to be considered. The question cannot be considered without the facts especially to "insulate a company and its ex-directors from the rigors of law where it appears that they profess to take advantage of their own wrong".
Justice N. J. Jamadar further observed that a winding up order due to settlement terms is not on the same pedestal as winding up order passed on merits
Case Title: Monic Sunit Ujjain v. Sanchu M. Menon and Ors.
Citation: 2022 LiveLaw (Bom) 464
The Bombay High Court rejected a criminal revision application in a complaint under the Negotiable Instruments Act observing that section 138 cannot be attracted if the cheque is given as security for a loan from a unlicensed money lender.
"In cases of money lending business without license, the provisions under Section 138 of Negotiable Instruments Act are not attracted", Justice Prakash Naik observed in his order.
Case title: M/s. Pinak Bharat and Company v. Anil Ramrao Naik
Citation: 2022 LiveLaw (Bom) 505
The Bombay High Court held that subsequently adding dates for payment without the payer's consent renders the negotiable instrument void, while refusing relief in a cheque bouncing case.
"No doubt cheque is negotiable instrument which is transferable and negotiable, presumption under Section 138 of the Negotiable Instrument Act can be drawn only when the pre-conditions are satisfied. The complainant unilaterally has put in dates on the cheques without the authority of the accused and even by not informing him. So, it amounts to material alterations. If it is so such negotiable instrument becomes void", Justice S. M. Modak held in his judgment.
Case Title: Indranil Mukherjee v. State of West Bengal and Ors
Case Citation: 2022 LiveLaw (Cal) 145
The Calcutta High Court held that an order of interim compensation awarded under Section 143A of the Negotiable Instruments Act, 1881 (Act) cannot be recovered from the estate of a deceased accused, who died before the conclusion of the trial. Justice Kausik Chanda observed that the order of interim compensation is dependent on the outcome of the trial and accordingly underscored, "There is no finality attached to such interim order of compensation and no right is crystallised in favour of the complainant by dint of such interim order of compensation. The order of interim compensation, which is passed in the aid of final compensation, will cease to exist when the trial comes to an end due to the death of the accused since in such eventuality there cannot be any scope to adjudicate the innocence or the guilt of the accused in the trial." The Court further opined that in the event of the death of an accused, compensation awarded under Section 138 of the Act can be recovered from the estate of a deceased accused however an interim compensation awarded under Section 143A of the Act cannot be recovered from the estate of a deceased accused.
Case title - Ms. Todi Investors v. Ashis Kr. Dutta & Anr.
Case Citation: 2022 LiveLaw (Cal) 327
The Calcutta High Court has held that the appeal against the acquittal of the accused in a cheque bounce case can be filed only before the High Court under Section 378(4) of CrPC and not before the Sessions Court. The bench of Justice Subhendu Samanta held thus after coming to the conclusion that a complainant in a case u/s 138 of the Negotiable Instrument Act is not a victim as defined u/s 2(wa) of CrPC and therefore, he/she can't file an appeal against acquittal according to the provision of Section 372 of Cr. P.C. "Thus, a complainant in a case U/s 138 of the Act of 1881 could not challenge the order of acquittal before the Sessions Court under the proviso to Section 372 of the Code and his only remedy is to file an appeal to the High Court with special leave under Section 378(4) of the Code," the bench said.
Case Title: Subrata Bose v. Mithu Ghosh
Case Citation: 2022 LiveLaw (Cal) 334
The Calcutta High Court has held that rebuttal of the presumption in favour of cheque holder under Section 139 of the Negotiable Instruments Act is guided by the 'Test of Proportionality'. The Single Judge Bench of Justice Tirthankar Ghosh thus held that to rebut the presumption, the person accused must raise a "probable defence" before the Court, to shift the burden on the complainant. It clarified that mere denial is not sufficient and the accused must set up an initial defence by a reply notice or by examining its witnesses. The observations were made while allowing a criminal appeal and setting aside the order of lower appellate court which acquitted the Respondent herein in respect of a proceeding under S. 138 of the NI Act.
Case Title: M/S Rayapati Power Generation Pvt. Ltd. And Anr
Citation: 2022 LiveLaw (Del) 75
The Delhi High Court has observed that while computing the limitation period of 30 days prescribed under sec. 138(b) Negotiable Instruments Act for issuance of a valid legal notice, the day on which intimation is received by the complainant from the bank that the cheque in question has been returned unpaid has to be excluded.
Justice Manoj Kumar Ohri was dealing with a bunch of petitions filed under sec. 482 of Cr.P.C. seeking quashing of Criminal Complaints qua them.
Case Title: Gopala Krishna Mootha V. The State Govt Of Nct Of Delhi & Anr
Citation: 2022 LiveLaw (Del) 136
The Delhi High Court has reiterated the various necessary factors to be kept in mind before making a person vicariously liable for offences committed by a company under sec. 138 of the Negotiable Instruments Act, 1881.
The Court dismissed a plea seeking quashing of Criminal Complaint filed under Section 138 of the Negotiable Instruments Act. The petitioner also sought to quash an order dated 03.02.2021 passed by the Trial Court issuing summons to him.
The respondent No.2 in the petition had filed a complaint before the Court of Metropolitan Magistrate, Saket Court alleging that he was appointed as the CFO of the India Ahead News Private Ltd. which is engaged in the business of running a TV news channel.
It was alleged in the complaint that the petitioner and the accused No.2, who was the son of the petitioner, were the directors of India Ahead News Pvt. Ltd. and that they were responsible for the day to day affairs of the company had been running the TV channel and actively controlling all the operations of the company.
Case Title: Sanjay Gupta V. The State & Anr.
Citation: 2022 LiveLaw (Del) 240
Emphasising that once a person issues a cheque it must be honoured, the Delhi High Court has observed that such a person is bound to face criminal trial and consequences in case the cheque amount is not paid despite issuance of notice and opportunity to pay the said amount.
Noting that the Negotiable Instruments Act provides sufficient opportunity to a person who issues the cheque, Justice Rajnish Bhatnagar said thus:
"Once a cheque is issued by a person, it must be honored and if it is not honored, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he is bound to face the criminal trial and consequences."
The Court was of the view that once issuance of a cheque and signature are admitted, the presumption of a legally enforceable debt in favour of the holder of the cheque arises.
Case Title: HARSH SEHGAL v. STATE & ANR
Citation: 2022 LiveLaw (Del) 470
The Delhi High Court has observed that the applicability of Section 148 of the Negotiable Instruments Act, 1881 will be extended to appeals arising out of complaint cases that have been filed prior to the amendment of 2018.
Justice Chandra Dhari Singh was dealing with a batch of pleas seeking setting aside of order dated 5th February, 2022 passed by Additional Sessions Judge, Saket Courts.
It was argued by the petitioners that sec. 148 of the NI Act was never intended to be made applicable to all pending appeals but only for the appeals which were filed after the amendment came into force. It was added that the that the amended provisions are not retrospective for appeals filed prior to the amendment.
Case Title: Guneet Bhasin V. State Of Nct Of Delhi & Anr. & Ors
Citation: 2022 LiveLaw (Del) 1123
The Delhi High Court has held that any infirmity in the cheque return memo does not render the entire trial under Section 138 of the Negotiable Instruments Act as nullity.
Observing that cheque return memo is a memo informing the payee and its banker about the dishonour of a cheque, Justice Sudhir Kumar Jain said if the said cheque return memo is not bearing any official stamp of the bank, it does not render the same as invalid or illegal.
Case Title: Man Mohan Patnaik V. Cisco Systems Capital India Pvt.Ltd & Ors.
Citation: 2022 LiveLaw (Del) 1201
The Delhi High Court has said that prima facie, merely being a signatory to a cheque does not, in itself, make a person guilty of the offence under Section 138 of the Negotiable Instruments Act.
Observing that the offence is triggered at the stage when a cheque is returned unpaid by the bank for insufficiency of funds, Justice Anup Jairam Bhambhani said:
"For guilt to be imputed to an officer of a company, at the very least, the officer should have been responsible for the business and affairs of the company and for honouring the cheque on the date that the cheque was returned unpaid."
CASE TITLE: NADRESS TU v. THE STATE OF ASSAM AND ANR
Citation: 2022 LiveLaw (Gau) 51
The Gauhati High Court has made it clear that in offences made out under Section 138 of the Negotiable Instruments Act, the territorial jurisdiction of the Court will be where the cheque is delivered for collection.
Justice Robin Phukan further added that no classification of cheque, as bearer or cross cheque/account payee cheque is made in the NI Act, for the purpose of jurisdiction.
"From the word 'any cheque', used in section 138, it can be well inferred that it may be an account payee cheque or a bearer cheque, dishonor of which on account of insufficiency of fund or exceed the amount would amount to an offence and would attract the penalty," it said.
17. Every Offence Under Negotiable Instruments Act Is Compoundable: Gujarat High Court
Case Title: Maheshsinh Babusinh Zala vs State of Gujarat
Citation: 2022 LiveLaw (Guj) 14
The Gujarat High Court has held that when parties have settled the dispute amicably, the compounding of the offence is permitted with regard to an offence under Section 138 of the Negotiable Instruments Act, 1881.
Justice Vipul Pancholi took note of Section 147of the Act which provides that notwithstanding anything contained in CrPC, every offence punishable under this Act shall be compoundable.
Case Title: C.M. Smith And Sons. Ltd Through Deinesh Mohanlal Panchal Versus State Of Gujarat
Citation: 2022 LiveLaw (Guj) 30
"It is a settled proposition of law that proceedings under Section 138 of the NI Act would lie only in respect of any 'enforceable debt'", the Gujarat High Court has observed today. The Bench comprising Justice Gita Gopi made this observation in connection with an application filed under Section 482 of CrPC, seeking the quashing of the order passed by the CJM Rajkot for offence under Section 138 of the Negotiable Instruments Act.
Case Title: Ayyubkhan Kalekhan Pathan V/S StateOf Gujarat
Citation: 2022 LiveLaw (Guj) 215
The Gujarat High Court has dismissed a petition seeking to quash a case under Section 138 of the Negotiable Instruments Act holding that whether the cheque was issued by the petitioner or his brother who had the same initials was a question to be considered at the stage of trial and prima facie the intention of the petitioner was to avoid paying back the huge sum to the complainant.
Justice Nirzar Desai dismissed a petition wherein the petitioner, a proprietor of AK Construction claimed that his brother's firm, AK Road Constructor was a separate entity and that the complaint against a cheque issued by AK Road Contractor did not have any connection with him.
Case Title: Shashikant Shamaldas Patel V/S StateOf Gujarat
Citation: 2022 LiveLaw (Guj) 250
In a petition involving alleged misuse of cheque, the Gujarat High Court has directed to send the disputed cheque to the Forensics Laboratory for the opinion of the Handwriting Expert to ensure the 'larger object of fair trial.'
The Petitioner, an accused, for offence under Section 138 of the Negotiable Instruments Act, 1881 had challenged the order of the trial court and Sessions Judge which rejected his plea for forensic examination of the cheque. The Petitioner made the prayer for sending the cheque for examination by the Handwriting Expert to determine the ageing and the writing on the cheque.
Case Title: Gundeep Singh Sood v Insolvency Professional Agency Of Institute Of Cost Accountants Of India.
Case No.: 2022 LiveLaw (Guj) 403
The Gujarat High Court bench comprising of Justice Biren Vaishnav set aside an order passed by IPA ICAI refusing registration to an applicant on the ground of low CIBIL Score and pending proceedings under Negotiable Instruments Act, 1881. The Bench has directed the IPA ICAI to pass a fresh order, by taking into consideration the fact that Petitioner's CIBIL score was low due to its engagement as a Director in the Companies.
Case Title: RAMESH KUMAR versus STATE BANK OF INDIA AND ANR.
Citation: 2022 LiveLaw (HP) 26
The Himachal Pradesh High Court has observed that if the drawer of a cheque fails to raise a "probable defence" or to contest the existence of a legally enforceable debt or to deny the issuance of the cheque and signatures thereupon, the statutory presumption in favour of cheque holder under Section 139 of Negotiable Instruments Act comes into play.
The observation came from Justice Sandeep Sharma while hearing a revision petition filed by a cheque drawer, challenging the judgment of conviction passed by the Magistrate and its confirmation in appeal.
23. S.147 NI Act | Post-Conviction Compounding Of Offences Is Permissible: Himachal Pradesh High Court
Case Title : SHRI KANTU RAM v SHRI BEER SINGH
Citation : 2022 LiveLaw (HP) 28
The Himachal Pradesh High Court recently observed that a Court, while exercising powers under Section 147 of the Negotiable Instruments Act, can proceed to compound the offences even after recording of conviction by the courts below.
The observation came from Justice Sandeep Sharma in a case where the revision Petitioner, who was convicted under Section 138 of the NI Act by the Magistrate Court and was aggrieved by subsequent dismissal of appeal by the Sessions Court, had agreed to pay the amount due and settle the matter.
Case Title: Parvaiz Ahmad Bhat Vs Fida Mohd Ayoub
Citation: 2022 LiveLaw (JKL) 2
The Jammu and Kashmir and Ladakh High Court held that the dishonor of a cheque for the reason that there were incomplete signatures appearing on the cheque, constitutes an offence under Section 138 of the Negotiable Instruments Act.
Case Title: Engineering Control Vs. Banday Infratech Pvt. Ltd
Citation: 2022 LiveLaw(JKL) 65
A bench of Sanjay Dhar ruled The Jammu and Kashmir and Ladakh High Court ruled that an inference of having received the statutory notice of demand by a drawer of a cheque as mandated under Section 138 of Negotiable Instrument Act can be raised only if the notice has been dispatched to his correct address. Such an inference cannot be drawn if the notice has been sent on the incorrect address of the drawer of the cheque, the court observed.
Case Title: Fayaz Ahmad Sheikh Vs. Mushtaq Ahmad Khan
Citation: 2022 LiveLaw (JKL) 73
The Jammu and Kashmir and Ladakh High Court ruled that the test to ascertain and uphold the fundamental right against "double jeopardy", which is guaranteed under Article 20(2) of the Constitution, is that whether the former offence and the offence now charged have the same ingredients in the sense that the facts constituting the one are sufficient to justify a conviction of the other and not that the facts relied on by the prosecution are the same in the two trials.
Case Title: Mohammad Shafi Wani Vs Noor Mohammad Khan
Citation: 2022 LiveLaw (JKL) 111
The Jammu and Kashmir and Ladakh High Court reiterated that the provisions contained in Section 138 of the NI Act must be interpreted in a liberal manner so as to achieve the object for which the said provision has been enacted.
Not only the cases of dishonour of cheques on account of insufficiency of funds or on account of exceeding of arrangement but the cases involving dishonour of cheques on account of "stop payment", "account closed" and "Signature Mismatch" also fall within the ambit of offence under the aforesaid provision, the bench underscored
28. NI Act | Joint Petition In Respect Of Different Causes Of Action Not Maintainable: J&K&L High Court
Case Title: Naseer Ahmad Sheikh Vs Mohammad Sultan Bhat.
Citation: 2022 LiveLaw (JKL) 135
The Jammu and Kashmir and Ladakh High Court observed that a joint petition in respect of different causes of action is not maintainable.
"The instant petition is not otherwise maintainable as through the medium of instant petition, the petitioner has challenged as many as four complaints and four separate orders directing issuance of process against him by the trial court. A joint petition in respect of different causes of action is not maintainable. On this ground also, the petition deserves to be dismissed," Justice Sanjay Dhar observed.
Case Title : Ab Rasheed Bhat Vs HDFC Bank.
Citation : 2022 LiveLaw (JKL) 191
The Jammu and Kashmir and Ladakh High Court ruled that the production of original Power of Attorney is not necessary at the time of taking cognizance of the complaint under Section 138 of Negotiable Instruments Act.
A bench of Justice Sanjay Dhar observed,
"When the complainant/payee is a company, an authorised employee can represent the company. Such averment and prima facie material is sufficient for the learned Magistrate to take cognizance and issue process. If at all, there is any serious dispute with regard to the person prosecuting the complaint not being authorised or if it is to be demonstrated that the person who filed the complaint has no knowledge of the transaction and, as such that person could not have instituted and prosecuted the complaint, it would be open for the accused to dispute the position and establish the same during the course of the trial".
Case Title : Tamanna Vs Khushmeela
Citation : 2022 LiveLaw (JKL) 203
The Jammu and Kashmir and Ladakh High Court held that if correct address of the accused is mentioned in the complaint as well as in the notice of demand under Section 138 of the Negotiable instrument Act, then mere variation of address in the postal receipt will not lead to a presumption that the notice was sent on a wrong address.
"In these circumstances, the question whether the notice of demand has been actually received by the petitioner/accused can be determined only during the trial of the case," it said.
Case Title - Hazari Prasad v. The State of Jharkhand and another
Citation: 2022 LiveLaw (Jha) 60
The Jharkhand High Court has observed that the presumption under Section 139 of the NI Act is akin to the general rule of evidence incorporated in Section 106 of the Evidence Act.
The Bench of Justice Shree Chandrashekhar further said that the accused has the right to show that there is a possibility that the case pleaded against him is not correct. However, this stage would come only when a prima facie case is established by the complainant.
The Jharkhand High Court has reiterated that when an accused under Section 138 of the Negotiable Instruments Act has to rebut the presumption in favour of cheque holder under Section 139 of the Act, the standard of proof for doing so is that of 'preponderance of probabilities'.
The observation came from Justice Deepak Roshan: "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. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden. Keeping this in view, it is now a settled position that 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 doubt about the existence of a legally enforceable debt or liability, the prosecution fails."
Case Title: Vijaya v Shekharappa Case No: Criminal PetitionNo.100261/2022
Citation: 2022 Livelaw (Kar) 82
The Karnataka High Court has said that it is not mandatory for Magistrate Courts to pass orders directing interim compensation under Section143A of the Negotiable Instruments (NI) Act, if the accused does not pleadguilty.
A single judge bench of Justice M Nagaprasanna said, "The Legislature has cautiously worded sub-section (1) of Section 143A not to make it mandatory in all cases where clauses (a) and (b) of sub-section (1) would empower the learned Magistrate before whom proceedings are pending consideration to award interim compensation. It is the discretion conferred, as the word used is "may"."
Case Title: M/S. A.SEATING & Others v. M/S. NANDINI MODULARS Case No: CRIMINAL REVISIONPETITION NO.1242/2021
Citation: 2022 LiveLaw (Kar) 113
The Karnataka High Court has said that if a party, opposing the proceedings instituted under Section 138 of the Negotiable Instruments Act, fails to raise the ground of delay in filing the complaint before the court of first instance, the Court in Appeal is empowered to remand the matter back for fresh consideration on the issue of condonation of delay under Section 142(b)of the Act.
Case Title: RASHMITANDON & ANR v. THE STATE OF KARNATAKA
Citation: 2022 LiveLaw (Kar) 159
The Karnataka High Court has held that proceedings under Section420 of the Indian Penal Code are maintainable even if a complaint has been invoked Section 138 of the Negotiable Instruments Act.
36. S.147 NI Act | Every Offence Under Negotiable Instruments Act Is Compoundable: Karnataka High Court
Case Title: Arun Vincent Rajkumar v S Mala
Case No: CRIMINALREVISION PETITION No.579 OF 2015
Citation: 2022 LiveLaw(Kar) 206
The Karnataka High Court recently said that Section 147 of the Negotiable Instruments Act makes every offence punishable under the Act as compoundable and there is no bar on parties to compound the offence.
Case Title: V. KRISHNAMURTHY v. DIARY CLASSIC ICE CREAMS PVT. LTD
Citation: 2022 LiveLaw(Kar) 223
The Karnataka High Court has directed Magistrate courts to take into consideration conduct of the accused while deciding application filed by drawee in a cheque dishonour case, seeking interim compensation under section143A of the Negotiable Instruments Act, 1881.
Case Title: Himanshu Gupta v. V Narayana Reddy
Case No: Criminal Petition No. 3555 of 2022
Citation: 2022 LiveLaw (Kar) 275
The Karnataka High Court has said under Section 143-A of the Negotiable Instruments Act, the court can direct payment of interim compensation even without the complainant making an application praying for the same, but not without following principles of natural justice.
Case Title: B M MUNIRAJU v. THE JAIL SUPERINTENDENT
Case No: WRIT PETITION NO.7387/2022
Citation: 2022 LiveLaw (Kar) 283
The Karnataka High Court has directed the Jail Superintendent of the Central Prison at Bengaluru to consider a parole application filed by an accused convicted under the Negotiable Instruments Act seeking to arrange 50% of the disputed amount for depositing with the Supreme Court Registry in connection with an appeal against conviction pending before it.
Case Title: PADMANABHA T G v. M/S RADICAL WORKS PVT. LTD
Citation: 2022 LiveLaw (Kar) 322
The Karnataka High Court has said that delay in disposal of case filed under Section 138 of the Negotiable Instruments Act cannot be a ground to grant interim compensation under Section 143A of the Act.
Case Title: H.N. NAGARAJ v. SURESH LAL HIRA LAL
Citation: 2022 LiveLaw (Kar) 400
The Karnataka High Court has held that a proprietary concern is not a separate entity and as such, ought not to be arrayed as a separate accused in a case registered under section 138 of the Negotiable Instruments Act.
A single judge bench of Justice Suraj Govindaraj observed, "In a proceeding under Section 138 of N.I.Act, the arraying of a proprietor as an accused or a proprietary concern represented by the proprietor would be sufficient compliance with the requirements under Section 138 of N.I.Act, the proprietor and the proprietary concern are not required to be separately arrayed as a party accused."
Case Title: NAGARAJ v. ISHWAR
Citation: 2022 LiveLaw (Kar) 409
The Karnataka High Court has said that an acquittal order cannot be passed by the trial court under section 138 of the Negotiable Instruments Act, for non-appearance of the complainant while recording plea of accused.
A single judge bench of Justice P N Desai sitting at Kalaburagi allowed the petition filed by Nagaraj and restored the prosecution before Additional Civil Judge. The bench said, "For non-appearance of the complainant on each and every date of hearing, an order of acquittal cannot be passed in every case. The Court has to see the stage of the case and the previous appearance of the accused and complainant and how many years the complaint is pending and what is the nature of the case before passing any such dismissal order. Simply to dispose of the cases or get rid of the case, the complaint cannot be dismissed when there is no necessity of the presence of the complainant."
43. Wife Cannot Be Made Accused in NI Act Case For Cheque Issued By Her Husband: Karnataka High Court
Case Title: VEENASHRI v. SHANKAR
Citation: 2022 LiveLaw (Kar) 439
The Karnataka High Court has said proceedings under Section 138 of the Negotiable Instruments Act cannot be initiated against the wife for "dishonor of the cheque issued by her husband".
A single judge bench of Justice M I Arun while allowing the petition filed by petitioner Veenashri and quashing the proceedings against her, said, "Petitioner cannot be made accused for dishonour of the cheque issued by her husband and he alone can be prosecuted for the same."
Case Title: HEENA THIRUMALI SATEESH & ANR v. M/S MINIMELT ENGINEERS INDIA
Citation: 2022 LiveLaw (Kar) 455
The Karnataka High Court has said that in proceedings initiated against directors of a company under Section 138 of the Negotiable Instruments Act, the complainant is only expected to make necessary averments regarding their vicarious liability and thereafter, the burden is upon such directors to show that they are not liable to be convicted.
A single judge bench of Justice M Nagaprasanna observed, "The complainant is supposed to know only generally as to who were in-charge of the affairs of the Company... the complainant is expected to allege that the persons named in the complaint are in-charge of the affairs of the Company... The burden would be on the Board of Directors or persons in-charge of the affairs of the Company to show that they are not liable to be convicted."
Case Title: SUNITA W/O BHARATKUMAR AITAWADE & ANR v. MALIKJAN S/O BHASKAR SANNAKKI
Citation: 2022 LiveLaw (Kar) 464
The Karnataka High Court has quashed the proceedings initiated against two former directors of a company under Section 138 of the Negotiable Instruments Act by the complainant claiming that when he invested the money in the company they were directors.
A single judge bench of Justice Hemant Chandangoudar allowed the petition filed by Sunita and Vidya and quashed the proceedings pending against them. A private complaint was filed under Section 200 of the Code of Criminal Procedure, 1973 for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (for short, 'the Act'), alleging that the cheque, which was issued by the Company in favour of the complainant, when presented for realisation was dishonoured for want of funds. The Magistrate, after recording the sworn statement of the complainant, took cognizance of the offence punishable under Section 138 of the Act and issued summons to the accused.
Case Title: GAJANAN v. APPASAHEB SIDDAMALLAPPA KAVERI.
Citation: 2022 LiveLaw (Kar) 483
The Karnataka High Court has held that contravention of Section 269SS of the Income Tax Act, which prescribes if the transaction amount is more than Rs.20,000, such transaction shall be made through cheque or demand draft, does not make the transaction void and it can be called a legally recoverable debt.
Accused Gajanan had approached the court seeking to set aside the judgment of Addl. District and Sessions Judge, Belgaum, confirming the judgment of conviction and order of sentence passed by Magistrate Court, convicting the petitioner for offence punishable under Section 138 of Negotiable Instruments Act and sentenced to pay a fine of Rs.1,28,000.
Case Title: M/s Pradhan Mercantile Pvt Ltd v. M/s Virgin Apparels & Anr
Citation: 2022 LiveLaw (Kar) 511
The Karnataka High Court has said that the Appellate Court should be very cautious and exercise the discretion judiciously while remanding the matter for a de-novo trial.
A single judge bench of Justice Dr HB Prabhakara Sastry, set aside the order dated September 2, 2013 passed by the appellate court which had in turn set aside the conviction handed down by the trial court under Section 138 of the Negotiable Instruments Act (NI) against the accused and remanded the matter to the trial Court ordering for a de-novo trial.
Case Title: Rajeswary vs State of Kerala
Citation: 2022 LiveLaw (Ker) 2
The Court observed that a convict in a cheque bounce case can pay the fine amount directly to the complainant. It is not necessary to deposit the fine amount in court. In this case, while disposing of the Criminal Revision Petition filed by the accused, the High Court had affirmed the conviction but modified the sentence of simple imprisonment as a sentence to pay fine of Rs.7,17,000/-. The accused was granted a period of six months to remit the amount of fine in the trial court.
Case Title: Shibu L.P v. Neelakantan & Anr.
Citation: 2022 LiveLaw (Ker) 366
The Kerala High Court on Thursday held that evidence of the power of attorney holder is not credible unless they possess due knowledge of the transaction. Justice A. Badharudeen observed that a complainant alleging offence under Section 138 should make a specific assertion regarding the knowledge of the power of attorney holder in such transactions. The Judge added that a power of attorney holder who had no knowledge regarding the transactions cannot be examined as a witness in the case.
Case Title: M/s. Nag Leather Pvt. Ltd. v. M/s. Muzain Hides
Citation: 2022 LiveLaw (Mad) 37
The Madras High Court in a Bench comprising of Justice N. Sathish Kumar in M/s. Nag Leather Pvt. Ltd. v. M/s. Muzain Hides held that as long as a moratorium under Section 14 of the Insolvency and Bankruptcy Code is imposed, proceedings under Section 138/141 of the Negotiable Instruments Act cannot be initiated against the Corporate Debtor. These proceedings, however, can be initiated against natural persons as mentioned in Section 141. The Bench allowed the Petition and quashed proceedings under Section 138/141 of the Negotiable Instruments Act, 1881 against Petitioner no. 1, who was the Corporate Debtor undergoing CIRP under the Code.
Noting that the moratorium would apply only in respect of the Corporate Debtor, and not in respect of the directors/ management, the Court allowed the Respondent to proceed against Petitioners no. 2 and 3, them being natural persons.
Case Title: S.M.D Mohamed Abdul Khader v. Muniswari
Citation: 2022 LiveLaw (Mad) 175
While setting aside the order of a lower court, the Madras High Court recently allowed an accused under Section 138 of the Negotiable Instruments Act to examine complainant's side of witnesses. Justice G.K Ilanthiraiyan sitting at Madurai observed,
"Accused has the right to demonstrate that the complainant in a particular case did not have the capacity and therefore, the case of the accused is acceptable which he can do by producing independent material namely by examining his witnesses and producing documents. It is also open to him to establish the very same aspect by pointing to the materials produced by the complainant himself."
Case Title: R Barathbaran (died) and others v. R. Nallathambi
Citation: 2022 LiveLaw (Mad) 211
The Madras High Court bench of Justice Teeka Raman has held that it is not mandatory under the Negotiable Instruments Act 1881 to obtain both signature and thumb impression for a pro-note to be valid.
The court also opined that when the defendant had not denied the execution of the pro-note, the lower appellate court could not raise suspicion with regard to the execution of the note merely on the ground that the thumb impression of the defendant was not obtained.
The court also stated that when there is a statutory presumption is favour of the plaintiff under Section 118 of the Negotiable Instruments Act, the burden is on the defendant to prove otherwise. The defendant cannot merely rebut the presumption by a bare explanation but only by proof. The court was of the opinion that the evidence of the defendant was not sufficient to discharge this onus of proof and that the approach of the lower appellate court in condemnable.
53. Orders Passed U/S 148 NI Act Are Interlocutory In Nature, Not Revisable: Madras High Court
Case Title: Bapuji Murugesan v. Mythili Rajagopalan
Citation: 2022 LiveLaw (Mad) 264
While discussing the scope of revision in case of orders passed under Section 148 of the Negotiable Instruments Act, the Madras High Court recently observed that such orders are interlocutory in nature and are outside the revisional jurisdiction of the High Court.
The bench of Justice D Bharatha Chakravarthy was hearing a criminal revision petition against an order of the Principal Sessions Judge, Chennai which in exercise of powers under Section 148 of the Act, suspended the order of imprisonment (till the disposal of appeal) for cheque dishonour, subject to a deposit of 15% of the cheque amount.
The court opined that the order for deposit under Section 148 of the Negotiable Instruments Act was not a precondition for the appeal to be taken on file and therefore will not result in a final order deciding appeal. It was only a direction to deposit subject to the final outcome of the appeal and as such was only a matter of procedure. The court highlighted that such orders did not determine the rights of the parties. It was also observed that non passing of such order or accepting any application by the accused would not result in culmination of proceedings
Case Title: G Deepa and another v The General Manager and others
Citation: 2022 LiveLaw (Mad) 480
The Madras High Court recently observed that banks setting up ceiling limits based on the Reserve Bank of India's circular in non-base branches are not violative of the Banking Regulation Act.
Justice N Sathish Kumar further observed that when the account holder himself opened the bank account knowing all the restrictions put up on non-base branches, he could not later complain that the same is violative of his property right.
Thus, finding no merits in the petition, the court dismissed the same. The court also opined that it was open to the RBI and other banks to modify the restrictions and to enhance the ceiling limits.
Case Title: HDFC Bank Ltd. Mawlai Nonglum Branch & Anr v. Sri Baklai Siej & Anr.
Citation: 2022 LiveLaw (Meg) 15
The Meghalaya High Court has reiterated that for an offence under Section 138 of the Negotiable Instruments, Act to be made out, the dishonoured cheque must have been issued by the account holder under his name and signature.
Justice W. Diengdoh noted that only the holder of the account on which the cheque is drawn could be made liable and such culpability cannot be extended to others except as provided under Section 141 NI Act which deals with offences by and on behalf of the company or partnership, where the signatory to the cheque may be a Director of the company or a Partner of a partnership firm.
Case Title: Sri Gadadhar Barik v. Sri Pradeep Kumar Jena & Anr.
Citation: 2022 LiveLaw (Ori) 39
The High Court held that Court can take cognizance of a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 for 'cheque bounce' on the basis of a notice issued pursuant to presentation of a cheque for encashment for the second time and its subsequent dishonour. A Single Judge Bench of Justice Radha Krishna Pattanaik observed,
"...if the entire purpose underlined Section 138 of the N.I. Act is to compel the drawers to honour their commitments made in course of business or other transactions, there is no reason why a person who has issued a cheque which is dishonoured and who failed to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque had not rushed to the court with a complaint based on such default or for the reason that the drawer has made the holder defer prosecution promising to make arrangements for funds or on account of any other similar situation."
Case Title: Bijaya Manjari Satpathy v. State of Orissa & Ors.
Citation: 2022 LiveLaw (Ori) 158
A Single Judge Bench of Justice Gourishankar Satapathy held that a person in charge of a 'Trust' cannot be impleaded as an accused for dishonour of cheque, punishable under Section 138 of the Negotiable Instruments Act, if the 'Trust' itself is not arraigned as a party as per the mandate of Section 141 of the Act. Section 141 prescribes liabilities of companies for dishonour of cheques.
Case Title: Sunil Kumar v. The State of Bihar & Ors.
Citation: 2022 LiveLaw (Pat) 14
Patna High Court has ruled that an order for payment of interim compensation under the Negotiable Instruments Act, 1881 ('the NI Act') can be enforced under the Bihar & Orissa Public Demands Recovery Act, 1914 ('the Recovery Act') as a 'public demand'. A Division Bench of Chief Justice Sanjay Karol and Justice S. Kumar held,
"The interim compensation so ordered under Section 143A of the NI Act is recoverable as a fine under Section 421 of Cr.P.C. which then, as shown from the above discussion, clearly falls under the definition of 'public demand'. The petitioner's contention of non-applicability of the Recovery Act, therefore, necessarily has to be negated."
Case Title: Amjad Ali Khan @ Guddu Khan versus The State Of Bihar
Citation: 2022 LiveLaw (Pat) 32
The Patna High Court observed that magistrate is forbidden from taking cognizance of the offence under Section 138 Negotiable Instruments Act if the complaint was not filed within one month of the date on which the cause of action arose.
The observation came from Justice Prabhat Kumar Singh: "In terms of clause (c) of the proviso to section 142 of the NI Act, such complaint should be filed within one month after drawer of the cheque has received notice, and 15 days thereafter have elapsed...It is settled law that the Magistrate is forbidden from taking cognizance of the offence if the complaint was not filed within one month of the date of which the cause of action arose."
Case Title: Parveen Mehta Versus Vishal Joshi
Citation : 2022 LiveLaw (PH) 119
Punjab and Haryana High Court while dealing with an application under Section 378(4) Cr.P.C. for grant of leave to appeal against the judgment acquitting respondent in Complaint Case of 2012, held that undisputed signatures of the respondent on the cheque in itself are not sufficient for conviction under Section 138 of the Act.
The bench comprising Justice Avneesh Jhingan while dismissing the application held that one of the ingredients under Section 138 of the Act is that the cheque was issued for discharge of a debt or other liability.
Case Title : Harjit Singh v. State of Punjab and Others
Citation : 2022 LiveLaw (PH) 163
In a case relating to dishonour of cheque wherein the limitation period for invoking proceedings under Section 138 of the Negotiable Instruments Act had elapsed, the Punjab and Haryana High Court held that the Petitioner cannot invoke Section 482 of CrPC seeking directions to indirectly restore the said right. It observed,
"The process of law cannot be taken recourse to circumvent the due procedure prescribed in law," Justice Vinod S. Bhardwaj observed.
Case Title: Amit Kumar (Deceased) through his LR's mother Smt. Sushila Devi v. State of Haryana and another
Citation: 2022 LiveLaw (PH) 237
Punjab and Haryana High Court recently held that Section 389 of CrPC and Section 148 of the Negotiable Instruments Act are independent of each other. Whereas Section 389 is meant for protecting the personal liberty of the convict, Section 148 is auxiliary or supplemental to the mandate carried in Section 389.
The bench comprising Justice Sureshwar Thakur further added that non-compliance of a conclusive order made under Section 148 of the Act, would not bring any ill consequence upon the personal liberty of the convict under Section 389 CPC, nor would the errant convict will become amenable, for his being put to judicial custody.
Case Title: Sardar Bhupendar Singh v. MS Green Feeds through its partner Vipin Kumar
Citation :2022 LiveLaw (PH) 250
Punjab and Haryana High Court recently held that when a cheque issued by a sole proprietary entity is dishonoured, it is necessary to array the proprietary concern as an accused, along with the sole proprietor.
The bench comprising Justice Sureshwar Thakur further added that besides made it clear that merely suing the sole proprietor would not be sufficient, in view of Section 141 of the Negotiable Instruments Act.
The provision provides procedure in case of offences committed by companies. The bench observed that the provision not only covers body corporates but also includes firms and "other association of individuals".
Case Title: G.k. Construction Company, Through Its Owner Govind Katariya v. Balaji Makan Samagri Stores, Through Its Proprietor Mallaram Patel
Citation: 2022 LiveLaw (Ra) 92
The Rajasthan High Court observed that if modal auxiliary verbs or imperative words such as 'may', 'should' etc. are followed by the provision/expression prescribing lower bar/limit such as 'minimum', 'not below', etc. then, these words ('may', 'should', etc.) are required to be read as 'shall'.
The court dealt with the question whether the usage of word 'may' in section 148 of Negotiable Instruments Act provides a discretion to the Court to impose or not to impose the condition of depositing minimum 20% of the fine amount.
Section 148 provides that in an appeal by the drawer against conviction under section 138, the Appellate Court may order the appellant to deposit such sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court.
Case Title: Kodam Danalakshmi v. State of Telangana
Citation: 2022 LiveLaw (Tel) 1
In a case pertaining to dishonour of cheque, the Telangana High Court recently ruled that a joint account holder who is not a signatory to the disputed cheque shall not be prosecuted under Section 138 of Negotiable Instrument Act, 1981.
Justice Shameem Akhtar held that a mere joint account holder but not a signatory cannot be prosecuted under Section 138 of NI Act, unless and until his/ her signatures are on the cheque. The Court further observed that penal provisions are to be construed strictly and not in a routine/casual manner.
Case title - Sumit Deb v. Joy Deb and another
Citation: 2022 LiveLaw (Tri) 13
The Tripura High Court has made it clear that a court is required to issue notice to the accused and hear him before condoning the delay in filing a complaint under Section 138 of the Negotiable Instruments (NI) Act.
"...under Section 138 of the NI Act, if the original complaint is filed after the expiry of the statutory period, then, in such cases, before condoning the delay, according to the proviso to Section 142 (b) of the NI Act, the accused shall be given a notice along with a copy of the application for condonation of delay," the Bench of Justice Arindam Lodh held.