TaxTMI 
TaxTMI 
2001 (9) TMI 993
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....er thereof (Punjab and Sindh Bank) filed a complaint under section 138 of the Negotiable Instruments Act, 1881 ('the Act'). The drawer bank and its officials have been arraigned as accused in the complaint. But a single Judge of the High Court of Bombay quashed the complaint mainly on the premise that the instrument (described as the "pay order") is not a cheque. The Punjab & Sindh Bank has filed this appeal in challenge of the aforesaid order of the High Court. Besides the premise stated above, learned single Judge of the High Court adopted two more grounds for quashing the complaint. One among them is that even assuming that the instrument is a cheque, it was crossed and, hence, the complainant-bank should only have collected the amount a....
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....sed the writ petition on 1-7-1999 without prejudice to the rights of the accused to make a plea before the trial court for discharging the accused. Thereafter the accused moved the trial magistrate for recalling the process on the ground, inter alia, that the instrument is not a cheque as per section 138 of the Act. The magistrate dismissed the aforesaid plea as per his order dated 29-1-2000. When the accused filed a second writ petition in the High Court in challenge of the aforesaid order of the magistrate, the learned single Judge allowing the said writ petition passed the impugned order. 5. The first question raised is whether the instrument which is described by both sides as a 'Pay Order' is a cheque within the meaning of section 1....
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....may at best be a promissory note but the bid made by him did not succeed as it is a difficult task to bring the draft or a pay order, as in this case, within the purview of the definition of promissory note in section 4. The indispensable postulate for a promissory note is that there should be an unconditional undertaking to pay a certain sum by the drawer. Such an undertaking cannot be read out from the impugned instrument. At any rate the instrument involved in this case is closer to a Bill of Exchange because of the unconditional order of its maker to the person concerned 'to pay a certain sum'. 8. The postulate in section 5 that the Bill of Exchange shall contain an unconditional order directing "a certain person to pay" need not nec....
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.... only for the limited purpose of Chapter XIV which deals with 'crossed cheques'. We are unable to agree with the said contention that section 131A is intended to limit the operation of a draft as a cheque only for crossing purposes. In our view, the said section is intended to widen the scope of crossed drafts as to contain all incidences of a crossed cheque. This is for the purpose of foreclosing a possibility of holding the view that draft cannot be crossed. 11. Even if it is possible to construe the draft either as a promissory note or as a Bill of Exchange, law has given the option to the holder to treat it as he chooses. This can be discerned from section 17 of the Act which says "where an instrument may be construed either as a pro....
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....at even though such an instrument might not become a bill of exchange between the drawer and the drawee when both were the same person "it is well established that the holder of the instrument may treat it as a bill of exchange". 13. Later, a Division Bench of the Calcutta High Court in Birbhum Central Co-operative Bank Ltd. v. Pioneer Bank Ltd. AIR 1956 Cal. 615, even without reference to the aforementioned observations, adopted the same view. Chakravartti, CJ., speaking for the Division Bench has stated thus: "It is well settled that a banker's draft is a bill of exchange and as such it is a negotiable instrument. The issue of a draft is regarded in banking practice as a matter of purchase and ordinarily the relationship between the....
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....ruments Act was amended by incorporating section 131A in the said Act. 15. That apart, the learned Single Judge while relying on the decisions of the House of Lords in Capital & Counties Bank (supra) restricted himself to the former limb of the observation therein. It is in the latter limb that the House of Lords said that when the draft is in possession of a holder, the instrument can be treated as Bill of Exchange. 16. We, therefore, dissent from the view adopted by the learned Single Judge in the impugned judgment that the pay order is not a cheque. 17. The second premise of the learned Single Judge that since the pay order was a crossed instrument, the complainant-bank could have only collected the amount and remitted the proce....