Very interesting discussion with NI Act judgment.
Recently i heard some interesting points in this regard. Pl give your valuable opinions 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) requested to hold the cheque and promised to remit the money by RTGS since 'the outstation cheque' will take 15 to 20 days for collection (Buyer and seller are from different states). Cheque is properly prepared and dates and amount was also filled by the seller (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 communication 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 endorsed 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 the 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 negotiable 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 finalized and it has to be reconciled.
h) But the seller is able to prove the debt with out any ambiguity. The seller and buyer have been in communication trough emails and seller is able to prove the debt with clear evidence of physical original documents along with the circumstantial evidence by email correspondence.
Please discuss and give the best possible ideas
