TaxTMI 
TaxTMI 
2020 (8) TMI 134
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....spite issuance of legal demand notice, the revisionists failed to make the payment of the cheque amount. 3. Hence, the respondent filed a complaint u/s 138 NI Act against the revisionists. 4. After taking the cognizance, Ld.MM issued summons to the revisionists. Thereafter, revisionists moved an application seeking discharge. However, vide impugned order dated 06.08.2019, Ld. MM, by citing the judgment of Hon'ble Apex Court in M/s Laxmi Dyechem v. State of Gujarat, (2012) 13 SCC 375, had dismissed the application for discharge and ordered the framing of notice u/s 251 Cr.P.C. Hence, the present revision petition. 5. The grounds taken in the revision petition are, that the impugned order is wrong on facts and in law. The ld. trial court had wrongly appreciated the facts and circumstances as observed and incorporated by Hon'ble Apex Court in Laxmi Dyechem (supra). Ld. trial court failed to appreciate the position of law as described under N.I Act that Chapter XVII deals with penalty in cases relating to dishonor of cheques for insufficient funds in the accounts. A further ground taken is, that in view of section 251 Cr.P.C, when an accused appears before the trial court in a summo....
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....mount cannot be ascertained from the cheque and that being the case, it is not a valid negotiable instrument. He has further contended that he admits that merely the difference in the amount in figures and words will not invalidate the cheque because as per section 18 of the NI Act, the amount can still be ascertained on the basis of the amount written in words. However, in the present case, the amount written in words is absurd and in no manner can help in ascertainment of the cheque amount. The amount in figures has been written as "Rs. 44,18,896/-" whereas, the amount in words is written as "Forty Four Lacs Eighteen Lacs Eight Hundred and Ninety Six only". He has therefore contended that the document which was presented before the bank was not a cheque or a negotiable instrument within the definition of the Negotiable Instruments Act and the offence u/s 138 NI Act could only have been attracted if a cheque is dishonoured. In the present case, as the instrument presented was not a valid cheque, it cannot be said that an offence u/s 138 NI Act was committed. He has further contended that the learned Trial Court had wrongly applied the judgment of Hon'ble Supreme Court in Laxmi Dyc....
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....a banker, it will become a cheque. 14. The definition of bill of exchange is given in section 5 of the NI Act, which reads as under:- "Bill of exchange".-A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A promise or order to pay is not "conditional", within the meaning of this section and section 4, by reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of a certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain. The sum payable may be "certain'', within the meaning of this section and section 4, although it includes future interest or is payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instalment, the balance unpaid shall become due. The person to whom it is clear that the direction is given or tha....
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....he amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid. 22. Therefore, as per the provisions of section 18 NI Act, merely because the amount to be paid as stated in figures and words is different, a cheque or an instrument does not become invalid and the amount stated in words shall be considered to be amount undertaken or ordered to be paid. 23. In the usual course of things, if a cheque has ambiguity with regard to the amount, it can be settled by falling back upon the amount written in words and that amount shall be considered to be the amount undertaken or ordered to be paid through that instrument or cheque. The effect of section 18 NI Act is that in case of amount is stated differently in words and figures, the amount stated in figures would be immaterial and it is only the amount stated in words that has to be considered. In this regard, Hon'ble Jammu and Kashmir High Court in Jammu & Kashmir Bank v. Qazi Taj Din, 1954 Jammu & Kashmir 56 (P.B) way back in 1954 had held as under:- 5. From the peremptory nature of Section 18 of the Negotiable Instruments Act, ....
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....rfect and practical way" 27. Therefore, the legal preposition that emerges is, that an instrument to become a bill of exchange or cheque, as per sections 5 & 6 of the NI Act, has to have a certainty not only with regard to the person who is directed to pay the amount; not only with regard to the person who is directing such payment; not only with regard to the person who has been directed to make the payment but also, the amount directed to be paid has to be certain. In case any of these definitive directions are ambiguous or uncertain, the instrument will not be a valid bill of exchange and thus, will not be a cheque. In the present case, there is an uncertainty with regard to the amount which has been ordered to be paid through the instrument in question. However, in view of section 18 of NI Act, it can still be a valid instrument if, on the basis of the amount written in words, a certainty can be arrived at with regard to the amount ordered to be paid. Surprisingly, in the present case, the amount written in words is "forty four lacs eighteen lacs eight hundred and ninety six only.". This amount cannot be said to be a certain amount of money as it is an absurdity which makes th....
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....unt 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 provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], 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, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. Explanation.- For the purposes of this section, "deb....
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....of insufficiency of funds, exceeding arrangement with the bank, stopping of payment of the cheque by the drawer, closing of account after the cheque had been drawn, signatures mismatch etc. However, the applicability of Section 138 NI Act on the basis of dishonor of an invalid instrument / cheque was neither considered nor decided upon. The legal preposition that has emerged from the judgment of Laxmi Dyechem (supra) and the judgments cited therein appears to be that, where the instrument issued is otherwise a valid cheque and has been dishonoured for the reasons which could not have been known or noticed by the receiver of the cheque, the drawee would be still liable u/s 138 NI Act provided all other requirements for prosecution under this section has been met. For example, the receiver of a cheque cannot be expected to know whether on the date of presentation of the cheque, there will be sufficient amount in the account of the drawee or not; the receiver of the cheque cannot be expected to know whether the drawee has appended his correct signatures on the cheque or not; the receiver of the cheque cannot be expected to know that the drawee after issuing the cheque will issue the o....