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of <h1>Court rules documents not meeting cheque criteria; petitioner wins.</h1> <h3>Vinod Baid Versus SGK. Oriental Degree College</h3> Vinod Baid Versus SGK. Oriental Degree College - [2003] 41 SCL 344 (AP) Issues:Interpretation of the definition of a 'cheque' under section 6 of the Negotiable Instruments Act in the context of documents issued by a company, determining whether the documents constitute a cheque and if an offence under section 138 of the N.I. Act is made out.Analysis:The petitioner, Chairman of a Non-Banking Finance Company, sought to quash proceedings in a criminal case where a Fixed Deposit receipt was issued to an Educational Institution, and subsequent cheques for interest were dishonored. The petitioner contended that the documents were not cheques but demand warrants, while the prosecution argued that the term 'cheque' was used in the complaint, hence should be considered as such.The court delved into the definition of a 'cheque' under section 6 of the N.I. Act, which specifies a cheque as a bill of exchange drawn on a banker payable on demand. It further examined the characteristics of a cheque, emphasizing its immediate payment nature, drawing distinctions from bills of exchange. The court referenced legal commentaries to elucidate the essential features of a cheque, highlighting its prompt payment requirement, lack of acceptance, and necessity to be drawn on funds in the banker's possession.The key consideration was whether the documents issued, including refund orders and interest warrants, could be classified as cheques and if they constituted an offence under section 138 of the N.I. Act. The court noted that the absence of the crucial element of being payable on demand in the documents precluded them from being categorized as cheques. Consequently, the court opined that the documents did not fall within the definition of a cheque, thereby negating the applicability of section 138 of the N.I. Act and the commission of an offence.In conclusion, the court ruled in favor of the petitioner, quashing the proceedings as the documents did not meet the criteria to be considered as cheques, and no offence under section 138 of the N.I. Act was established. The judgment differentiated between the documents issued by the company and traditional cheques, highlighting the importance of the immediate payment aspect in defining a cheque and determining liability under the N.I. Act.
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