Legal Reference Library

The Gujarat High Court, in Harshad Manubhai Malavaiya vs State Of Gujarat, held that husband is not liable for a cheque issued by the wife in her personal capacity. In the instant matter, Justice JB Pardiwala examined the question whether the petitioner can be made vicariously liable under Section 138 for the cheque dishonoured which were issued by his wife in personal capacity. Relying on the Supreme Court’s judgment in the matter of M/s Aparna A Shah vs M/s Sheth Developers Pvt Ltd  and considering the language used in Section 138 and taking note of background agreement pursuant to which a cheque is issued by more than one person, this court held that it is only the “drawer” of the cheque who can be made liable for the penal action under the provisions of the NI Act. The normal rule in the cases involving criminal liability is against vicarious liability. To put it clear, no one is to be held criminally liable for an act of another. In the above judgment, the Supreme Court ...

The Supreme Court, in N Paraeswaran Unni vs G Kannan, has held that a reminder notice to the drawer of the cheque cannot be construed as an admission of non-service of the first notice by the complainant. In the instant case, the complainant had issued a notice to the complainant within15 days of the cheque bouncing, but it was returned with an endorsement ‘intimation served, addressee absent’. He again sent a notice, wherein it was returned with postal endorsement “Refused, returned to sender”. The trial court allowed his complaint, which was later upheld by the first appellate court. However, the high court set aside these concurrent findings on the ground that that the statutory notice was beyond the prescribed limitation period as mentioned under Section 138 of the NI Act. On appeal, the apex court bench comprising Justice NV Ramana and Justice Prafulla C Pant observed that it is settled law that when a notice is sent by registered post and is returned with postal endorseme...

In Hazi Jahangir Molla Vs. Md. Alim Mallick, the Hon'ble Calcutta High Court decided that Part payment cannot defeat the entire cause of action. Further Even if one person who has no money lending licence cannot be debarred from granting any accommodation loan to his friend or other person on him he has confidence. The opposite party took the accommodation loan and he cannot take the shelter of the money lenders’ act to defraud the person who accommodated him. Taking into consideration the factual aspects of this case this revisional application is to be decided on the following points. (1) Whether the demand notice was defective as because a part payment to the tune of Rs. 1,00,000/- was accepted and that is the departure from the cause of action itself? (2) Whether the complaint is barred by limitation? (3) Whether the cheque was issued in discharge of existing liability? (4) Whether the part payment of cheque is enough to defeat the entire cause of action? (5) W...

The Supreme Court in Shyam Pal vs. Dayawati Besoya, has reiterated that courts can exercise discretion under Section 427 of the Indian Penal Code to the benefit of prisoners in cases where the prosecution is based on a single transaction, no matter even if different complaints in relation thereto might have been filed. The Bench comprising Justice Dipak Mishra and Justice Amitava Roy reiterated the dictum laid down in V.K. Bansal vs. State of Haryana and Another and a recent decision in Benson vs. State of Kerala The court also observed that such a concession cannot be extended to transactions which are distinctly different, separate and independent of each other and amongst others where the parties are not the same. In the facts of the case, the court ordered that substantive sentences of 10-month simple imprisonment awarded to the appellant for his conviction under Section 138 of the Negotiable Instruments Act in the two complaint cases would run concurrently. “In arriving at t...

Rambhool Singh Versus State & Anr. Dishonoring of cheques - Negotiable Instruments Act, 1881 - Held that:- Section 139 of the N.I. Act provides for raising of presumption to the effect that the holder of the cheque has received it in discharge of liability. The Hon’ble Apex Court in the case of Vijay v. Laxman and Anr. (2013 (5) TMI 40 - SUPREME COURT OF INDIA) has observed that once the cheque has been issued and the signatures thereon has been admitted by the accused, then it is not available to the accused to take the defence that the cheque was not issued by him. The present revision petition has been filed assailing the judgments/orders passed by the Courts below. After going through the record and the submissions made by the parties, this Court is of the considered opinion that there is no apparent illegality or infirmity in the judgments/orders passed by the Courts below. This Court is not sitting in appeal and is dealing with the revision petition. It is a settled l...

The Supreme Court on Monday held the dishonour of a post-dated cheque given for repayment of loan installment, which is also described as “security” in the loan agreement, is covered by Section 138 of the Negotiable Instruments Act, 1881. The Division Bench of Justice Dipak Mishra and Justice A.K. Goel has dismissed an appeal filed by the director of a company against the order of the Delhi High Court by which the court dismissed his petition to quash criminal complaints filed under Section 138 of the Negotiable Instrument Act, against him and the company. Vide the loan agreement dated 15th March, 2001, the respondent agreed to advance loan of Rs 11.50 crore for setting up of 4.00-MW biomass-based power project in Andhra Pradesh. The agreement recorded that post-dated cheque leaves towards payment of installment of loan (principal and interest) were given by way of security. The cheque leaves carried different dates depending on the dates when the installments were due and upon dishono...