138 negotiable instrument act
Querist :
Anonymous
(Querist) 17 November 2011
This query is : Resolved
I have filed a complaint u/s 138 NI Act which is pending. accused appear and filed an application along with his 10th class mark sheet and saying that at the time of filing of compliant and also at the time of transaction he is a minor and therefore complaint is not maintainable.accused and complainant are friend and accused borrow 2 lakh for starting his business and for return the money he issued a cheque to complainant.at the time of transaction complainant don't know that he is minor at that time.is there any judgment on this point that still complaint is maintainable.
H. S. Thukral
(Expert) 17 November 2011
Find out how a minor could manage to open a bank account. He must have given his DOB in the application form. a minor can not open an account individually, it is only under a guardian.
prabhakar singh
(Expert) 17 November 2011
@Mr.Harbhajan Singh Thukral!
Although you are correct Mr. Thukral but perhaps above twelve or fifteen minors are allowed by bank to open and operate there a/c independently.
I request you to think in the line that a minor can commit the offence or not u/s138 NI Act???
It is an other mater that he can not enter in to any agreement???That may be a civil case issue.How criminal case would be viewed in against him???
My concepts in criminal law procedure is not good for want of practice.
H. S. Thukral
(Expert) 17 November 2011
I too have not come across any such case so far but definitely I shall be looking forward to answer that if the Negotiable Instrument Act allows a minor to draw, indorse a negotiable instrument (Section 26 NIA), then what is liability of minor under section 138 if the cheque bounces. Thanks Mr. Prabhakar for correcting me and raising this issue for further answers.
Guest
(Expert) 17 November 2011
Harbhajan ji,
Prabhakar ji is right in his observation, as a minor can open a savings account if he is able to operate an account. The only question, however remains whether a minor can be tried for his crime under the NI Act.
In my opinion, Section 45 of Juvenile Justice Act 1986, itself, provides enough inbuilt cushion about punishment under the Acts other than Juvinile Act. Would you, along with Shri Prabhakar Singh like to review the position to provide your views also on that aspect.
prabhakar singh
(Expert) 17 November 2011
Thank you Mr. Thukral!
You have hinted me the answer and i have got it to bind all parties except himself.
Mohiri Bibi Vs Dharmo Das Ghosh still a good law.
prabhakar singh
(Expert) 17 November 2011
For the reasons stated below my opinion is that a minor can not be prosecuted u/s138 of NI Act.
Under Section 26 of the Negotiable Instruments Act, 1881 if the minor, makes, draws or indorses a promissory note or a bill of exchange the holder would be entitled to enforce the instrument and receive payment on it against all parties except the minor.
The minor himself cannot incur any liability on the instrument by reason of such making, drawing or endorsing and the instrument is wholly void as against him. The minor is thus never liable upon a negotiable instrument in any capacity.
‘However an instrument is not bad merely because a minor draws it or accepts it or endorses it.
The instrument is quite good but the minor will not be held liable on it. This is what is meant by saying that a minor is not competent to draw a negotiable instrument.
Though a minor does not incur any liability on an instrument he can acquire rights under it. He can sue on it himself. Thus if he becomes the holder in due course of an instrument he is perfectly entitled to sue upon it all the prior parties thereto.
Law provides that instrument as against the minor is wholly void. Law does not say that the instrument is wholly void for all purposes.
Thus the minor acts as a conduit pipe or channel to convey title and liability but not to originate it.
Guest
(Expert) 17 November 2011
@Prabhakar ji,
Your argument definitely seems to have a weight, as section 26 makes it clear, "A minor may draw, indorse, deliver and negotiate such instruments to as to bind all parties except himself."
BUT, the point to ponder is that the said section does not deal with honour of liability, whereas section 30 of the NI Act deals with the liability of drawer, but does not provide any exception for a minor. If we go deep through section 26 that deals only with making of an instrument, NOT about liability of payment/honour of the instrument already made. That aspect is dealt with in section 30 only, and if we consider section 26 to absolve a minor of his liability to honour his commitment, that becomes contradictory to the section 30.
So, you may kindly like to review the position with particular reference to section 45 of the Juvenile Justice Act.
Advocate. Arunagiri
(Expert) 17 November 2011
Minor is not entitled to operate the bank account. His signature is not obtained for the purpose of opening a bank account.
Under the circumstances, how a minor could have issued a cheque.
Under any circumstances, minor can not be prosecuted under the NI Act.
Guest
(Expert) 17 November 2011
@Arunagiri ji,
If you kindly quote some RBI guideline that would enhance my knowledge please. I have not yet come across any such instruction of the RBI.
Rather, I have seen banks opening SB accounts in the name of minors, who are literate and are considered to operate their own account independently. Moreover, banks make a mention of merely about being Indian Citizen, as eligibility criteria and do not show any age condition even on their sites.
Sailesh Kumar Shah
(Expert) 18 November 2011
@learned experts
Account of Minors :
(a) A Savings Bank account of a minor may be opened to be operated upon by the natural guardian of the minor or by the guardian appointed by the Court.
(b) A Savings Bank Account may also be opened in
(i) the single name of a minor aged 10 years or more to be operated upon by the minor.
(ii) the joint names of two minor who have completed the age of 10 years to be operated upon by them jointly.
(iii) the joint names of two or more minors to be operated upon by a person who is the natural guardian of both or all the minors.
Shonee Kapoor
(Expert) 18 November 2011
I opened my first Savings bank account when I was 13 years old that was w/o cheque book facility.
I opened another Savings bank account when I was less than 16 years old, with cheque book facility.
However, I would look forward to the reply, whether a minor can be prosecuted under S 138 NI.
To the best of my knowledge and understanding, 138 is for discharge of liability arising out of any kind of debt, that would be akin to a contract, and a minor can not enter a contract.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
prabhakar singh
(Expert) 18 November 2011
@Mr.Dhingra!
i have gone through your post and have considered it to the extent you raised your plea to fasten a minor because of section 30 but you missed to understand that an exception clause laid for minor in section 26 shall stand placed every where even in section 138.
i see rather Mr.Shonee has better understanding than many of advocates here.
Try to understand that minor can be a drawer with in meaning of section 30 but his liability is specially protected under section 26 shall for him will be deemed to have ben placed every where.
The position of law that emerges from a minor's contract under N.I.ACT is that while he would be competent to bind every body and have enforceable rights against every one,no one can charge him or enforce against him for his liability.SAY THAT LAW PLACES HIM IN A 'WIN-WIN'POSITION[DONO HATH MAE LADOO]
You did not mark the privy council case i referred[Mohiri Bibi Vs Dharmo Das Gosh] where it was laid that any benefit that have arisen to the minor by any contract with him shall not revert back even when contract with him would be void under section 11 of the contract Act.Then under Partnership Act a minor can be admitted as a partner for profits of the
partnership and under ACT in consideration(N.I.ACT)it section 26 that makes him competent to open and run and operate an a/c on his own.
You will be surprised if i say that despite payments cheque issued by him during his minority and cashed by his banker debiting his a/c ;on attaining majority he would be in his right to demand all gone outs from his a/c from the bank on basis of legal position emerging due to section 26 read with section 11 of Contract Act and leading cases
(a) Mohiribibi(b)shyamlal vs. pyarelal .
So either comprehend better with jurisprudence related to minors or leave it for others but do not argue me just for argument shake to mark your presence.
Besides Mr.Thukral who hinted me a direction to think,i have found only Mr.Shonee better on this point from among those who had participated here to discuss and Mr.Shah is definitely greatest info bank i often look towards him.
prabhakar singh
(Expert) 18 November 2011
@Mr.Dhingra!
since it got duplicated i have washed it.
Raj Kumar Makkad
(Expert) 18 November 2011
Every person competent to contract has capacity to incur liability by
making, drawing, accepting, endorsing, delivering and negotiating a promissory note, bill of exchange or cheque (Section 26, para 1, Negotiable Instrument Act, 1881).
As a minor’s agreement is void, he cannot bind himself by becoming a party to a negotiable instrument but he may draw,
endorse, deliver and negotiate such instruments so as to bind all parties except himself (Section 26, para 2).
In view of the provisions of Section 26 explained above, the promissory note executed by both parties is valid even though a minor is a party to it. Though a minor is not liable; but his immunity from liability does not absolve the other joint promisor from liability.
[Sulochana v. Pandiyan Bank Ltd., AIR (1975) Mad. 70].
