Negotiable Instruments Act

[font=""times new roman""]1.     Negotiable Instruments Act, 1881: Presumption u/s. 139

[/font] [font=""times new roman""]Dr. Sampathkumar B.V. vs. Dr. K.G. V. Lakshmi (2006) 132 Com. Cas. 160 (Karn.)

[/font] [font=""times new roman""]Facts

[/font] [font=""times new roman""]The cheque issued by the respondent when presented was dishonoured. On a complaint filed u/s. 138 of the Negotiable Instruments Act, 1881, the respondent contended that no prosecution could lie under the section as a blank cheque was issued as security for repayment of the loan of Rs. 75,000/-. The trial court dismissed the complaint on the ground that the respondent admitted the issuance of blank cheque as security.

[/font] [font=""times new roman""]Held

[/font] [font=""times new roman""]The HonΓÇÖble High Court observed that there was proof of issuance of cheque and its dishonour therefore a presumption regarding consideration arose under s. 139 of the Act which was not rebutted by the respondent.

[/font] [font=""times new roman""]The Court further held that a cheque whether issued for repayment of loan or as security makes little difference u/s. 138 of the Act and in the event of dishonour the legal consequences would be the same without distinction.

The accused was sentenced to pay fine of Rs. 1.50 lakhs, in default to undergo simple imprisonment for a period of six months.

[/font] [font=""times new roman""]2.     Summary Suit : Cheque dishonoured ΓÇô Maintainability

[/font] [font=""times new roman""]IRAM FEROZ VS. AYAZ GADHIYA (2006) 132 Comp. Cas 194 (Bom)

[/font] [font=""times new roman""]Facts

[/font] [font=""times new roman""]A summary suit is filed by the plaintiff against the defendant to recover the amounts lent and advanced based on a dishonoured cheque. The defendant admits that the loan was advanced.

[/font] [font=""times new roman""]The defendant contended that a summary suit on a dishonoured ΓÇÿchequeΓÇÖ is not maintainable as cheques are not included within the provisions of Order 37 rule 1, sub-rule (2) of the Code of Civil Procedure which only refers to

ΓÇ£(a) suits upon bills of exchange, hundies and promissory notes;ΓÇ¥

[/font] [font=""times new roman""]Held

[/font] [font=""times new roman""]The HonΓÇÖble Bombay rejecting the above contention of the defendant observed that the terms ΓÇÿbill of exchangeΓÇÖ and ΓÇÿchequeΓÇÖ are not defined in the Code of Civil Procedure therefore the meaning must be derived from the Negotiable Instrument Act. Wherein sec. 6 defines cheque as under:

[/font][font=""times new roman""]“6. Cheque – A `cheque’ is a bill of exchange drawn on a specified banker…..”
[/font][font=""times new roman""]The HonΓÇÖble court further referring to the decision in the case of M/s. Purnima Jaitly (MS) vs. Ravi Bansi Jaisingh AIR 2003 Bom 494 held that a suit on a dishonoured cheque issued by the defendant in favour of the plaintiff is maintainable as a summary suit.
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