9911796707
|
Home
Issues Involved:
1. Sustainability of prosecution under Section 138 of the Negotiable Instruments Act for a dishonored post-dated cheque due to account closure. 2. Interpretation of Section 138 concerning the requirement of an active bank account at the time of cheque issuance and presentation. Issue-wise Detailed Analysis: 1. Sustainability of prosecution under Section 138 of the Negotiable Instruments Act for a dishonored post-dated cheque due to account closure: The primary issue in this case was whether prosecution under Section 138 of the Negotiable Instruments Act is sustainable when a post-dated cheque is dishonored due to the closure of the drawer's bank account. The petitioner issued a cheque dated 5-9-1992, which was dishonored with the endorsement "account closed." The petitioner argued that since the account was closed before the cheque's presentation, the transaction does not fall under Section 138. The court rejected this argument, emphasizing that Section 138 does not limit the reasons for cheque dishonor to insufficient funds alone. The court cited the Division Bench decision in Rakesh Porwal v. Narayan Joglekar, which clarified that the circumstances causing dishonor are irrelevant; the mere fact of non-payment is sufficient to attract Section 138. The court concluded that closure of an account falls within the scope of Section 138, as the legislation aims to ensure the credibility of cheque transactions and prevent dishonest practices. 2. Interpretation of Section 138 concerning the requirement of an active bank account at the time of cheque issuance and presentation: The petitioner contended that for Section 138 to apply, the bank account must be active at the time of both cheque issuance and presentation. The court dismissed this contention, stating that the essential elements under Section 138 are the dishonoring of the cheque and the drawer's failure to pay the amount within 15 days of receiving notice. The court emphasized that the reason for dishonor, including account closure, is immaterial. The court highlighted that the legislative intent behind Section 138 is to ensure that cheques are issued responsibly and to provide a mechanism for rectifying minor mistakes within 15 days. The court also noted that the Banking Regulation Act mandates banks to ensure that unused cheque leaves are surrendered upon account closure, but this does not absolve the drawer from liability under Section 138. The court concluded that holding otherwise would defeat the purpose of the legislation and undermine the credibility of cheque transactions. Conclusion: The court found no reason to interfere with the lower court's judgment, affirming that the closure of an account falls under the purview of Section 138 of the Negotiable Instruments Act. The Criminal Revision Application was dismissed, with no order as to costs. The ruling reinforces the broad applicability of Section 138 to various circumstances of cheque dishonor, including account closure, thereby upholding the integrity of cheque transactions in commercial practices.
|
