Important Judgment on NI Act

HEMONT -THEN WHAT WILL HAPPEND WHEN THE BANK DISHONOUR A CHEQUE NO THE GROUND THAT 'STOP PAYMENT' BUT THERE IS SUFFICIENT BALANCE IN THAT ACCOUNT?

Account has sufficient funds to clear the cheque.
BUT
A/c holder arranges for "Stop Payment", with the bank,  BUT he has to give justification to the bank for reasons to stop payment. (eg. cheque is lost)
If the reasons are not within the scope of  "legally enforceable debt", then prosecution / conviction cannot take place.
Complaintant proves that cheque was given to complainant and is not lost as claimed by accused. Complainant entitled to prosecute accused till the logical end.
Complaintant has to prove that accused has deliberately stopped payment for a "legally enforceable debt"

My perception for everybody's  INTROSPECTION :
In the above SC judgment (as posted by kiran kumar'ji), the 2 bench SC judge's state that the law book mentions ONLY & ONLY two ingredient (condition) that can be used to prosecute the accused and that is "insufficient funds" and "funds not arranged for".  These are the ONLY & ONLY two wordings (and not interpretations) that is written in the law book.

The SC judgement strictly says that other reasons are not acceptable like "stop payment" and "account closed" or "sign differ" or "cheque mutilated" or "cheque outdatd"  or "a/c frozen" or "a/c inoperative" and other excuses.  The law books do not provide for the above exact wordings for prosecution u/s 138.

The SC judges say that anything and everything else is "judicial interpretation"  and not the law as passed by the parliament.  It also means that  10 different benches of SC can interpret 10 different "judicial interpretation" of  S.138,  BUT the law provides for only two ingredients, specially and strictly to be followed where  "vicarious liability" is concerned.

Judicial interpretations changes the meaning and text words of the Law sections.
As said earlier 10 different judges, will give 10 different "judicial interpretations" for issues u/s 138 and in the game process, the exact parliamentary wordings of law (section) goes down the legal drain.

Advocate of "xyz" quotes a SC judgement that says "a/c closed" means cheque is dishonoured.
Advocate of  "abc" quotes a SC judgement that says "a/c closed" does not mean "insufficient balance" and provisions of S.138 do not get attracted.

If a group of judges can interpret the law (as per their own judgements), and those judicial  interpretations is supposed to become law,  THEN in all probabilites, we need not have parliament  and elected representatives to concieve and compose laws.    IN OTHER WORDS, THE CONCIEVING AND COMPOSING OF LAWS CAN BE GIVEN TO A GROUP OF SELECTED JUDGES. And another group as usual takes up "interpreting those laws".

The law is becoming funny. And as my uncle says "the law is an ass".

anyway, in a country mixture of democracy, everybody has a right to interpret the law as they want and only the interpretations that suits to some are accepted as the law and the litigants are pulverised.

Consider this Quote :
"the good thing about excuses (justifications) is that we can always find them at the right time"

Keep Smiling .... Hemant

THANKS 4 UR REPLY. I SUPPORT UR VIEW, HEMANT.

The letter given by drawer for stop payment will be material document to determine whether section 138 applicable or not. The circumstance will decide who has to prove correctness of the instrument.Section 138 is not for the recovery of sum .The main object of the section 138 of the said act is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments.

DEAR HEMANTH JI,

U HAVE RIGHTLY POINTED THE INTERPRETATION OF THE JUDGEMENT, HOWEVER THE TRAIL COURT AND THE SUBSEQUENT ARGUMENTS OF COMPLAINANT ADVOCATE MIGHT HAS LOOK FOR THE ANY MISCHIEF IN STOPPAYMENT , IT IS UPTO THE EVIDENCES AVAILABLE FOR THE SC TO DECIDE ON 138 NI ACT, ANY HOW IT SHOULD NOT BECOME LIKE 498A.....PJANARDHAN REDDY ADVOCATE ,INDUS LAW ASSOCIATES. HYDERABAD

Dear Hemant Agrawal, [Advocate]

Pls I draw attn to bare act N.I.Act,138, & 141/142 r/w.

                Its absolutely clear that after 15 days notice, should have made payments,      after filling complaint, issue of summons, then

"DOUBLE THE AMOUNTS of the Instrument- WITH 6 MONTHS      PUNISHMENT/ IMPRISONMENT ? " isn't it.;;;;

how do you say NIAct doest not presumes punishment,

pls light on the matter,  any such judgemnts,pls. from supreme courts,

if so then any corporate will hv a manager/ officer employed, to take on commiting fraud, take on bails, keep saying by mistake / by over look the cheque is issued/ ?? is not will happen so,? then the judicary is working for in favour of crime not for natural justice.pls.

 

 

 

Dear jayvelad advocate, Sir from which courts you are practising.pls. your emailID- fr guidance.

 06 August 2009, 14:21

          Now comming to your interpretaion, 

Sir, Stop payments will attract 420, with malafide intension, . How,

why at all you issued cheque.  

was there an admitted liability, then only you issued cheque?

to clear out debts/ but intensionally you take the advantage of law,judiciary, and show as you had  sufficiaent balance,/or created one? else

otherwise you could have made counter claims for it. by filling a fresh case for issue of cheque amounts? from beneficiary.

Under such  circumstances it will  attract 420, malafide common intenstions [406]? of all in the corporate/ prop/ partnership firm/ there should be fast track economy to control crime.

(Not Telgi or bofors issue keep smilling after death also?)

further more it should get the de -registration  at ROC/ Ministry/ financial instituins/ curb the finances from institutional funds/ , which in idian does not take place so?

 why dont we quote any other usa/ uk/ country examples now,

its decredited next days onwards in case of cheque is bounced/ till settled. Not more then three reply/responses permitted. It should be law of governance.

Invited attn of all experts to my views, if hold any good to all.

 

 

"ghansham das" :

 

1.  Firstly,  "LAW"  is not philosphy which means  "say so grandma's theories".
 

2.  Before writing & posting irrelevant things on this forum or commenting philosphically, please read, re-read and introspect and then re-introspect the meanings and wordings of the forum members / posters.
 

3.  FURTHER,  Please point out the particular portion of my post where I've stated that  " NIAct doest not presumes punishment, ".   Did I state this or did you hallucinate about it with a obvious prejudiced mind.

 

NOW,
The Law, specifically  "N.I.Act",  recommends a punishment of   "double the amount as fine"   or "imprisonment of 2 years".  HOWEVER ALL THIS (quantum) IS AT THE DISCRETION OF THE COURT and is not mandatory. 
Remember, 138 has a  "Compoundable offence",  component, which can be used firstly by the Complainant and secondly by the Judge (depending).

 

4.  In LAW, there is no such things as  "Natural Justice" or  "favour of crime or otherwise" or "time limit" or for that matter anything else.
The Court are mandatorily bound to follow procedures, rules and sections AS LAID DOWN IN THE BOOKS OF LAW, as passed by the legislature (parliament)
IF THE COUNTRY NEEDS TO FOLLOW THE LAW OF   "natural justice",  THEN THERE IS NO NEED TO FORMULATE OR COMPOSE LAWS OR PASS IT IN THE PARLIAMENT.  Everybody can religiously follow the "natural law" for "natural justice".   Accuseds can shed gallons of tears in the court and the judges would feel that this accused is a real grieved accused and that "natural justice" would mean to "favour" the accused whether there is a crime or not.

 

5.  The  "LAW" requires documentary evidence in matters of  "N.I.Act"
No  "natural justice" is applicable or permissible.
There is no mention of  the word "natural justice" in any of the laws enacted by the parliament.
Granting "bail" is a right of the Court and the Accused, under the democratic constitution.  Please remember that we are not living in a "dictator-ruled country".  We live in Democracy and in Democracy, what we (public) say is absolute truth (irrespective of all whatever).

"natural justice"  stems from the "law of nature"
BTW,
my colony's alpha-dog mates with several b*tches (ms.doggies) without any restrictions,  which is the LAW of Nature or say  "natural justice".
Going by the above logic of  "natural justice"  or  "law of nature",  the IPC section of Rape, Bigamy, Atrocities etc... would become redundant, if  "natural justice" were to be imparted.
(if you have not understood "natural justice" from the above example,  let me know, so that I can explain it more clearly and in detail, for your benefit)

WHETHER,  the manager or officer or Telgi or "taking advantage"  or "malafide common intenstions"  or  " fast track to control crime."   etc .....
ALL THIS ARE FICTIONs of law and administration,  hallucinated by the Govt. and other disgruntled Philosphers and politicians.
We all have been hearing all this since independence (1947) and the above philospical stances have grown in numbers and resultingly now as of today there are several crores of cases pending in india courts.

 

ALL BECAUSE, the LAW wordings were not followed in true spirit, but philosphically twisting the Law, by interpreting it to its each own whims, several times over and over again.  One SC judgement contradicts another SC judements.  What will you do with such SC judgements. 

 

REGARDING judgements from the Supreme Court,  I suggest you approach your local advocate and ask him such several judgments by the Supreme Court or research the website of the Supreme Court  or get an  lawyer assistant to obtain all the Supreme Court judgements that you may require.

FURTHER,   "keep smiling" is a quote, that I use to lighten up disgruntled and frustrating thoughts that emnate from people around us.
AS IT IS,  the "Keep Smiling",  improves facial features and raises nostalgic "face value" even after death.

Keep Smiling .... Hemant Agarwal
 

 

Dear sir

Very interesting discussion with NI Act judgement.

Recently i heard some interesting points in this regard. Pl give your valuable openions in this matter.

a) A cheque for Rs.30 lakhs  is issued against the supply of  material. The cost of the material is Rs.35 lakhs. The buyer (it is a private limited company) requeste to hold the cheque and promised to remit the monry by RTGS since 'the outstation cheque' wil take 15 to 20 days for collection (Buyer and seller are from different states). Cheque is properly prepared mdhe dates and te amout (it is not the blank cheque).

b) Since there was no remittance till 5 months (Cheque valid period is 6 months from the date of the chque), the seller presented the cheque in the bank. The same was informed to the buyer by way of Fax & Email.

c) After 10 days of the presentation of the cheque, seller has the email comunication from the buyer that the cheque has not et reached his bank & it wan not dishonored by them.

d) Subsequently, the cheque was returned unpaid and reached back to the seller just 10 days prior to the validity period of the cheque (i.e 6 months). But strangely, the bank has endorced the reason for the cheque bounce as 'FUNDS'  - EFFECTS NOT  CLEARED , PRESENT AGAIN'.

e) Since the validity period is about to end, it could not be represented.

f) It was confirmed by the seller that there are no funds in the bank account and so many other cheques were also returned by the bank with te same endorsement and no funds were also expected (i.e no cheques under collection etc).

g) Now the counsel for the accused ( buyer) has taken the stand as follows : 1) Cheque return will not come under the provisions of negotiabe instruments act since it was returned with the endorsement to represent and the cheque is not dishonored for the reason ' insufficient funds in the account' . 2) The cheque was issued only as a security 3)The account is not finalised and it has to be reconsiled.

h) But the seller is able to prove the debt with out any ambiguity. The seller and buyer have been in comunication trough emails and seller is able to prove the debt with clear evidance of physical original documents alongwith the circumstantial evidence by email correspondance.  

Please discuss and give the best possible ideas

 

yes, it will attract provision under section 138 of N.i. ACT.But you should file case systematically.

Sir,

What would be the effect of the earlier Judgment of SC in the case of Goaplast Pvt. Ltd. Vs.  Chico Ursula D'Souza and Anr.  reported in 2003 (3) LJSOFT (SC) 7

Once cheque is issued by a drawer, a presumption under Section 139 must follow _ Merely because drawer issued notice for stoppage of payment it will not preclude an action u/s 138 of N.I. Act by the drawee or the holder of the cheque in due course _ By countermanding payment of post-dated cheque, a party should not be allowed to get away from the penal provision of Section 138 of N.I. Act.

Goaplast judgement is of 2003, whereas the Khurana judgement is the latest one and provides clear interepretation of 138 and specific conditions that would attract 138.

Everything else of earlier becomes redundant, as of now, unless a further larger bench of SC, interprets otherwise, which is a remote chance, since the legislature and the judiciary has already made its intentions to clear the back-log of 138 cases.  AND personally I think what better excuse than to redifine the meaning of 138 and make almost all 138 cases to be null & void or say not tenable.

Keep Smiling .... Hemant

 

 

Upon perusal it is clear that the Judgment is in the nature of opinion as perceived from the facts and circumstances of the case and it does it create any binding precedent.

Paras 13 and 14 of same are worth citing.

"14. Keeping in view the facts and circumstances of the case, we are of the opinion that the complaint petition does not disclose an offence punishable under Section 138 of the Act."

Thus Judgment relates itself to the facts and circumstances of that particular case.

"13.   Before us a contention has been raised that the appellant did not have sufficient funds in his bank account. Such an allegation has not been made in the complaint petition. In any event, it was for the bank only to say so, as the complainant is not supposed to have knowledge in regard to the amount available in the account of the appellant."

Main impediment in the referred case was that the necessary ingredient for constituting offence under 138 i.e. contention as to insufficiency of fund was not alleged in the complaint petition. Second portion of para 13 of the judgment, somehow, seems to be Ticklish as the complainant can not bring the banker to depose for him at the preliminary stage.

There are number of judgment of the Apex Court on the "STOP PAYMENT" issue and Trial Court can not refuse to entertain such complaints unless same relates to stop payment chequest for same reported lost by the drawer. In which case Complainant will have to do little more homework.

I agree with you sir, Along with Mr Advocate- Jayvel- Its mistake from D SCCC, However N whatever be the reasoning behind, the court is unable to protect the rights of the general people/ public under the constituinal act 226/227. I feel big sorry, The cheque is a right-instrument for right/ proper safely carrying-payments against the debts accrued. Then Only the issuence arrises. In that context also if mylord is over looking some thing which not not known to people of the country will definitely sends a wrong msgs. Let scc to clerify it immeeditely.Else its bound to treat as play grounds for judicial system. This is no way at all acceptable to many beneficiary,pls.

Dear legal manager,

Can I say some thing- relevant-pls,

A chq is a fast clg debt paying right instrument to carry and trafser it to beneficiary's account,

the court doesn't come in to picture atll. if comes means court is ample of  time to intervene all time, keep increasing work load,  crush-brush necessary desired justice in time to beneficiary.

it will be termed and treated as violation of constituinal rigfhts of the citizen undr article 226/227 - confirming the statement made open in press- by chief jc.Mr K G  " The rights of all citizen will be protected by all means at all cost,,,,," 16th august 09,,,

Hope many will agree with my views.

thanks

Law club experts made not leave abondent such vibrant issues....

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