2019 (7) TMI 1836 - HC - Indian Laws

Dishonor of Cheque - cheque was returned - case of petitioner is that the cheque has been returned by the bank by requesting the respondent to contact the Drawer - Drawee Bank and present it again - HELD THAT - In the facts of the present case, the concerned bank has not returned the cheque on the ground of defect. It has been returned by directing the respondent to contact a concerned bank and present it again. In short, this endorsement cannot be held to be dishonour of cheque. In the considered view of this Court, the respondent without complying with the requirements of the bank, ought not to have proceeded to file a complaint under Section 138 of the Negotiable Instruments Act. The Court below went wrong in taking cognizance of the complaint. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Quashing of proceedings in C.C.No.5476 of 2016 under Section 138 of the Negotiable Instrument Act.

Analysis:
The petition sought to quash the proceedings in C.C.No.5476 of 2016, involving an offence under Section 138 of the Negotiable Instrument Act. The complaint alleged that a cheque was returned with an endorsement to contact the Drawer - Drawee Bank and present it again. The petitioner argued that this did not amount to dishonoring the cheque for want of funds or payment stoppage, and the respondent should have clarified with the bank before filing the complaint. The petitioner contended that such actions amounted to an abuse of the court process, invoking the jurisdiction under Section 482 of Cr.P.C.

The respondent did not appear, leading the Court to proceed with the case. The main contention raised by the petitioner was that the cheque was returned with specific instructions to contact the bank and re-present it. The Court acknowledged that the Supreme Court held complaints under Section 138 could be maintained regardless of the reason for cheque return. However, in this case, the cheque was not dishonored due to a defect but for further action by the bank. The Court opined that the respondent should have followed the bank's instructions before filing the complaint, as failure to do so did not constitute cheque dishonor. Consequently, the Court found the lower court erred in taking cognizance of the complaint.

As a result, the High Court quashed the proceedings in C.C.No.5476 of 2016, allowing the Criminal Original Petition. The judgment emphasized the importance of complying with bank instructions before initiating legal action under Section 138 of the Negotiable Instrument Act to prevent abuse of court processes.