1990 (10) TMI 386 - HC - Indian Laws

Summary

Issues:
Interpretation of Section 138 of the Negotiable Instruments Act, 1881 in relation to dishonoring of cheques due to account closure.

Detailed Analysis:

1. Background:
The petitioner filed a complaint against respondents 2 to 4 under Section 138 of the Negotiable Instruments Act, 1881, alleging that they issued a cheque that was returned due to "account closed."

2. Magistrate's Decision:
The Magistrate concluded that dishonoring a cheque due to "closure of account" does not constitute an offense under Section 138. The Magistrate dismissed the complaint under Section 203 of the Criminal Procedure Code.

3. Petitioner's Challenge:
The petitioner sought to quash the Magistrate's order through a criminal petition under Section 482 of the Criminal Procedure Code.

4. Court Proceedings:
During the court proceedings, the petitioner's counsel indicated a possible settlement, leading to adjournments. However, the petitioner failed to appear on subsequent dates.

5. Legal Interpretation:
Section 138 of the Act specifies two conditions for punishing the drawer of a dishonored cheque: insufficiency of funds or exceeding arranged amounts. The closure of the drawer's account after issuing the cheque is not covered. The court emphasized strict interpretation of penal provisions.

6. Precedent Reference:
A Division Bench decision highlighted that statutory provisions must not be extended beyond their meaning. The court should not creatively apply rules to situations not explicitly covered.

7. Court Decision:
The court held that the petitioner's argument, claiming a liberal interpretation of Section 138, was not valid. The court dismissed the petition, stating that the impugned order could not be quashed under Section 482 of the Criminal Procedure Code.

In conclusion, the court's judgment emphasized the strict interpretation of statutory provisions and upheld the Magistrate's decision regarding the dishonor of a cheque due to the closure of the drawer's account.