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ALLAHABAD HIGH COURT (DB)
S.K. Phaujdar & J.C. Misra, JJ.
Smt. Ramawati Sharma - Petitioner
versus
Union of India & others - Respondents
Crl. Misc. Writ Petition No. 1210 & 1211 of 1997
Decided on 19-3-1998
Counsel for the parties:
For the Petitioner: Mr. Tej Pal, Advocate.
For the Respondent: Mr. Arvind Kumar Tripathi, Advocate.
Headnote:Negotiable Instruments Act, 1881 - Section 138 - Writ challenging constitutional validity of provision - Vires of penal provision challenged with regard to Arts. 14 and 21 of the Constitution of India Court has to see if personal liberty of petitioner was being taken away according to procedure established by law and procedure was arbitrary - No reason to declare provisions of Section 138 of the Act ultra vires the Constitution.
Held: Violation of Article 14 has been alleged only on the ground that the Negotiable Instruments Act speaks of promissory notes, bills of exchange and cheques, but Section 138 makes punishable certain acts committed in respect of cheques only. A promissory note, according to Section 4 of NI Act, is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking; signed by the maker, to pay certain sum of money only to, or to the order of, a certain person or the bearer of the instrument. A bill of exchange is an instrument in writing containing an unconditional order signed by the maker directing a certain person to pay certain sum of money only to, or to the orders a certain person or to the bearer of the instrument. A cheque is also a bill of exchange but is one drawn on specified banker and not expressed to be payable otherwise than on demand. (Para 9)
Further held: A cheque and promissory note may not be equated as a promissory note simply creates a liability and by issuing a cheque, the drawer desires that certain payment is to be made in favour of the holder. Section 138 does not punish every dishonour of a cheque. It must be a cheque for discharge in whole or any part any debt or other liability and the cheque is to be drawn upon a bank. This provision to be introduced as in business transactions issuance of cheque to discharge a debt or other liability is a common transaction and it has also been found that to avoid immediate liability. people do take recourse to issuance of cheque which bounces on presentation at the bank. The law may not, therefore, be deemed discriminatory as a promissory note basically differ from a cheque and only a cheque out of possible bills of exchange have been chosen to come under the purview of election 138. This law has been necessitated because of the malpractices prevalent in our society. (Para 11)
We have already indicated that mere taking of loan is not made punishable by Section 138 of the N. 1. Act. It is the act of issuance of a cheque for discharge of a debt or liability which has only been made punishable under certain circumstances and after following certain procedures. It may not, therefore, stated that the liberty of person was being curtailed by an arbitrary procedure or that such a provision was violative of Article 21 of the constitution.
(Para 12)
Result: Petition dismissed.
Provisions of Section 138 of Negotiable Instruments Act are not ultra vires the Constitution.
JUDGMENT
J.C. Misra, J. - The basic prayer in both these writ petitions cover the constitutional validity of Section 138 of the Negotiable Instrument Act (for short. N.I. Act). The petitioners in these two matters have been prosecuted for an offence under Section 138 of the N.I Act as the cheques they had issued to pay up their debts had bounced for lack of proper fund in the respective accounts. The provision under the aforesaid section have been challenged as violative of Articles 14, 19, 20 and 21 of the Constitution of India hence a prayer was made to declare the provisions ultra vires of the Constitution and to further quash the criminal proceedings initiated under that section against the petitioners.
2. The case against Ramawati Sharma was filed by Rahul Malayiya in complaint no. 5376 of 1995 and the gist of the complaint case is that the accused had taken a loan from the complainant and with a view to repay the same she had issued a cheque dated 10-4-1995.
The cheque was drawn on through Allahabad Bank at Delhi and it was deposited in Indian Overseas Bank. Allahabad. The cheque could not be encashed as the drawer of the cheque had directed that no payment under the cheque should be made. When the complainant made enquiries from the accused an explanation was given that payment was directed to be stopped as she had no adequate sum to meet the cheque. On the request of the accused the cheque was withheld for some time and was placed in the bank again on 8-9-1995 and it had bounced again with the same note that payment had been stopped. Accordingly, a notice as required under the law served upon the accused but despite receipt of the notice the sum under the cheque amounting to Rs. 30.000/- was not paid.
3. In the other case the same Rahul Malaviya filed a complaint against the accused Rama Shankar Sharma and Suresh Chandra Sharma. Here also a cheque of Rs. 30. 000/- was issued by the accused for repayment of a loan and the cheque was drawn on Canara Bank. Wazirpur Branch. Delhi, dated 30-4-1995. The cheque was deposited in Indian Overseas Bank. Allahbad and the complainant was informed that the cheque could not be encashed as there was no sufficient deposit in the account against which the cheque was drawn. The complaint was filed after due notice and after failure of the accused to pay the sum under the cheque.
The grounds on which the prayer for declaring the provisions ultra vires were that the N.I. Act thought of atleast three types of negotiable instruments namely promissory note bill of exchange and cheque and the law had made punishable a failure of encashment upon cheque only and not upon the other two types of negotiable instruments. It was further stated that the liability to repay a loan is out and out a civil one and for that no criminal liability could have been attached even by making a legislation.
4. The learned counsel read out before us different quotations from different provisions of international law and American decisions and we feel that the exercise certainly proved the erudition of the learned counsel but the points read out were absolutely irrelevant for the present matters.
5. So far the second aspect of the argument is concerned the learned counsel insisted that for incurring a loan a person could not be made liable criminally. While we agree to his submission in toto we would only point out that despite our insistence the learned counsel could not indicate if the penal provision was for the loan itself or for certain further action on the part of the debtor .to show a repayment of the debt. Section 138 of the N.I. Act does not punish the act of taking loan but it penalises a person who proposed to repay the loan by issuance of a cheque and the cheque is not encashed due to shortage of fund in the account. This further action on the part of the debtor cannot be equated with his action of tak
