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1995 Supreme(Online)(Bom) 6

BOMBAY HIGH COURT
R.M. Lodha, J
Mayuri Pulse Mills v. Union of India
Criminal Writ Petition No. 68 of 1994 | Criminal Writ Petition No. 91 of 1994 | Criminal Writ Petition No. 93 of 1994 | Criminal Writ Petition No. 75 of 1994 | Criminal Writ Petition No. 94 of 1994 | Criminal Writ Petition No. 140 of 1994



Advocates:
For the Appellants/Petitioners: J.N. Chandurkar, V.S. Sohoni
For the Respondents: J.K. Gilda

Sections 138 and 140 of the Negotiable Instruments Act, creating strict liability, are constitutionally valid and serve essential public interest.

Headnote:(A) Negotiable Instruments Act, 1881 - Sections 138, 139, 140, and 141 - Constitutional validity questioned - Petitioners challenged the provisions as ultra vires Articles 14 and 21 of the Constitution - The court held that Parliament has the competence to enact these provisions, asserting that S.138 and S.140 uphold public interest and are fundamentally valid under constitutional law - Defence under S.140 restricted but not unjust - No arguments raised against S.139 and S.141 - Court dismissed all petitions, affirming the legitimacy of stringent cheque dishonour provisions. (Paras 1-24)

Facts of the case:
The case revolves around cheques issued by the petitioners to the complainant, which were returned unpaid. Following the proper legal procedure, complaints were lodged invoking S.138 and S.141 leading to these petitions.

Findings of Court:
Court found the provisions of the N.I. Act constitutional, aimed at protecting creditors and supporting smooth financial transactions.

Issues: Constitutionality of S.138, 139, 140, and 141 of the N.I. Act challenged particularly regarding the defence limitations under S.140.

Ratio Decidendi: The court concluded that provisions under S.138 and S.140, creating strict liability, are constitutionally valid and serve the legitimate purpose of enforcing financial discipline in business.

Result: Criminal writ petitions are dismissed.

1 The constitutional validity of S.138, 139, 140 and 141 in Chap.17 of the Negotiable Instruments Act, 1881 (for short "the N.I. Act"), as enacted by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, is under challenge in this bunch of six writ petitions. Since all these writ petitions involve the aforesaid common question of law, these petitions are decided by this common judgment.

2 Before we appreciate the submissions made by learned counsel challenging the provisions of S.138, 139, 140 and 141 of the Negotiable Instruments Act, 1881 , as ultra vires and violative of Art.14 and 21 of the Constitution of India, briefly the facts of Criminal Writ Petition No. 91 of 1994 may be adverted to.

3 It is alleged in Criminal Writ Petition No. 91 of 1994 (Mayuri Pulse Mills v. Union of India) that respondent No. 4, Parmanand Mohanlal Rathi, proprietor, Rathi Trading Company, filed a complaint against the petitioners under S.142 of the Negotiable Instruments Act, 1881 , alleging that the petitioners have committed offences under S.138 and 141 of the . According to the complaint, the petitioners issued two cheques drawn on the State Bank of Hyderabad, Amravati, dated September 13, 1991, and September 18, 1991, respectively, towards payment of the bills amounting to Rs. 1,11,780. The said cheques were deposited for collection in the account of the complainant with the Punjab National Bank, Amravati Branch, but the said cheques were returned unpaid with an endorsement "exceeds arrangement". Thereafter, the complainant served upon the petitioners a notice in writing making a demand for payment of the said amount of money from the petitioners, but the petitioners failed to comply, compelling the complainant to file the complaint under S.138 read with S.141 of the . On the said complaint, which was registered as Complaint No. 136 of 1992 by the Chief Judicial Magistrate, Amravati, process was issued to the petitioners. The petitioners moved an application before the Chief Judicial Magistrate, Amravati, for dropping the criminal proceedings on the ground that they had not committed any offence within the meaning of S.138 of the . The Chief Judicial Magistrate by his order dated January 25, 1993, dismissed the application holding that no question of dropping the criminal proceedings arises. The petitioners taking exception to the order passed by the Chief Judicial Magistrate, Amravati, on January 25, 1993, rejecting the application to drop the criminal proceedings under S.138 and 141 of the , preferred the revision petition before the Additional Sessions Judge, Amravati, who by his order dated December 24, 1993, dismissed the revision petition filed by the petitioners holding that the Chief Judicial Magistrate was justified In rejecting the application of the accused.

4 In Criminal Writ Petitions Nos. 91 of 1994, 93 of 1994, 75 of 1994, 68 of 1994 and 94 of 1994, Mr. J. K. Gilda, learned counsel for respondent No. 4, has put in appearance. Rule was Issued by this court In Criminal Writ Petition No. 68 of 1994 and the Assistant Government Pleader took notice on behalf of respondent No. 2, State of Maharashtra. All the matters involving common questions of law have been heard together by us.

5 Mr. J. N. Chandurkar, learned counsel for the petitioners in Criminal Writ Petitions Nos. 91 of 1994, 75 of 1994, 95 of 1994, 68 of 1994 and 94 of 1994, urged before us that the provisions of sections, 138 and 140 of the Negotiable Instruments Act, 1881 , are unreasonable and, therefore, violative of Art.14 of the Constitution of India. Learned counsel submitted before us that S.140 of the , takes away a very important right of defence of the accused in a prosecution for an offence under S.138 of the , and that by itself makes the provisions contained in S.138 and 140 of the Act unconstitutional. A defence of an accused in a prosecution for an offence under S.138 that the drawer had reason to

























































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