Case u/s 138
Querist :
Anonymous
(Querist) 04 October 2011
This query is : Resolved
I had taken a Technology Development Assistance [TDA] from a Mission for the development of a particular industry started by a union ministry. The Mission is neither a Bank or Financial Institution not a NBFC hence they have given the name of TDA in stead of loan. This TDA was given to me for purchase of certain machines for a new project and remaining portion of project cost was financed by a bank and promoter. This TDA is repayable within interest of 1%. As security they had taken post dated cheques from me. Machines are also hypothecated to the.
Although it is not mentioned in the TDA Agreement, but it can be established from other correspondences that the mission was supposed to finance smaller units which will produce semi finished items which will be raw material for me.
As mission could not develop such ancillary units, my project was running at low capacity utilization and making losses year after year and finally was closed down.
Mission has not taken possession of the machines which are hypothecated to them. In stead they deposited the cheque and as the same was dishonoured, filed a case on my Under Section 138.
Please suggest me whether I have any chance of winning this case if I fight this as Mission could not fulfill its obligation.
ajay sethi
(Expert) 04 October 2011
in the cheques issued by you were the amounts and date filled in ?
if dates, amount have been filled in by mission it amounts to material alteration in cheque . in such a case as per bombay high court judgements no cheque bouncing case is maintanable .
prabhakar singh
(Expert) 04 October 2011
One thing is established that cheque were for a existing liability then unless some technical defect arises, which often does though, responsibility on proof of offence would arise.To beat them you need to search as many defects as there may be found.
You can and should sue them for damages caused to you arising out of breach of the contract due to commission of default of promise made by them.
Querist :
Anonymous
(Querist) 05 October 2011
Thanks Advocate Ajay Sethi, Adv Prabhakar Singh & Adv Raj Kumar Makkad.
Adv Sethi, in these cheques, Date was filled by the mission. All other details were filled by them. One more information, these cheques were issued from a bank account which has been classified as Non Performing Asset [NPA] by bank as per RBI guidelines and Mission is aware about this and even than they deposited the cheque. In such situation do you think this cheque bouncing case is maintainable.
Querist :
Anonymous
(Querist) 05 October 2011
Advocate Prabhakar, do you think that since I was not in a position to operate at 100% capacity because Mission could not establish ancillary units will be enough reason to sue them for damages? Please note that setting up of ancillary unit was not mentioned in the agreement. It was a verbal assurance, which through my various letters brought in record.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 05 October 2011
If legal liability is proved the writings on cheque is minor irregularity.
And as the things stand as of now it is a difficult task to convince the court to wait for forensic examination which takes time.
Guest
(Expert) 05 October 2011
TDA is a type of soft loan for technology development to provide you financial assistance. But you have not mentioned what were the conditions of repayment, as per the agreement.
Issue of cheque from an NPA account can only exhibit mal-intention on your part to intentionally evade from clearing your liability, rather than giving you any benefit.
Taking possession of the hypothecated machinery can take place only as a last resort and that too as per the terms specified in the agreement, as the organisation has security instruments (cheques) in its custody to encash them first to receive back its advanced amount.
I really wonder, instead of thinking of discharging your liability to clear TDA, you think about claiming damages from the mission, which advanced you a huge amount on such a cheap rate.
However, I endorse the views of JSDN.
Querist :
Anonymous
(Querist) 06 October 2011
Dear Mr. Dhingra
1. When we had issued the cheques, account was in operation. Later on as the company was running in losses, the account was classified as NPA.
2. Reason for losses is that the unit was running at very low capacity utilisation because mission could not arrange for ancillary unit, which it was supposed to.
3. I have no intention to sue the mission for damages. It was just in response to Adv Parbhakar's reply I had asked this.
4. My sole interest is to get rid of this 138 case. I don't mind even if mission takes back machines which are hypothecated to them.
Please respond how it can be possible?
ajay sethi
(Expert) 06 October 2011
in bmumbai if 138 had been filed and amounts ,dates etc , name filled in by mission cheque bouncing case would not have been maintanable
A single judge of Kerala High Court in Capital Syndicate Vs. Jameela[1] held that if a drawer issues a cheque leaf with his signature only and without the name of the payee and the specifying the amount and date, the filling up of the name of the payee and the specifying the amount and date would amount to material alteration u/s.87 of the act and therefore the criminal proceedings u/s. 138 of the act would not lie if such a cheque is dishonored. The court observed that “…..the subsequent insertion of the amount and the name of the payee without the consent of the drawer would amount to material alteration rendering the instrument void u/s. 87 of the Act”.
In the said judgment the Kerala High Court cited with approval the decision of a division bench of the Kerala High Court in Bhaskaran Chandrasekharan v. Radhakrishanan[2] in which the court had considered whether the putting of the date in an undated cheque subsequent to the issue of the same when there was no dispute regarding consideration, signature, amount and the name of the payee, would amount to material alteration rendering the instrument void u/s. 87 of the Act. the Court held that: “ When a cheque is issued for valid consideration, with no dispute regarding signature, amount and name, it cannot be said that putting a date on cheque by the payee who is the holder of the cheque in due course would amount to material alteration rendering the instrument void. In fact there is no material alteration. When a cheque is admittedly issued with blank date, and when the payee has no objection with regard to the name, amount and signature, it can be assumed that there is an implied consent for putting the date as and when required by the beneficiary at get it enchased”. The court further held that: “Alteration of the date in the cheque may be material alteration. Alteration may have the effect of lengthening the period of limitation or shortening it. So alteration of payee’s name is material which affects the character of the instrument, and so also the relationship of the parties. So also the alteration of signature as well as the amount. All this would amount to material alteration”.
Querist :
Anonymous
(Querist) 07 October 2011
Thanks Adv Sethi. So what I understand that since only date in the cheque was filled by Mission, court will treat it as material alteration; hence case is not maintainable.
I have already received summon. What should be my next course of action.
If by any chance I miss to appear before court on the date mentioned in the Summon, does it harm me. Someone informed me that after summon, I will get a bailable warrant.
ajay sethi
(Expert) 07 October 2011
you have to contest the case . appear in court on date mentioned in summons . engage a local lawyer . if you dont appear court will issue bailable warrant against you . later non bailable warrant .
