1. The liability of accused in cheque bounce cases

2.

S.20 of The Negotiable Instrument Act is not applicable on cheques.

This section is abount blank instruments. Courts resort to this section and give illegal authority to possessor of cheque to fill up the blanks. All concerned must object this as S.20 is not at all applicable to cheques as the cheques are not the stamped instrument. They were but they have been taken off the list long back. Blank cheques are conditional cheques, and must be subject to final explicit consent by the drawer. The argument of the courts that cheque can be filled up by anyone and need not be in drawer's handwriting is fine but does not mean that possessor can fill date and amount on the cheque without consent of drawer. A person who accepts blank cheque must realise this pitfall, but it cannot be argued that a person who issues blank cheque must face the consequences. 

Unfortunately courts are taking the issue of blank cheques very lightly without the sanction of law and hence all the defense counsels must take up this issue vehemently. It will be resolved sooner or later.

R Trivedi

(advocate.dma@gmail.com)

3.

Complaint by a proprietorship firm can be constituted as follows.

1. Either by the proprietor declaring himself as the proprietor. He can be the complainant as well as witness.

3. By an existing GPA holder as complainant on behalf of firm as well as witness. The GPA should have been granted before the alleged transactions. He must state that he knows the transactions in his personal capacity.

3. Either by the employee (non GPA holder) of firm on behalf of firm with SPA from the proprietor, but in this case proprietor must also appear as witness.

It is not permissible under the law that a proprietor gives authority letter / SPA / GPA at the time of complaint to a simple employee to become both complainant as well as witness on behalf of firm. If so the proprietor must also appear as witness, otherwise case fails.

R Trivedi

(advocate.dma@gmail.com)

4.

Date of Drawn

There is a good amount of illegality happening in the courts on this issue. Even the supreme court has ruled badly on this without proper consideration of S.46 of NI Act and S.68 of The Indian Stamp Act.

A conjoin reading of S.46, S.118(b) of Negotiable Instrument Act and S.68 of The Indian Stamp Act shows that as per law the date of drawn is the date on which cheque is signed/delivered/received. Courts illegally take date on cheque as date of drawn. Under S.118(b) of NI Act, the accused can prove that the cheque was given / delivered 6 months before the date of dishonor either as PDC or as Blank. If so then case under S.138 must fail. 

All counsels of in the cases involving Blank Cheques or PDCs or old EMI cheques must take up this point strongly at trial stage, The Hon SC will have to reconsider its position on PDCs (date of drawn), sooner or later.

R Trivedi

(advocate.dma@gmail.com)

5.

Liability of other Directors

Signatory Director / Managing Director is by default responsible and they can be made accused along with the company. A complainant must be careful while including other directors as accused.

1. The complainant must clearly and explicitly state in complaint that XYZ director was the incharge of accused company, having active involvement in the day today functioning of the company. If available complainant must provide some evidence to support the involvement of such director.

2. If the complainant fails to mention in the complaint as above, then such director has the good chances of acquittal. Such director may approach HC under S.482 for discharge.

6. Dishonor of advance cheque

S.138 is not applicable, if a person issues a cheque as advance for purchase of some goods and if this cheque bounces, then it is the civil liability depending on the nature of the contract, not the criminal liability. 

Originally posted by : R Trivedi
	6. Dishonor of advance cheque   S.138 is not applicable, if a person issues a cheque as advance for purchase of some goods and if this cheque bounces, then it is the civil liability depending on the nature of the contract, not the criminal liability.

How it is not applicable on advance payment, Kindly explain 

For S.138 the liability must be existing at the time of issuance of cheque. Advance payment is not for existing liability as the material is yet to be delivered to drawer. Any loss under the contract on account of cancellation of order/contract must be assessed as civil liability. Apex Court order.. https://indiankanoon.org/doc/90881329/

Thanks for the explanation.