TaxTMI 
TaxTMI 
1999 (4) TMI 581
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....o challenged before the High Court the order dated 10.12.1997 passed by the Metropolitan Magistrate rejecting their application under Section 258, Criminal Procedure Code for dropping the proceedings. In that application before the Metropolitan Magistrate, appellants have stated that before closing the account on behalf of appellant No. 1, a letter dated 3rd August 1996 was sent by the second accused to the Chief Manager, Canara Bank, Madras informing them to close their group companys accounts; in case, any of the cheque by mistake comes to the Canara Bank, Madras, then the same be sent back with the note account closed payment stopped. That Revision Application under Section 482, Criminal Procedure Code was rejected by High Court by its judgment and order dated 15th June, 1998. Against that Order, the present appeal is filed by special leave in which this Court issued notice on 26th March, 1999 for final disposal. At the time of hearing of this matter, learned Counsel for the appellants submitted that complaint, on the face of it, does not make out any offence punishable under Section 138 of the Negotiable Instruments Act and, therefore, it deserves to be quashed. He submitted th....
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.... for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment of a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer of the cheque, within fifteen days of the receipt of information by him from the bank regarding the retu....
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....fund to honour the cheque in that account; Further, cheque is to be drawn by a person for payment of any amount of money due to him on an account maintained by him with a banker and only on that account cheque should be drawn. This would be clear by reading the Section along with provisos (a), (b) & (c ). Secondly, proviso (c) gives an opportunity to the drawer of the cheque to pay the amount within 15 days of the receipt of the notice as contemplated in proviso (b). Further, Section 140 provides that it shall not be a defence in prosecution for an offence under Section 138 that the drawer has no reason to believe when he issued the cheque that the cheque may be dishonoured on presentment for the reasons stated in that Section. Dishonouring the cheque on the ground that account is closed is the consequence of the act of the drawer rendering his account to a cipher. Hence, reading Section 138 and 140 together, it would be clear that dishonour of the cheque by a bank on the ground that account is closed would be covered by the phrase the amount of money standing to the credit of that account is insufficient to honour the cheque. Learned Counsel for the appellants, however, submitted ....
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...., or avoid doing, to an indirect or circuitous manner that which it has prohibited or enjoyed: quando aliquid prohibetur, prohibetur et omne pe quod devenitur ad illud. The manner of construction has two aspects. One is that the Courts, mindful of the mischief rule, will not be astute to narrow the language of a statute so as to allow persons within its purview to escape its net. The other is that the statute may be applied to the substance rather than the mere form of transactions, thus defeating any shifts and contrivances which parties may have devised in the hope of thereby falling outside the Act. When the Courts find an attempt at concealment, they will, in the words of Wilmot, C.J. brush away the cobweb varnish, and shew the transactions in their true light. This benignant rule originated four hundred years ago in Heydons case, which resolved That for the sure and true interpretation of all statistics in general (be they penal or beneficial restrictive or enlarging of the common law) four things are to be discerned and considered: (1st) What was the common law before the making of the Act, (2nd) What was the mischief and defect for which the common law did not provide. (3r....
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....s of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do so as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases (Emphasis supplied) Lastly, we would refer to the decision by a Three-Judge Bench of this Court in the case of Modi Cements Ltd. Vs. Kuchil Kumar Nandi (1998) 3 S.C.C. 249 dealing with a similar contention and interpreting Section 138 of the Act. In that case, the Court referred to the earlier decisions in the case of Electronics Trade and Technology Development Corporation (1996) 2 SCC 739 and K.K. Siddharthan Vs. T.P. Praveena Chandran (1996) 6 S.C.C. 369 and agreed that the legal proposition enunciated in the aforesaid decisions to effect that if the cheque is dishonoured, because of stop payment instruction to the bank, Section 138 would get attracted. It also amounts to dishonour of the cheque within the meaning of Section 138 when it is returned by the bank with the endorsement like (I) in this case, referred to the drawer (ii) instructions for stoppage of payment and stamped (iii) exceeds agreement. The Court observed t....