2001 (3) TMI 1015 - SC - Companies Law

Whether period of six months for presentation of cheque to the banker, as required under proviso (a) to Section 138 of the Act, should be reckoned from the date mentioned on the face of the cheque or a date previous to that when it was made over by the drawer to the drawee? Held that - In the case on hand, the cheque was prepared and made over by the drawer to the drawee on 10.11.1995 but the date mentioned thereon was 20.1.1996 and it was presented before the banker for encashment on 7.7.1996, i.e., within a period of six months from 20.1.1996. Thus we find no ground to quash prosecution of the appellant as, on the facts alleged, an offence under Section 138 of the Act is clearly made out. Appeal dismissed.

Summary

Issues Involved:
1. Validity of the prosecution under Section 138 of the Negotiable Instruments Act, 1881.
2. Interpretation of the six-month period for presenting a cheque under Section 138 of the Act.
3. Legal status and implications of post-dated cheques.

Detailed Analysis:

1. Validity of the prosecution under Section 138 of the Negotiable Instruments Act, 1881:
The appellant challenged the judgment of the Bombay High Court, which upheld the orders of the Sessions Court and the Chief Judicial Magistrate, taking cognizance and issuing process against the appellant under Section 138 of the Negotiable Instruments Act, 1881 (the Act). The prosecution was initiated based on a complaint filed by the respondent, alleging that a cheque issued by the appellant was dishonored due to the account being closed. The appellant contended that no offence under Section 138 was made out as the cheque was presented after six months from the date it was handed over, although within six months from the date mentioned on the cheque.

2. Interpretation of the six-month period for presenting a cheque under Section 138 of the Act:
The core issue was whether the six-month period for presenting a cheque should be reckoned from the date mentioned on the cheque or from the date it was handed over by the drawer to the drawee. The Court referred to the precedent set in Anil Kumar Sawhney vs. Gulshan Rai, which established that a post-dated cheque is deemed to be drawn on the date it bears, not the date it was handed over. The Court reaffirmed this interpretation, stating that the six-month period for presenting a cheque under Section 138 should be calculated from the date mentioned on the cheque.

3. Legal status and implications of post-dated cheques:
The judgment provided a comprehensive analysis of the legal status of post-dated cheques, referencing various legal texts and precedents. It was established that a post-dated cheque is essentially a bill of exchange until the date it bears, at which point it becomes a cheque payable on demand. The Court cited multiple cases, including Da Silva vs. Fuller and Royal Bank of Scotland vs. Tottenham, to illustrate that a post-dated cheque cannot be presented or paid before its date. The judgment emphasized that for the purposes of Section 138, the cheque is considered drawn on the date mentioned on it, and the six-month period for presenting it starts from that date.

Conclusion:
The Supreme Court dismissed the appeal, upholding the prosecution under Section 138 of the Act. The Court concluded that the cheque in question, dated 20.1.1996, was presented within six months from that date, thus fulfilling the requirement under Section 138. The judgment reinforced the legal principle that the six-month period for presenting a cheque is to be calculated from the date specified on the cheque, not from the date it was handed over to the drawee.