Section 138 of the Negotiable Instruments Act is not violative of Articles 14, 19, 20, and 21 of the Constitution of India.

( 1 ) THE basic prayer in both these writ petitions cover the constitutional validity of Section 138 of the Negotiable Instruments 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 provisions 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 Malaviya in complaint No. 5376 of 1995 and the gist of the complaint case is that the accused had taken a loan from the complainantand with a view to repay the same she had issued a cheque dated 30-4-95 The cheque was drawn on the Kisanganj Branch of 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 was served upon the accused, but despite receipt of the notice the sum under the cheque amounting to Rs. 30,000. 00 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. 00 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, Allahabad, 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.

( 4 ) THE grounds on which the prayer for declaring the provisions ultra vires were that the N. I. Act thought of at least 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.

( 5 ) 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.

( 6 ) 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 taking the loan and we must differ with the submiss