N.i. act sec 138
Sandeep Didwania
(Querist) 30 August 2012
This query is : Resolved
A cheque was issud by the accused in the name of 'X' for repayment of the loan amount. X expired and thereafter the wife of the deceased deposited the the said cheque in the bank account, the bank account was a joint one.. the cheque bounced.
whether the wife of the deceased can file a case u/s 138 of the N.I.Act against the accused,
plz help........plz give sum rulings...if any
Arun Kumar Bhagat
(Expert) 31 August 2012
In my opinion she being the "holder in due course" is entitled to file case.
Anirudh
(Expert) 31 August 2012
I am afraid, if the cheque was drawn in favour of "X" and when "X" had died, his wife cannot be said to be either "the holder" or "the holder in due course" of the cheque.
Therefore, when the cheque gets dishonoured, she cannot bring any action under Section 138 of the N.I.Act.
She might have been entitled to bring the action under Sec. 138, in case the cheque was bearer cheque (issued to her husband, but came to her hand) or if the cheque issued in the name of her husband had been endorsed by her husband in her favour. In those cases she could have very well become in the case of the bearer cheque the "holder" and in the case of the endorsed cheque "holder in due course".
This is not the situation in the present case.
As such, on dishonour of the said cheque, she cannot bring any action u/s. 138 N.I.Act. Even if she brings such an action, the accused can successfully get out of it.
Hemant Agarwal
(Expert) 01 September 2012
1. IF the name of Mr. X, appears on the said cheque THEN on dishonour of the cheque, the complainant in the matter can be only Mr. X. Under no circumstances the wife of Mr. X, derives any right for file for prosecution u/s 138 of the N.I.Act, unless and until the said cheque was indorsed for collection to the name of wife of Mr. X.
2. Here since Mr. X, is deceased before presentation of the cheque, the said cheque becomes "null & void", since it is payable to "order" (u/s 13)and is without authority for depositation purposes. The criminal prosecution is abated, by default, even before the prosecution is filed, more so since the mandatory notice (u/s 138) to the alleged accused, now cannot be issued by the deceased cheque holder.
3. However, within time limitation, the Wife of Mr. X, as a legal heir, may file Civil court proceedings to recover the amount of the bounced cheque.
4. The "privity of contract" as far as the said cheque is concerned, is between the accused & Mr. X. For criminal prosecution, the parameter of "privity of contract" should be established, for purposes of determing the "legally enforceable debt", but necessary at the hands of Mr. X.. Here for criminal prosecution, the wife cannot say with conviction that there exists some "legally enforceable debt" between the wife and the accused.
Keep Smiling .... Hemant Agarwal
RAJU O.F.,
(Expert) 01 September 2012
It is not clear as to whether the cheque was returned unpaid with endorsement of insufficient funds. As the payee of the cheque died, wife can seek payment by cash or by fresh cheque in her name.
prabhakar singh
(Expert) 01 September 2012
On the given facts in the query Wife is an Heir of the Loan amount having right to recover it and "not a holder in due course".
She can file only suit of recovery for which she would be required to present a succession
certificate without which court shall not pass any judgement;although suit can be filed
even before obtaining the succession certificate .
No criminal proceeding under section 138 NIA shall lie on facts stated.
M V Gupta
(Expert) 02 October 2012
Sorry. I happen to see this query rather late. The question whether the wife can file a complaint under Sec 138 of the NI act needs further deliberation. When the Payee of the cheque died it vests in the legal heirs of the deceased with all the rights of the deceased - both civil and criminal. Suppose on the death of owner of land a third party has encroached on it. Can not the heirs of the deceased prosecute the encroacher for tress pass? In my view there is no legal prohibition for such criminal action. Similarly, in the case under consideration, the heirs of X would appear to be competent to issue notice of demand under the proviso (b)of Sec 138 and if the amount is not paid they can institute the proceedings under Sec 138 ibid. Experts may like to reconsider the issue and respond.
Hemant Agarwal
(Expert) 02 October 2012
1. The "PAYEE" or the "HOLDER", means the name appearing on the Cheque AND NOBODY else, as far as prosecution u/s 138 N.I.Act is concerned.
(refer section 8 & 9 of the N.I.Act)
2. In the matter instant, the deceased has not "indorsed" the said cheque in the name of Wife, HENCE by legal default, the wife CANNOT be a "PAYEE" or the "HOLDER", thus deriving no right, atleast under the N.I.Act. Similarly the Banking Act forbids any activity in a Deceased Account, on receipt of the Death Certificate of the account holder. (refer relevant RBI circulars from the RBI website). Further the Drawer's wife cannot deposit the said drawee's cheque in HER OWN ACCOUNT, since this will be considered as fraud.
3. The drawee is under no legal obligation to honour any demand-notice by the Wife of the Drawer, since there is no Privity of Contract .OR. any legally enforceable debt towards the wife of the drawer.
4. The vicarious liability of the drawee is lawfully towards the drawer and at no point of time under CrPC the drawer's Wife would be able to prove the vicarious liability towards self. Hence concusively, a third party (wife of deceased drawer) has no locus-standi under the N.I.Act to initiate prosecution under the N.I.Act, BUT to the exclusion of other civil proceedings.
Keep Smiling .... Hemant Agarwal
Guest
(Expert) 02 October 2012
Dear Hemant,
Principlly, I would like to differ with your opinion, particularly with reference to the terms "payee" and "holder in due course." In fact, "holder in due course" can be, or cannot be the payee only. According to the definition provided in sec.9 of NI Act, "Holder in due course" means ANY PERSON who for consideration became the POSSESSOR of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or indorse thereof, if [payable to order] before the amount mentioned in it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title."
So far as the status of the widow of the deceased "Mr. X" is concerned, she had a joint account with her husband and the cheque was deposited in the joint account pertaining to her husband. Any cheque deposited in the joint account the joint holder becomes entitled to claim the amount deposited or liable to be deposited in the said account through any mode (cash or cheque). So, she would have become the rightful owner of the cheque amount "without having sufficient cause to believe that any defect existed in the title of the person from whom she derived her title."
As such she has every right to sue the defaulter drawer of the cheque to claim the said amount, which pertained to her deceased husband.
Hemant Agarwal
(Expert) 02 October 2012
ONLY for INTROSPECTION
Respected Mr. PS Dhingra,
1. Allow me to split the section 9 into two different parameters
NON-RELEVANT parameter: a) Holder in due course" means ANY PERSON who for consideration became the POSSESSOR of a promissory note, bill of exchange or cheque if payable to bearer
RELEVANT parameter: b) "OR" the payee or indorse thereof, if [payable to order]
- all instruments (above) "maybe" payable to bearer
- BUT bank cheque "payable to order" is payable only to the specific named payee-person AND NOT TO THE BEARER or to any third party.
2. Allow me to truncate out the irrelevant words from section 9
quote
"Holder in due course" means ANY PERSON .... "OR". cheque "IF payable to order".
unquote
- Payable to order (as far as a Bank Cheque is concerned) CAN ONLY be the deceased Drawee, i.e. the name on the Bank Cheque.
- Bank Cheque is "payable to order"
- "payable to order" is equal to "privity of contract" with specific person and NOT with a third party or an indorsement
3. EVEN though the account is a Joint account, the deceased's wife CANNOT deposit any cheque in the name of the deceased person, under the RBI notifications / circulars, after the DC has been submitted to the Bank. Operation of Bank accounts "singlely / jointly / either" basis pertains only for convience purpose and continuing TRANSACTIONS PERTAINING TO DECEASED PERSONS NAME IN THE JOINT ACCOUNT WILL BE CRIMINAL MISREPRESENTATION AND A FRAUD. The deceased wife cannot claim ANY title on the subsequent cheques pertaining to the deceased persons name, without appropriate court proceedings (LA or Succession certificate).
4. The wife of the deceased has legal remedy under the Civil procedures BUT based on the above arguments, the criminal prosectuion remedy under the N.I.Act (138 & 142) is not available to the non-holder (payable to order).
E.O.E.
Keep Smiling .... Hemant Agarwal
