AI Drafter 
TaxTMI 
TaxTMI 
2008 (8) TMI 951
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed Spent Wash‟ for the respondent. By way of security for due performance of that contract, the first petitioner issued an undated cheque favoring the respondent for Rs. 29,50,000/- drawn on Bank of Maharashtra, Model Colony Branch, Pune. This cheque is stated to have been handed over to the respondent company on 15.10.1995. 3. The petitioners allege that although they fulfilled their commitment for which the undated cheque was given as a security, the respondent never returned the cheque. It is the petitioners‟ case that instead of returning the cheque, the respondent entered the date 28.1.2008 on that cheque and presented it for collection through HDFC Bank Ltd, New Friends Colony, in February, 2008. On 6.02.2008 the said cheque was returned unpaid with the remarks "Payment Stopped by the Drawer." Thereafter on 16.2.2008, a notice under Section 138, Negotiable Instruments Act was sent by the respondent to the petitioners demanding payment of the cheque amount of Rs. 29,50,000/- within 15 days of receipt of the notice. No reply was sent by the petitioners to this notice. Thereafter on 7.4.2008, the respondent filed the impugned criminal complaint. On 11.4.2008, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 6 of the Act means a bill of exchange which is drawn on a banker and is not expressed to be payable otherwise than on demand. Thus a bill of exchange acquires the status of a cheque when it is payable on demand. For example, a „postdated cheque‟ when it is drawn, is only a bill of exchange and is not payable till the date which is specified on it. The Supreme Court in Anil Kumar Sawhney Vs. Gulshan Rai (1993) 4 SCC 424 while deciding the question of the date from which the period of six months contemplated under Section 138(a) of the Act is to be reckoned in case of a post dated cheque, held as follows; "14. An offence to be made out under the substantive provisions of Section 138 of the Act it is mandatory that the cheque is 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. It is the cheque drawn which has to be presented to the bank within the period specified therein. When a postdated cheque is written or drawn it is only a bill of exchange and as such the provisions of Section 138(a) are not applicable to the said instrument. The postdated cheque becomes ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield Vs. Lord Londesborough (1895- 1899) All ER Rep 282 it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths Vs. Dalton [1940] 2 KB 264 where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments. The Supreme Court in T.Nagappa Vs. Y.R.Murlidhar, (2008) 5SCC 633 while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the authority of the respondent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....njab AIR 1960 SC 866 the Supreme Court held that: "6........It is well-established that the inherent jurisdiction of the High Court can be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice. Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage....." 11. In State of Punjab Vs. Kasturi Lal (2004) 12 SCC 195, the Supreme Court discussing the scope of Section 482 of the Code held that: "10. The section does not confer any new powers on the High Court. It only saves the inherent power which the court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely: (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction........
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is not expedient and in the interest of justice to permit the prosecution to continue, the summons issued by the magistrate were wrongly quashed by the Single Judge of the High Court. 15. It is noteworthy that in the instant case, notice of demand sent by the complainant in terms of Section 138 of the Negotiable Instruments Act, did not elicit any response. Furthermore, even before this Court, counsel for the petitioners has not explained why his clients failed to make any specific demand in writing for return of the cheque since, according to them, its purpose had already been served, and the contract for which the cheque was issued, was over. Furthermore, as held by the Supreme Court in Modi Cements Ltd. Vs. Kuchil Kumar Nandi, AIR 1998 SC 1057, once a cheque is issued by the drawer, a presumption under Section 139 must follow, and merely because the drawer thereafter issues a notice to the bank for stoppage of payment, it will not preclude an action under Section 138 of the Act by the drawee or the holder of the cheque in due course. 16. To sum up, in the case at hand, admittedly the cheque was given for consideration. Whether it was for timely supply of the goods as cla....