No prosecution in cheque bounce case if issued as security

A) Criminal - Negotiable Instruments Act, 1881, s. 138 - Code of Criminal Procedure, 1973, s. 378(4) - Acquittal - Challenged - Applicant filed complaint against respondent for having committed offence punishable u/s. 138 of the Act - Magistrate held that as ten blank cheques were obtained by the applicant bank while sanctioning/disbursing loan as security and one of them was used in the present case and there was bar of limitation and acquitted the respondent - Hence, present application u/s. 378(4), CrPC for leave to file appeal - Held, in the present case blank cheques were issued prior to disbursement of loan as a collateral security for loan which was sanctioned - In such case there was no existing debt or liability when the cheque was issued - So, in the facts and circumstances of the case, the case does not fall within offence punishable u/s. 138 of the Act - Criminal application dismissed.

(B) Criminal - Constitution - Negotiable Instruments Act, 1881, s. 138 - Object and purpose for introducing amendment to the Act - Held, object of the amendment and introduction of Chapter XVII in the Act by Act of 1988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general - So, provisions like s. 138 of Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life - However, the object was not to provide effective and speedy remedy for recovery of loans - So, it is doubtful if provisions of s. 138 of the Act would be attracted to a case in which a blank or post dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan - Criminal application dismissed.
source:
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

CRIMINAL APPLICATION NO. 898 OF 2009

CORAM : P.R. BORKAR,J. RESERVED ON : 03.02.2010 PRONOUNCED ON : 16.02.2010

arbitration clause not a bar to the entertainment of the consumer complaint

As regards the plea of arbitration, that was rightly rejected by the State Commission for it should suffice to say that provisions of Section 3 of the Consumer Protection Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. We need not repeat that Section 3 is an additional remedy to the complainants in addition to all the remedies, which are otherwise available under the existing laws. Now it is settled that the arbitration clause would not be a bar to the entertainment of the complaint by the redressal agency constituted under the Act, even if the arbitration clause had been provided in an agreement or and if any reliance is required, one may refer to Ram Nath v. Improvement Trust, Bathinda 1994 (I) CPR
357.

Associated Road Carriers Ltd. vs Kamlender Kashyap And Ors. on 10/1/2008

citations: I (2008) CPJ 404 NC Bench: S K Member, B Taimni

place for filing the complaint u/s 138

The Delhi high court last week ruled in a cheque bouncing case that a complaint under the Negotiable Instruments Act should be filed in the court where the drawee bank is situated. In this case, Swastik Sales Corporation vs Advanced Medical Optics, the cheques were issued by Swastik in Mumbai on a bank there and was dishonoured there. The notice of demand was issued in Delhi. Following that the complaint was filed in Delhi. Swastik moved the high court for quashing the complaint arguing that the Delhi court had no jurisdiction to prosecute the case. The high court, relying on Supreme Court decisions, agreed with Swastik


Relevant fact of the case:


The complainant had not proved that cheque in question was issued and delivered to the accused in Delhi. There was no such allegation to this effect in the complaint and during the course of arguments also no such stand was taken by the complainant’s counsel. It is an admitted case that the petitioners (accused) are the resident of Mumbai and do not have either a residence or a place of work in Delhi. It is an admitted case that cheques in question were drawn on a bank in Mumbai and were dishonoured by that bank at Mumbai. It is also an admitted position that the notice of demand, though issued from Delhi, was sent to the petitioners at Mumbai. This is nowhere the case of the complainant that the notice of demand was served upon the petitioners in Delhi.

Crl.M.C.No. 842/2009 & Crl.M.C.No. 843/2009

Date of Order: 03rd March, 2010