TaxTMI 
TaxTMI 
2022 (1) TMI 9
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....offences, issued process against the petitioners. 2) It appears from the record of the case that respondent has filed a complaint against the petitioners alleging that cheques bearing No.612444 dated 09.07.2020 for an amount of Rs. 15.00 lacs, No.612445 dated 09.07.2020 for an amount of Rs. 10.00 lacs and No.612446 dated 09.07.2020 for an amount of Rs. 10.00 lacs drawn on J&K Bank Branch Khanabal in favour of respondent/complainant, when presented to the banker, were returned unpaid with the remarks "drawers signature incomplete". According to respondent/complainant, the petitioners knowing fully-well that the cheques were to be signed by both the petitioners, who happen to be the partners of the firm that has issued the cheques in questio....
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....etermine this question, the provisions contained in Section 138 are required to be noticed. It reads as under:- "138. Dishonour of cheque for insufficiency, etc., of funds in the account.-Where any cheque drawn by a person on an account maintained by him with a banker 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 pr....
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....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. At first blush, it appears that it is only in two situations that Section 138 of the NI Act is attracted, firstly when there are insufficient funds available in the bank account of the person who is drawing the cheque and secondly where it exceeds the arrangement. However, the provision has been interpreted by the Supreme Court in a number of judgments in a manner so as to include within its ambit even the cases where the dishonor of cheque has taken place for the reasons other than the aforesaid two reasons. 7) In NEPC Micon Limited And Others vs. Magma Leasing Limited,( 1....
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....d as under: "18. The aforesaid propositions in both these reported judgments, in our considered view, with great respect are contrary to the spirit and object of Sections 138 and 139 of the Act. If we are to accept this proposition it will make Section 138 a dead letter, for, by giving instructions to the bank to stop payment immediately after issuing a cheque against a debt or liability the drawer can easily get rid of the penal consequences notwithstanding the fact that a deemed offence was committed. Further the following observations in para 6 in Electronics Trade & Technology Development Corpn. Ltd. "Section 138 intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds....
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....38 of the NI Act in a liberal manner so as to achieve the object for which the said provision has been enacted. Not only the cases of dishonour of cheques on account of insufficiency of funds or on account of exceeding of arrangement but the cases involving dishonour of cheques on accounts of "stop payment" and "account closed" have also been brought within the ambit of offence under the aforesaid provision. 11) In Vinod Tanna's case (supra), the Supreme Court, while dealing with a case where the cheque drawn by the accused was not been honoured by the bank on account of drawer's signatures being incomplete, held that dishonour of cheque for the aforesaid reason would not constitute an offence under Section 138 of the NI Act and, according....
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..... We have carefully gone through the said decision which relies upon the decision of this Court in Electronics Trade & Technology Development Corporation Ltd. (supra). The view expressed by this Court in Electronics Trade & Technology Development Corporation Ltd. (supra) that a dishonour of the cheque by the drawer after issue of a notice to the holder asking him not to present a cheque would not attract Section 138 has been specifically overruled in Modi Cements Ltd. case (supra). The net effect is that dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was no....