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1995 Supreme(AP) 31
Andhra Pradesh High Court
Judges : M.N.RAO, S.V.MARUTHI
B.Mohan Krishna - Appellant
Versus
Secretary, Union of India New Delhi - Respondent
W.P. Nos. 101/90
Decided On : 01-27-95
Advocates Appeared :
M/s. S. Satyanarayana Prasad,Y.S. Srinivas,T. Koti Reddy
Headnote:NEGOTIABLE INSTRUMENTS ACT, Secs.138 to 142 - Of the Five Sections comprising with Chapter XVIIs of the Act (Inserted by Sec.4 of Act 66 of 1988) DISHONOUR OF CHEQUES - Impugned, · legislation is not ultra-vires the powers of Union Parliament.
Sec. 138 creates strict liability Exclusion of mens rea as a necessary ingredient of offence under Sec. 139 is dear and explicit - Absence of mens rea in the section for fastening criminal liability is not arbitrary, violative of Art.14 of the Constitution of India.
Treating of Companies and Individuals separately for fastening Union of India New Delhi & Ors. 149 criminal liability is not violative of Art. 14 and this classification cannot be termed either irrelational or unreasonable.
Words “fails to make the payment” in Proviso (c) to Sec. 138 cannot be implied as “failure without reasonable cause”.
Presumption incorporated in Sec.139 is intended to cover only holder of a cheque of the nature referred to in Sec.138 and is not violative of the guaranteed fundamental right of an accused under Clause 3 of Article 20 of the Constitution of India.
Prosecution of Company or any of its employees under Sec.138 is not prohibited.
Secs. 138,139 and 142 Interpretation of - Guidelines indicated.
As section 138 incorporates strict liability, being a penal provision, it has to be construed strictly. Despite bona fide in1entions, if a person has issued a cheque in favour of another person and it is returned unpaid by the bank, he is liable for prosecution provided the cheque was issued from out of the account maintained by the drawer with a banker for the discharge, in whole or in part, of any debt or other liability. The reasons for the returning of the cheque by the bank must be : i) the amount standing to the credit of the account of the drawer is insufficient ; or ii) it exceeds the amount arranged to be paid from that account by an agreement made with the bank. The second condition is attracted normally in case where the account holder is permitted to have over-draft facility and if the amount for which the, cheque was issued is in excess of the amount for which such over-draft facility was given.
Where a cheque is issued not for the purpose of discharge of any debt or other liability, the maker of the cheque is not liable for prosecution. For example, if the cheque is given by way of gift or present and if it is dishonoured by the bank, the maker of the cheque is not liable for prosecution. Unless the two conditions set out in Section 138 are satisfied, no criminal liability can be fastened.
Section 138 is not couched in precise language. Apart from being vague, it is likely to be mis-interpreted in a manner different from what was intended by the law making body, and this is because of the words “payment of any amount of money to another person” appearing in the main enacting clause. The words “another person” are not explained. This .at the first blush gives an incorrect impression that the words “another person" mean only a “Payee" and that the sweep of the offence is confined to the drawer and the, payee. It is therefore, hold that both the payee and holder in due course are covered by the expression "another person" but not a mere holder or endorse without consideration.
The rebuttable presumption under Section 139 operates only in favour of the payee or a holder in due course but not in favour of a person who, without consideration/became the holder of the cheque.
In a prosecution under Section 138, it is open to the accused to rely upon the other provisions of the Act in support of his plea of innocence except the defence that is specifically excluded by Sec. 140.
See: Sec. 10 of the Essential Commodities Act and 17 of the Prevention of Food Adulteration Act, 1954
See: Colin Howard, ‘Australian Federal Constitutional Law’ Second Edn., P.18
Vide: All Saints High School Vs. Govt. of A.P. A.I.R. 1980 S.C. 1042.
See: 1979 (J) A.L.T. 38.
See: Hindusthan Steel Ltd., Vs. State of Orissa A.I.R. 1970 S.C. 253
A.I.R. 1962 S.C. 1052 AT 1060
A.I.R. 1961 S.C. 1808 at 1814
1994 (1) An.W.R. 73 overruled.
See: Kundal Lal Vs. Custodian, Evacuee Property A.I.R. 1961 S.C. 1316
