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1998 Supreme(Mad) 1469

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE A. RAMAN
Rukmaniraj Yarn Company - Appellant
Versus
Thangapratap Spinning Mill Private Limited - Respondents
Criminal Revision Case No. 853 of 1997 and Criminal Miscellaneous Petition No. 6584 of 1997
Decided On : 03 November 1998

Appearing Advocates:V. K. Muthusami, M. N. Sundaresh, Advocates.

Judgment :-

A. RAMAN, J.

The accused is the petitioner.

A complaint was laid against the accused before the Judicial Magistrate No. III, Srivilliputhur, under section 138 read with section 142 of the Negotiable Instruments Act, 1881. The case of the complainant runs as follows :

The accused had dealings with the complainant by purchasing cotton yarn on credit. To discharge the outstanding due on such transaction, the accused issued a cheque dated December 20, 1995, for Rs. 50, 000 when the said cheque was presented for collection to the Tamil Nadu Mercantile Bank Limited, Salem, it was returned with a memo of dishonour, stating "funds insufficient". The accused had issued the cheque knowing fully well that he has no sufficient funds in his account to meet the demand in the cheque. The complainant received the information of dishonour of cheque on June 21, 1996. The complainant issued a legal notice on June 28, 1996. Therefore, the accused is guilty under section 138 of the Negotiable Instruments Act.

The petitioner herein, who is the accused filed an application before the trial court viz., the Judicial Magistrate No. III, Srivilliputhur, for his discharge from the case, and the same was dismissed by the Judicial Magistrate No. III, Srivilliputhur, on September 2, 1997, with the result, that this revision is preferred.

The respondent-complainant, who was served with notice on this revision, has not chosen to enter appearance or contest the matter. After hearing the arguments of learned counsel for the petitioner, and going through the records in this case, I am satisfied that this is a fit case, where the order passed by the Judicial Magistrate has to be set aside.

Section 138 of the Negotiable Instruments Act runs as follows :

"Where any cheque drawn by a person on an 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 extend to one year, or with fine which may extend 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 fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within 15 days of the receipt of the said notice.

Explanation. - For the purpose of this section, 'debt or other liability' means a legally enforceable debt or other liability."

If a person, therefore, issues a cheque for payment of any amount due to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, and it is returned by the bank unpaid, the said person shall be deemed to have committed an offence under section 138 of the Negotiable Instruments Act. In order that section 138 of the Negotiable Instruments Act shall apply, three necessary conditions must exist. The first condition is that the cheque must have been or must be presented within a period of six months from the date on which it is drawn or from the




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