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Section 138 NI Act: There should not be any uncertainty in cheque as regards to amount written in words, holds Delhi HC

Team SoOLEGAL 6 Aug 2020 3:27pm

Section 138 NI Act: There should not be any uncertainty in cheque as regards to amount written in words, holds Delhi HC

The Patiala House Court while dealing with the instant matter related to dishonour of cheques held that an instrument cannot be called a cheque unless it specifies a certain sum of money to be given to a certain person. The sum written on the instrument should not be inappropriate, and only then can it be considered a cheque and so it would have legal implications under the Negotiable Instruments Act, 1881.

In this case, a cheque was dishonored for an error in the mentioning of amount as “Forty Four Lacs Eighteen Lacs Eight Hundred and Ninety-Six only”. Thus the Canara bank dishonored the cheque saying that cheque  was drawn irregularly the and the amount in words and figures differed.

The revisionist via their counsel Sanjay Bhargav, claimed that the amount mentioned above could not be found as an instrument and therefore the document presented before the bank was neither a bill of exchange nor a cheque under Sections 5 and 6 of the Negotiable Instruments Act, 1881. In addition, Section 138 of the Negotiable Instruments Act, 1881 could not be attracted.

On the other hand, the respondent represented by M.P Upadhyay, argued that the revisionist cannot take advantage of his mistake. Reliance was placed on Supreme Court’s judgment of M/S Lakshmi Dyechem v. state of Gujarat 2012-13 SCC 375, in which court has expanded the scope of expression “amount of money is insufficient” to conclude dishonor of cheques. 

Additional Sessions Judge Parveen Singh noted that, as set out in Section 5 of the Negotiable Instruments Act, five conditions are satisfied to be met for a valid negotiable instrument, i.e., an instrument in writing; containing an unconditional order signed by the maker; directing a certain person to pay; a certain amount of money; a certain person or to the bearer of the instrument.

The Court noted that the cheque in question did not meet one requirement, i.e. the amount of money entered should be certain. Accordingly, it was held that, since the instrument on the basis of which the complaint was lodged was not a valid cheque as defined in Section 6 of the Negotiable Instruments Act, 1881, there was therefore no offense under Section 138 of the Negotiable Instruments Act, 1881 on the part of the revisionists.



Tagged: Section 138   Patiala House Court   dishonour of cheques   Negotiable Instruments Act   counsel Sanjay Bhargav   Judge Parveen Singh   Supreme Court  
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