Team  SoOLEGAL

Cheque Cases: Landmark Supreme Court Judgment on Section 138 of Negotiable Instruments Act[Read Judgment]

Team SoOLEGAL 31 Aug 2017 10:37am

Cheque Cases: Landmark Supreme Court Judgment on Section 138 of Negotiable Instruments Act[Read Judgment]

Supreme Court has delivered a landmark Judgment by changing the basic criteria under Section 138 of Negotiable Instruments Act and marked the offence under this act as person specific. Through this Judgment, SC provides relief to the holder of a bounced cheque, due to insufficient funds in the payer’s account under the provision of the Negotiable Instruments Act. The Court also made clear that the basic rules under Cr.PC that the cognizance was taken against the offence and not against the offender, was not appropriate in a prosecution under NI Act.

In this case, the applicant received a cheque signed by Harihara Krishnan. The cheque was drawn allegedly in discharge of balance sale considerable payable by M/s Norton Granites Pvt. Ltd. The Cheque was, then bounced due to shortage of funds which was drawn on account of another private company M/s Dakshin Granite Pvt. Ltd. wherein Hariharan Krishnan worked as a Director.

The Cheque was presented for collection by the respondent through his bank (Indian Bank, High Court Branch, Chennai) on 28 August 2012, which was dishonored on the ground that the account is closed. According to the presented application, it came to the notice of respondent during the cross-examination of the appellant that the cheque was drawn on account of Dakshin and the appellant is only a signatory on behalf of Dakshin in his capacity as a director of Dakshin.

The learned counsel representing the appellant argued that the appellant herein being the alleged signatory of Dakshin would only be vicariously liable for the offence committed by Dakshin. Later realizing the mistake, the respondent resorted to the device of filing an application on August 19, 2015, under Section 319 Cr.P.C. to implead Dakshin as an accused.

The learned Magistrate allowed the application under Section 319, but the application filed by Hariharan was dismissed in the High Court on the ground that the cognizance is taken of the offence and not the offender, and hence there was no impediment in adding an additional accused once the cognizance was already taken.

However, the Apex Court found the reasoning of the High Court invalid. In view of the law declared by Apex Court in Aneeta Hada case, the prosecution against the appellant could not be successfully maintained without prosecuting Dakshin. The Court also pointed out that the prosecution under section 138, contrary to other prosecutions under IPC, was person specific.  

Read the Judgment here: 






Tagged: Supreme Court   Section 138  
Did you find this write up useful? YES 209 NO 19
SHYAM SUNDER NAYYAR   29 Jan 2020 11:08pm
REALLY INFORMATIVE AND USEFUL
Reply
divakara   22 Aug 2019 7:22pm
a
Reply
divakara   22 Aug 2019 7:22pm
a
Reply
×

C2RMTo Know More

Something Awesome Is In The Work

0

DAYS

0

HOURS

0

MINUTES

0

SECONDS

Sign-up and we will notify you of our launch.
We’ll also give some discount for your effort :)

* We won’t use your email for spam, just to notify you of our launch.
×

SAARTHTo Know More

Launching Soon : SAARTH, your complete client, case, practise & document management SAAS application with direct client chat feature.

If you want to know more give us a Call at :+91 98109 29455 or Mail info@soolegal.com