High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE N. ARUMUGAM
M.M.T.C. Limited, rep. by its Senior Manager
Versus
S.Mohammed Gani, Proprietor, Fine Food Packers Ms.21
Crl.R.C.No.374 of 1995, Crl.P.R. No.373 of 1985
Decided On : 17-06-1996
NEGOTIABLE INSTRUMENTS ACT - SECTION 138 - DISCHARGE OF ACCUSED - PROMISSORY ESTOPPEL - LEGAL PRINCIPLE: There can be no promissory estoppel against a statute provided by an enactment.
Fact of the Case:
The complainant filed a private complaint under Section 138 of the Negotiable Instruments Act against the accused for issuing a cheque that bounced due to insufficient funds. The accused filed a petition for discharge under Section 239, Cr.P.C., contending that the cheque was a post-dated one and was issued as a token of promise or security, and therefore, it was not a negotiable instrument. The trial court discharged the accused, holding that the cheque was not a negotiable instrument and that the case was hit by the doctrine of promissory estoppel.
Finding of the Court:
The High Court held that the trial court erred in discharging the accused without marking the documents and giving an opportunity to the complainant to prove their genuineness. The court also held that the trial court erred in relying on the doctrine of promissory estoppel, as there can be no promissory estoppel against a statute provided by an enactment.
Issues: 1. Whether the cheque issued by the accused was a negotiable instrument. 2. Whether the case was hit by the doctrine of promissory estoppel.
Ratio Decidendi: 1. A post-dated cheque issued as a token of promise or security is not a negotiable instrument. 2. There can be no promissory estoppel against a statute provided by an enactment.
Final Decision: The High Court set aside the trial court's order discharging the accused and remitted the matter back to the trial court for fresh trial and disposal in accordance with law.
1. In ordering notice of motion of the present revision case filed by the complainant/petitioner who lost the case before the trial court viz., VII Metropolitan Magistrate, George Town, Madras in Crl.MP.No. 1910 of 1995 in CC.No.4166/94 dated 24. 1995 which application was filed for the discharged of the respondent/accused under section 239, Cr.P.C. for the offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as “the Act”), I have heard both parties on merits and as consented to by them I have disposed this revision on merits.
2. The petitioner has alleged in the complaint before the court below that the respondent being the accused has availed the financial assistance from the petitioner company for the export of marine products and have been doing the business and that in the due course of the same for the sums due and payable in part a cheque drawn by him for a sum of Rs. 10, 00, 000 on 24. 1994 in favour of the complainant was given which, when presented for encashment, was bounced with an endorsement “inadequate funds” and that therefore having caused the due notice of demand and failing compliance of the said demand by the accused and basing the case on the said cause of action, a private complaint under Section 138 of the Act was filed before the court below.
3. On receipt of the summons by the accused, he entered his appearance, however, a petition under Section 239, Cr.P.C. was filed praying for the discharge of the accused by contending inter alia that the cheque issued by him was only in token of a promise or security to pay which was evident from the fact that it was a post-dated one on the date of issue and that therefore, the said instrument is not a negotiable instrument to give the cause of action for filing any complaint for the offence alleged. The notice of demand was duly replied and that in fact the notice issued by and behalf of the accused to the complainant not to present the cheque for encashment due to inability of arranging funds clinchingly would go to show that there was no cause of action for the legal action above referred and that therefore, the discharge was asked for.
4. Considering the claim and counter claim of the respective parties on merits, the learned VII Metropolitan Magistrate, George Town, Madras has held that the bounced cheque given by the respondent is not a negotiable instrument, but the post-dated cheque does not within the purview of the Act, but part of an agreement and that too the facts of the instant case are hit by the doctrine of promissory estoppel and that therefore, for the various reasonings given by the accused that he is not entitled to be proceeded against for the offence alleged, discharged him as prayed for by passing the impugned order. Aggrieved at this, the complainant has come forward with the present revision challenging the impugned order for want of its legality and propriety.
5. The trial court while passing the impugned order has observed the reasonings in the following words:
“7. The accused alleged that the post-dated cheque was given on 33. 1994, but there is no whisper about the factum of issue of post-dated cheque either in the complaint or in the sworn statement. However, the letter dt.25. 1994 (but bearing the signature of the author as Dt.15. 94) at page three categorically admits that a post-dated cheque was issued. Further the said letter makes it clear that there was a business agreement dated 4. 93 between the parties and the complainant is keeping in mind the business relationship. Therefore, it is clear indication on behalf of the complainant that the cheque in question is issued during the business transactions and not meant for presentation without the advice of date of presentation of the cheque from the accused.
8. Having accepted the post-dated cheque and agreeing to present it only after hearing from the accused, as indicated by the interval between 24. 94, the date on which the accu
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