Cheque presentation period and stale-instrument dishonour under the Negotiable Instruments Act: liability and vicarious liability were not made out.

Presentation of a cheque within the Section 138 period is computed by calendar months under Section 3(35) of the General Clauses Act, excluding the date of issue; on that basis, cheques dated 28.11.2016 and presented on 27.02.2017 were treated as within time. An endorsement of "instrument out dated stale" did not, by itself, fasten criminal liability under Section 138 where the return was attributable to the banker and the statutory ingredients of dishonour were not established. Vicarious liability under Section 141 also failed because the fourth accused was neither a partner nor a signatory, and no foundational evidence showed participation in the transaction. The proceedings were quashed.

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Issues: (i) Whether the cheques were presented within the prescribed period under Section 138 of the Negotiable Instruments Act; (ii) Whether dishonour for the reason "instrument out dated stale" gave rise to liability under Section 138 of the Negotiable Instruments Act, including vicarious liability of the fourth accused.

Issue (i): Whether the cheques were presented within the prescribed period under Section 138 of the Negotiable Instruments Act.

Analysis: The cheques were dated 28.11.2016 and presented on 27.02.2017. The period of three months was computed on the basis of calendar months under Section 3(35) of the General Clauses Act, and the date of issue was excluded. On that computation, the presentation fell within time, even though the banker returned the cheques with the endorsement "instrument out dated stale".

Conclusion: The cheques were presented within the prescribed period, and this issue was answered in favour of the petitioners.

Issue (ii): Whether dishonour for the reason "instrument out dated stale" gave rise to liability under Section 138 of the Negotiable Instruments Act, including vicarious liability of the fourth accused.

Analysis: The Court held that the endorsement did not create liability against the petitioners, as the return was attributable to the banker and the accused could not be fastened with criminal liability on that basis. As to the fourth accused, the materials showed that he was neither a partner of the first accused firm nor a signatory to the cheque, and no evidence established his participation so as to attract vicarious liability under Section 141 of the Negotiable Instruments Act.

Conclusion: No offence was made out against the accused, including the fourth accused, and this issue was answered in favour of the petitioners.

Final Conclusion: The criminal proceedings were held unsustainable and were quashed in their entirety, leaving the complainant free to proceed against the banker in accordance with law.

Ratio Decidendi: Presentation of a cheque within the statutory period must be computed by calendar months, and criminal liability under Section 138 cannot be fastened where the return endorsement does not establish the statutory ingredients of dishonour or where vicarious liability is not shown by necessary foundational facts.

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