TaxTMI 
TaxTMI 
2024 (10) TMI 1536
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....under Section 138 of the Negotiable Instruments Act (N.I.Act). It was asserted that the accused is working as a Fruits and vegetables commission agent under the name and title of Dhanta Fruit Traders (D.F.T), Shop No. 33, Fruit Mandi, Parala Sainj, District Shimla, H.P. The complainant sent apple boxes for sale to the shop of the accused on 29.08.2017. The accused sold the apple boxes for Rs.2,26,436/- and issued a cheque drawn on ICICI Bank, Theog Branch to discharge his legal liability. The complainant presented the cheque for its collection on 17.01.2018; however, the same was dishonoured on 23.01.2018. The complainant issued a legal notice to the accused asking him to pay the amount within 15 days from the date of the receipt of the notice. However, the accused failed to pay the amount. The notice issued to the complainant was also not served but was returned with an endorsement of unclaimed. Hence, the complaint was filed against the accused for taking action against him as per law. 3. The learned Trial Court found sufficient reasons to summon the accused and when the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under S....
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....No interference was required with the judgment and order passed by the learned Trial Court. Hence, the appeal was dismissed. 8. Being aggrieved from the judgments and order passed by the learned Courts below,the accused has filed the present revision asserting that learned Courts below erred in appreciating the material placed before them. The complainant had failed to prove that the cheque was issued in the discharge of his debt or legal liability. The complaint was barred by limitation. The Firm was not impleaded as a party and the accused could not be held liable. Jai Chand Chandel (DW-1) deposed that the shop was allotted to one Govind, which showed that the plea of the complainant that the accused was running the shop was incorrect. The notice was never served upon the accused and this aspect was overlooked by the learned Courts below. Therefore, it was prayed that the present revision petition be allowed and the judgments and orders passed by the learned Courts below be set aside. 9. I have heard Mr. N.S. Chandel, Senior Counsel instructed by Mr. Vinod Kumar Gupta, learned counsel for the petitioner/accused and Mr. Bhupinder Singh, learned counsel for the respondent/com....
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....rmined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings. 14. This position was reiterated in State of Gujarat v. DilipsinhKishorsinh Rao, 2023 SCC OnLine SC 1294 wherein it was observed: "13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C. which vests the court with the power to call for and examine records of an inferior court is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460 where the scope of Section 397 has been considered and succinctly explained as under: "12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any pr....
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....09 : 2001 SCC (Cri) 582 : 2001 SCC OnLine SC 447 that the cheque has to be presented within the period of validity in the bank of the accused and the presentation before the bank of the complainant is of no avail to him. It was observed at page 612: - "8. Section 138 provides that 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 punishable with imprisonment as prescribed therein subject to the conditions mentioned in clauses (a), (b) and (c) of the proviso. Section 3 of the Act defines the "banker" to include any person acting as a banker and any post office savings bank. Section 72 of the Act provides that a cheque must, in order to charge the drawer, be presented at the bank upon which ....
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....ount can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to (C) bank. The non-presentation of the cheque to the drawee bank within the period specified in the section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 3, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee. 11. We have perused the judgments of the Punjab and Haryana, Gujarat and Madras High Courts and their conflicting views and are of the opinion that the Madras High Court has no....
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....came invalid and hence, the entire proceedings have been vitiated and the learned Judicial Magistrate without even considering the said fact, mechanically took cognizance and issued a summons to the petitioner. Therefore, this Court is of the view that the proceedings under Section 138 of the Negotiable Instrument is liable to be quashed." 21. Gujarat High Court held in Anil Vasudev Rajgor v. State of Gujarat, 2017 SCC OnLine Guj 2799 that when the cheque was presented beyond the period of validity and was dishonoured with the endorsement instrument outdated, the proceedings under Section 138 of N.I.Actdoes do not lie. It was observed: "11. From the above proviso, it is clear that the provisions of Section 138 of the Negotiable Instruments Act are enacted taking into consideration the currency of cheques for, a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general Banking practice and' stipulates that the cheque should be presented for encashment1 either within the period of si....
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....ugh another Bank, namely, the collecting Bank of the payee." 12. A learned Single Judge of this Court in the case of ArunbhaiNilkantharai v. Jayaben Prahladbhai [2000 Cri LJ 1152] had an occasion to consider almost an identical issue. In the said case, it was contended on behalf of the complainant that what should the payee of the cheque do if the cheque is returned holding that the validity period had expired. In the said case, an argument was canvassed that there may be a delay on the part of the collecting' Bank in sending the cheque to the paying Bank though it had been within the period of validity, or because of the delay on the part of the postal Authority, the cheque might reach the paying Bank after the expiry of the period of validity or six months, as the case may be, the holder of the cheque, in such circumstances, would be helpless. The learned Single Judge rejected the contention observing as under:-- "10...The contention must fail. In that case initiation of criminal action is view of non-fulfilment of the requirements of Sec. 138 of the Act would certainly be barred, but it will be open to the payee to initiate the civil action filing the suit for ....
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.... unsustainable. The Treasury Code is framed by the Government of Kerala as empowered under Art. 283(2) of the Constitution and promulgated by the Governor of Kerala by notification No. 54282 dated 6-4-1983. 6. As per List 1 which is styled as Union List in 7th Schedule of the Constitution, all the items mentioned therein fall within the exclusive jurisdiction of the Union of India and item 45 in the list I of Schedule 7 is Banking and entry 46 therein is Bill of Exchange, Cheques etc. Therefore, the counsel for the appellant argued that Banking comes within the exclusive jurisdiction of the Government of India and the same can be regulated only by the Government of India and Reserve Bank of India. 7. The counsel for the appellant further argued that the Treasury Code is intended for transactions in Government money only and not for Banking business for the public and if the Treasuries conduct Banking business the entire rules and regulations regarding Bank including those rules applicable to cheques etc. contained in the Negotiable Instruments Act and the Banking Practice should be followed by the Treasuries. According to him, though the Treasury can regulate the ....
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....s follows:- "Provided that nothing contained in this Section shall apply unless- (a) the cheque has been presented to the Bank within the period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier." From the above proviso, it is clear that the provisions of S. 138 of the Negotiable Instruments Act are enacted taking into consideration of the currency of cheques for a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general Banking practice and stipulates that the cheque should be presented for encashment either within the periodof six months or within the period of validity of the cheque, whichever is earlier. Hence a cheque which is issued with the reduced validity period has to be presented for encashment within the expiry of that period so as to attract the provisions of S. 138 of the Negotiable Instruments Act. Therefore, the argument advanced by the counsel for the appellant that the Treasury Code promulgated by th....
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....sites for the institution of a complaint to which we have already referred in the earlier part of this order. None of these prerequisites is in itself sufficient to constitute a complete cause of action for an offence under Section 138. For instance if a cheque is not presented within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier, no cause of action would accrue to the holder of the cheque even when the remaining two requirements, namely service of a notice and failure of the drawer to make the payment of the cheque amount are established on facts...." 10. Learned counsel for the respondent has fairly not disputed the aforesaid legal position, though he urged that all such issues could be considered at the stage of framing of notice. 11. Reliance placed by the learned counsel for the respondent in Rajeev Ranjan Sinha(supra), Jitender Singh(supra), Thomas Varghese(supra) and A.V Murthy(supra) is misplaced as the issue involved in the present case was not raised in the aforesaid judgments. The validity of a cheque goes to the root of the initiation of proceedings under the Negotiable Instruments ....
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....suing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee." 24. Punjab and Haryana High Court also took a similar view in Nitin Mahajan vs. Vinod Kumar (11.05.2023 - PHHC) : MANU/PH/3563/202326.) and held: "5. From a perusal of proviso (a) to Section 138, it is apparent that one of the essential condition to bring into effect the substantive provision i.e. Section 138 of NI Act is that cheque be 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. In the present case, cheque in question was issued on 18.05.2018, therefore, as per RBI circula....
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.... 8. Under Section 138-A of N I Act, it is mentioned that the cheque should have been presented to the Bank within a period of six months from the date on which it is drawn or within the period of validity. Section 35-A of the Banking Regulation Act, 1949 confers powers to the Reserve Bank for giving directions in the interest of public or banking policy. Accordingly directions were issued that the Banks should not make payment of the cheques which are presented beyond the period of three months from the date of such instrument. 9. Section 138-A of the Negotiable Instruments Act deals with two contingencies, firstly, the cheque being presented within a period of six months and the secondly, within the period of its validity whichever is earlier. By virtue of the notification of the Reserve Bank of India, the period of validity would be three months and the cheque should have been presented within a period of three months. The Bank has committed an error in entertaining the cheque and giving memo stating that the cheque was returned for the reason of 'insufficient funds'. It is the specific direction of the Reserve Bank of India that the Banks should not entertain....