Invalid cheque after bank merger cannot sustain Section 138 prosecution; criminal proceedings quashed under inherent jurisdiction.

A cheque drawn on an account of a bank that had merged and was therefore invalid on the date of presentation did not satisfy proviso (a) to Section 138 of the Negotiable Instruments Act, 1881. The court treated the dishonour as one of an invalid cheque rather than a cheque attracting penal liability, and held that the ingredients of Section 138 were not made out. Exercising inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973, it quashed the criminal proceedings as an abuse of process where the complaint could not be sustained in law.

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Issues: Whether the criminal proceedings for dishonour of cheque were liable to be quashed under the inherent jurisdiction on the ground that the cheque, drawn on the account of a bank that had merged with another bank, was invalid on the date of presentation.

Analysis: The petition was examined under the inherent powers preserved by Section 482 of the Code of Criminal Procedure, 1973, which may be exercised to prevent abuse of process and secure the ends of justice. The decisive question was whether the cheque satisfied the requirement in proviso (a) to Section 138 of the Negotiable Instruments Act, 1881, namely that it must be a valid cheque presented within its period of validity. The Court accepted that the cheque had been issued on an erstwhile bank account after the merger, and that on the date of presentation it was returned as invalid. On that basis, the dishonour was treated as one of an invalid cheque rather than a cheque attracting penal liability under Section 138.

Conclusion: The proceedings were held liable to be quashed, as the cheque was not valid on the date of presentation and the ingredients of Section 138 of the Negotiable Instruments Act, 1881 were not attracted.

Final Conclusion: The criminal complaint could not be sustained in law and was set aside in exercise of inherent jurisdiction.

Ratio Decidendi: A cheque drawn on an account of a bank that had ceased to exist in the relevant form and was invalid on the date of presentation does not attract liability under Section 138 of the Negotiable Instruments Act, 1881, and criminal proceedings based on such dishonour may be quashed under Section 482 of the Code of Criminal Procedure, 1973.

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