IMPORTANT POINT
Prosecution under Section 138 Negotiable Instruments Act for dishonour of cheque drawn on an account which had already been closed would not be barred.

K.C. Sood, J.—Would a cheque issued after the closure of an account in a Bank fall within the mischief of Section 138 of Negotiable Instruments Act? (“Act” for short) is the question which calls for an answer in this petition.

2. Undisputed facts necessary for the disposal of this petition are:

3. The respondent Tek Ram, hereinafter referred to as the (“accused”) approached the petitioner Bal Krishan Sharma (“complainant” for short) in September, 1996 for a loan of Rupees one lakh saying that he required this amount to discharge his previous liability with the Bank which will enable him to get a loan of Rupees 4 lakhs from the Bank and that he would repay the amount. The petitioner accordingly advanced Rupees one lakh to the accused in cash and the accused in consideration whereof issued him a cheque dated 13-12-1996 drawn on Punjab National Bank, Fozal in the amount of Rupees one lakh. The cheque bounced, when the petitioner presented it to the Bank, with the endorsement that the account maintained by the accused with the Bank had been closed.

4. The evidence led by the petitioner shows that the cheque book, from which the cheque in question was drawn, was issued in favour of the accused. This account was maintained by the accused in the name of “Jawala Furniture Works Association” and was closed by the accused on 16-9-1994, i.e., prior to the issuance of the cheque to the petitioner.

5. Learned Trial Magistrate dismissed the complaint holding that in Order to invoke Section 138 of the Act, the maintenance of account with the Bank on the date of issuance of the cheque by the accused was necessary so as to bring the dishonour of the cheque within the scope of Section 138 of the Act.

6. Another ground for the dismissal of the complaint and acquittal of the accused was that the account in question was maintained in the name of “Jawala Furniture Works Association” and therefore, the cheque must have been issued on behalf of the “Jawala Furniture Works Association” and in the circumstances, it cannot be said that the accused issued the cheque in his personal capacity.

7. Dissatisfied with the acquittal of the accused, the complainant is in this petition under Section 378(4) of the Code of Criminal Procedure.

8. Heard Mr. Neeraj Gupta learned Counsel for the appellant and Mr. Ramesh Thakur, learned Counsel for the respondent.

9. Chapter VIII consisting of Sections 138 to 147 of the Act was inserted in the Act by an Amendment Act of 1988 with effect from 1-4-1989. This Chapter was incorporated in the Act to prevent harassment of the honest drawers. Sections 138 reads:

“138.Dishonour of cheque for insufficiency, etc., of funds in the account.—Where any cheque drawn by a person on account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the Bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that Bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for (a term which may be extended to two years), or with fine which may extent to twice the amount of the cheque, or with both:

Provided that nothing contained in this Section shall apply unless:

(a)the cheque has been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity; whichever is earlier;

(b)the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, (within thirty days) of the receipt of information by him from the Bank regarding the return of the cheque as unpaid; and

(c)t