Negotiable Instruments

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 dishnour cases, when the accused resides beyond the territorial jurisdiction of the court, the inquiry to be conducted under Section 202 of the Code of Criminal Procedure (CrPC), shall be conducted on affidavit, on receipt of complaints under Section 138 of the Negotiable Instruments Act (NI Act) to arrive at sufficient grounds to proceed against the accused. This was issued by the Suprem Court (SC) in the suo moto case in a constitutional Bench case : In re: Expeditious Trial of Cases Under Section 138

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 signatures from the bank to compare it with the signature appearing on the cheque, says the Supreme Court 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.

An authorised signatory of a company or firm will not be liable for prosecution in a cheque case, under section 138 of the Negotiable Instrument Act (NI Act) without the companies arraigned as an accused. This is what the High Court of Kerala says in Velayudhan Pilla S v Chellath Franklin and Another (2021 (1) KLD 753).