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Checking relevance for P. MOHANRAJ VS SHAH BROTHERS ISPAT PVT. LTD. ...
2021 2 Supreme 528 : Section 138 of the Negotiable Instruments Act, 1881, is primarily a civil wrong with compensatory intent, despite having criminal overtones. The offence is described as ''''almost in the nature of a civil wrong which has been given criminal overtones'''' and is intended to ensure the complainant receives the cheque amount as compensation. The object of Section 138 is both punitive and compensatory, aiming to maintain the credibility of cheques and enforce payment. The provision allows for compounding of offences, and the court may close proceedings and discharge the accused if the cheque amount with interest and costs is paid, especially in the interest of justice. The burden of proof lies on the accused, with a standard of ''''preponderance of probabilities'''', and the trial is generally summary in nature. The offence is also considered a ''''regulatory offence'''' and is made compoundable by the 2002 Amendment. The scheme of the provision allows for compensation under Section 357(1)(b) CrPC, and even if no fine is imposed, compensation can be awarded under Section 357(3) CrPC.Checking relevance for Suman Sethi VS Ajay K. Churiwal...
2000 1 Supreme 405 : Under Section 138 of the Negotiable Instruments Act, 1881, a notice of demand issued under the proviso to Section 138 must demand the ''''said amount of money'''', which refers specifically to the cheque amount. The notice is valid even if it includes additional claims such as incidental charges, notice charges, interest, or costs, provided these additional claims are severable and the cheque amount is clearly specified. If the cheque amount is clearly stated and the additional claims are separately mentioned, the notice will not be invalid merely because it demands more than the cheque amount. However, if an omnibus demand is made without specifying the cheque amount, the notice may fail to meet the legal requirement. The primary purpose of the notice is to give the drawer a chance to rectify the omission, and payment of the cheque amount within 15 days of receiving the notice or before the complaint is filed will absolve the drawer from criminal liability under Section 138, though civil proceedings may still lie for other claims.Checking relevance for Bijoy Kumar Moni VS Paresh Manna...
2025 2 Supreme 109 : Under Section 138 of the Negotiable Instruments Act, 1881, criminal liability arises only when a cheque is drawn by a person on an account maintained by him with a banker. The accused cannot be held liable in his individual capacity if the cheque was drawn on an account maintained by a company, even if he signed it as a director or authorized signatory. The company, not the individual, is the drawer of the cheque. Liability under Section 138 cannot be fastened on an individual unless the cheque was drawn on an account maintained by that individual. The requirement of Section 138 is strictly that the cheque must be drawn on an account maintained by the accused, and this condition is not satisfied merely because the accused signed the cheque on behalf of a company. Therefore, prosecution in the individual capacity of the accused for an offence under Section 138 is not maintainable if the cheque was drawn on a company''''s account.Checking relevance for Ajay Kumar Radheyshyam Goenka VS Tourism Finance Corporation Of India Ltd...
2023 4 Supreme 711 : Under Section 138 of the Negotiable Instruments Act, 1881, the proceedings are penal in character and not recovery proceedings. A person may face imprisonment, fine, or both. These proceedings are not akin to debt recovery or suit proceedings. Criminal liability under Section 138 is independent of financial liability and is based on the principle of dishonour of a negotiable instrument, which affects trade. The criminal prosecution initiated against directors and officials of a company under Section 138 read with Section 141 of the NI Act and Section 200 of the Cr.P.C. is not terminated by the operation of provisions of the Insolvency and Bankruptcy Code, 2016, even if the company is dissolved or a resolution plan is approved. The personal penal liability of the accused under Section 141 of the NI Act survives the insolvency process. Criminal proceedings under Section 138 will only be terminated in relation to the corporate debtor if it is taken over by a new management.Checking relevance for Indus Airways Pvt. Ltd. VS Magnum Aviation Pvt. Ltd. ...
2014 3 Supreme 8 : Under Section 138 of the Negotiable Instruments Act, 1881, the dishonour of a cheque does not constitute an offence if the cheque was issued as an advance payment for purchase orders that were later cancelled or not fulfilled, because at the time of drawal, there was no legally enforceable debt or other liability subsisting. A cheque issued for advance payment does not discharge an existing debt or liability, and thus cannot attract criminal liability under Section 138. The expression ''''for discharge of any debt or other liability'''' requires that the debt or liability must be legally enforceable and existing on the date of drawal of the cheque. If the purchase order is cancelled or goods are not supplied, the cheque cannot be considered as issued in discharge of an existing liability, and therefore, the dishonour of such a cheque does not amount to an offence under Section 138.
