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2001 (2) TMI 984 - SC - Indian LawsWhat is meant by, the bank as mentioned in Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881? Does such bank mean the bank of the drawer of the cheque or covers within its ambit any bank including the collecting bank of the Payee of the cheque? To which bank the cheque is to be presented for the purposes of attracting the penal provisions of Section 138 of the Act? Held that - Appeal allowed. We have perused the judgments of the Punjab Haryana, Gujarat and Madras High Courts and their conflicting views and are of the opinion that the Madras High Court has not correctly interpreted the provisions of law in this behalf. As, admittedly, in this case the cheque was not presented before the drawer s bank within the statutory period of six months, the criminal court had no jurisdiction to issue the process against the appellant. The impugned judgment of the High Court being contrary to law is thus not sustainable.
Issues:
1. Interpretation of the term "the bank" in Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881. 2. Determination of the bank to which the cheque must be presented for attracting penal provisions under Section 138 of the Act. Issue 1: Interpretation of the term "the bank" in Clause (a) of the proviso to Section 138: The Supreme Court was tasked with determining the meaning of "the bank" as mentioned in Clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881. The Court noted conflicting interpretations by different High Courts, with the Madras High Court allowing presentation of the cheque at the payee's bank as well as the drawer's bank. However, the Supreme Court emphasized that for criminal liability under Section 138, the cheque must be presented at the bank on which it is drawn within six months, whether directly or through a collecting bank. The Court highlighted the distinction between "a bank" and "the bank" in the Act, indicating that "the bank" refers specifically to the drawee bank. Therefore, the Court held that the term "the bank" in the proviso refers to the drawee bank and not any bank where the cheque is presented for collection. Issue 2: Determination of the bank for presenting the cheque under Section 138: The Supreme Court analyzed the provisions of the Negotiable Instruments Act to clarify that the cheque must be presented at the bank on which it is drawn to hold the drawer criminally liable under Section 138. The Court emphasized that such presentation must occur within six months at the drawee bank, even if presented through a collecting bank. The Court rejected the interpretation allowing presentation at any bank, as per the Madras High Court, and ruled that the cheque must be presented at the drawee bank to trigger criminal liability. In the case at hand, since the cheque was not presented at the drawer's bank within the statutory six-month period, the Court held that the criminal court lacked jurisdiction to issue process against the appellant. Consequently, the Supreme Court allowed the appeal and set aside the impugned judgment of the High Court, deeming it contrary to the law. In conclusion, the Supreme Court clarified the interpretation of "the bank" in the context of Section 138 of the Negotiable Instruments Act, emphasizing the necessity of presenting the cheque at the drawee bank within six months to establish criminal liability. The Court's decision provided a definitive understanding that aligns with the legislative intent and ensures strict adherence to the penal provisions of the Act.
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