1. Dishonour of cheques and subsequent prosecution under Section 138 of the Negotiable Instruments Act 1881. (Para 3 )
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2023 Supreme(SC) 1309
SUPREME COURT OF INDIA
HRISHIKESH ROY, SANJAY KAROL, JJ.
Harpal Singh – Appellant
Versus
State of Haryana – Respondent
Special Leave Petition (Criminal) No.15662 of 2023
Decided On : 04-12-2023
Advocates:
Advocate Appeared:
For the Appellant : Mr. Maninder Singh, Sr. Adv. Mr. Vaibhav Manu Srivastava, AOR Mr. Apoorv Agarwal, Adv. Mr. Maitreya Saha, Adv. Ms. Riya Thomas, Adv.
For the Respondent: Mr. Himanshu Sharma, AOR Mr. Lokesh Solanki, Adv. Mr. Prateek Bajaj, Adv. Ms. Muskan Chauhan, Adv.
Advocate Appeared:
For the Appellant : Mr. Maninder Singh, Sr. Adv. Mr. Vaibhav Manu Srivastava, AOR Mr. Apoorv Agarwal, Adv. Mr. Maitreya Saha, Adv. Ms. Riya Thomas, Adv.
For the Respondent: Mr. Himanshu Sharma, AOR Mr. Lokesh Solanki, Adv. Mr. Prateek Bajaj, Adv. Ms. Muskan Chauhan, Adv.
A cheque's dishonour under Section 138 cannot be excused by reliance on funds in other bank accounts; the specific account must have sufficient balance.
Headnote:(A) Negotiable Instruments Act, 1881 - Section 138 - Conviction for dishonour of cheque - The petitioner argued that a frozen bank account should exempt him from conviction; however, evidence showed insufficient funds at the time of cheque issuance, negating his defense. (Paras 3-6)
Facts of the case:
The petitioner faced conviction under Section 138 for issuing ten cheques totaling Rupees Eighty Lakhs, while his bank account had a maximum deposit of Rs. 18,52,033/-.
Findings of Court:
The court found the argument regarding other bank accounts irrelevant as the cheque was linked to a specific account.
Issues: The main issue was whether the frozen status of the bank account could absolve the petitioner from liability under Section 138.
Ratio Decidendi: The court ruled that reliance on other bank accounts does not assist in a Section 138 proceeding, emphasizing that the specific account's status is determinative.
Result: Special Leave Petition dismissed.
Act Referred
Legal Category Hierarchy
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crime and sentencing
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white collar crime
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negotiable instruments act
- dishonour of cheques (Para 6)
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negotiable instruments act
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white collar crime
Table of Contents
2. Whether freezing of the bank account or availability of funds in other bank accounts exempts the accused from conviction under Section 138, Negotiable Instruments Act. (Para 3 , 5 )
3. The account balance was insufficient to cover the cheques, rendering the argument regarding the frozen account inapplicable. (Para 4 )
4. In proceedings under Section 138 of the Negotiable Instruments Act, the accused cannot rely on funds available in bank accounts other than the one related to the dishonoured cheque. (Para 6 )
5. Special Leave Petition dismissed. (Para 6 )
6. Can an accused under Section 138 of the Negotiable Instruments Act avoid conviction if the bank account was frozen by police?
The benefit of incapacity to operate a frozen account is not available if the funds available in the account at the relevant time were already insufficient to cover the cheque amount. (Para 4 )
7. Can the accused rely on sufficient funds in other bank accounts to defend a prosecution for a dishonoured cheque under Section 138 of the Negotiable Instruments Act?
No, the accused cannot rely on other bank accounts for a dishonoured cheque; the legal requirement for sufficient funds relates specifically to the bank account from which the cheque was issued. (Para 6 )
ORDER :
1. Delay condoned.
2. Heard Mr. Maninder Singh, learned Senior Counsel appearing for the petitioner.
3. The counsel would submit that the concerned bank account was frozen by the police on 10.03.2015 and therefore the petitioner should not face conviction for the offence, under Section 138 of the Negotiable Instruments Act 1881.
4. However, it is seen from the impugned judgment itself that although ten cheques totaling a sum of Rupees Eighty Lakhs was issued by the petitioner, at the relevant point of time, the concerned bank account had maximum deposit of Rs. 18,52,033/-. This would indicate that the benefit of the judgment relied upon by the petitioner to point out his incapacity in operating the bank account, will not aid the petitioner.
5. The Senior Counsel would then refer to the funds available with the petitioner in different bank accounts, as shown from Annexure P-12, to say that the petitioner had sufficient balance in those bank accounts.
6. In a proceeding under Section 138 of the Negotiable Instruments Act, the accused cannot rely upon other bank accounts for the dishonoured cheque which relates to specific bank account of the accused. Accordingly, the argument advanced by Mr. Maninder Singh, learned Senior Counsel of having adequate funds by reference to the other bank accounts of the company, cannot be of any assistance to the accused. The Special Leave Petition is therefore found devoid of merit and the same is dismissed.
7. Pending application(s), if any, also stand closed.
