Negotiable Instruments

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 Section 138 of the Negotiable Instruments Act (NI Act), states the Jammu and Kashmir and Ladakh High Court Mohammad Shafi Wani v Noor Mohammad Khan.

A complaint for offence punishable under Section 138 of the Negotiable Instruments Act (NI Act) would be maintainable, even if a civil suit is filed for recovery of the amount, though both spring from the same cause of action, says Karnataka High Court in Lalji Kesha Vaid v Dayanand R.

A complaint regarding cheque dishonour, under Section 138 of the Negotiable Instruments Act (NI Act), can be filed to the Magistrate Court with an affidavit and associated documents.

In cheque cases filed under Section 138 of the Negotiable Instruments Act (NI Act), when the accused resides beyond the territorial jurisdiction of the court, an inquiry is to be conducted by the Magistrate under Section 202(1) of the Code of Criminal Procedure (CrPC), to arrive at sufficient grounds to proceed against the accused and the Magistrate can dispense with the Section 202 (1) inquiry if the complainant files an affidavit in lieu of the inquiry, as per the Constitutional Bench judgement: In re: Expeditious Trial of Cases Under Section 138 NI Act).

In a cheque case under Section 138 of the Negotiable Instruments Act (NI Act), if the accused disputes the signature on the cheque, then the court can summon certified copies of the specimen signature, which is admissible under Bankers’ Book of Evidence Act, 1891, from the bank to compare it with the signature appearing on the cheque under Section 73 of the Indian Evidence Act, 1882 (IEA), says the Supreme Court (SC) in Ajitsinh Chehuji Rathod v State of Gujarat and another.

In Rameshchandra Ambalal Joshi v State of Gujarat & Anr, the Supreme Court of India (SC) discusses how to calculate the word month appears in legal provisions. As per Section 3 (35) of the General Clauses Act, the word month has been defined and it “shall mean a month reckoned according to the British calendar”.

The cognizance of the offence in a cheque dishonour case, under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) can be taken by a court not inferior to a First-Class Judicial Magistrate upon a complaint in writing by the payee or the holder in due course of the cheque, to be made within one month of the date on which the cause of action arises.

Deposit of a minimum 20% of the cheque amount when the appeal court considers an appeal of an accused person convicted for dishonour of cheque under Section 148 of Negotiable Instruments Act, is not an absolute matter, but an exceptional one, says the Supreme Court (SC) in Jamboo Bhandari v MP State Industrial Development Corporation Ltd.

In a cheque dishonour case, the interim compensation can be directed to be paid only after the accused has pleaded not guilty as per section 143A (1) of the Negotiable Instruments Act, 1881 (NI Act).

The period of limitation for issuing legal notice under section 138 ( c ) of the Negotiable Instrument Act ( NI Act) and filing complaint under Section 142 (1) (b) of the NI Act is settled in M/S. Econ Antri Ltd v M/S. Rom Industries Ltd. & Anr [2013 (3) KHC 659].

A cheque which has been issued by a person but presented by the drawee after his death, cannot be paid by the bank. On the death of the drawer of a cheque, the cheque issued by him ceases to be a valid cheque. The reason is that on the moment of the death of the drawer of the cheque the balance amount available on his bank account will vests in his nominee or legal heir.

The appeal against the acquittal of the accused in a cheque bounce case can be filed only before the High Court, says the Calcutta High Court in Ms. Todi Investors v Ashis Kumar Dutta & Another.