2015 (2) TMI 1387 - SC - Indian Laws

Dishonour of Cheque - appellant contended that the pay order issued by the bank is nonetheless a cheque satisfying the definition of cheque under Section 6 of the Negotiable Instruments Act - HELD THAT - Having regard to the specific prescriptions set out in Section 138 referring to 'the person' who issued the 'cheque' again referable to 'an account' of that person so on and so forth, we have our own doubts as to how far the said decision rendered in respect of pay order issued can be applied to the facts of this case. However, for other reasons which weighed with this Court for not granting any relief in this appeal, we do not wish to go into the said issue vis- -vis the judgment relied upon by counsel for the Appellant and we leave it open for consideration as and when appropriate case arises before us. In the case on hand Respondent No. 1/Bank has been already dropped from the proceedings by order dated 1.11.2003 which has become final and conclusive. Therefore, in the first instance, even if the Appellant was to be permitted to proceed with the complaint as against Respondent No. 2, very many issues as regards how the pay order came to be issued and the return of the same by Respondent No. 1/bank would attract the penal provisions of Section 138 etc., which cannot be examined in the absence of the concerned accused, namely, the Bank being a party before the Court. Therefore, on this ground itself there is no scope to grant any relief to the Appellant for proceeding with the complaint as against Respondent No. 2. In the absence of necessary pleadings with particular details as regards the property based on which the transaction was stated to have been entered into between the Appellant and M/s. A.D. Exports Private Limited there is every justification in the stand of the Respondents to doubt the full transaction as between the Appellant and M/s. A.D. Exports Private Limited. More so, when a huge sum of ₹ 44,86,000/- was stated to have been parted by the said agreement holder to the Appellant who agreed to handover the possession and along with the title deeds - Appeal dismissed.

Summary

Issues:
1. Applicability of Section 138 of the Negotiable Instruments Act to a pay order.
2. Validity of the complaint filed under Section 138 against the respondents.
3. Exclusion of Respondent No. 1 from the proceedings and its impact on the complaint against Respondent No. 2.
4. Lack of necessary pleadings and details in the transaction between the parties.

Analysis:

1. Applicability of Section 138 of the Negotiable Instruments Act to a pay order:
The appellant contended that the pay order issued by the bank qualified as a cheque under Section 6 of the Negotiable Instruments Act, making the complaint under Section 138 maintainable. The appellant relied on a previous court decision to support this argument. However, the respondent's counsel raised doubts regarding the genuineness of the transaction and the applicability of Section 138 to a pay order. The court noted the lack of a definite principle in the previous judgment on applying Section 138 to a bill of exchange like a pay order. The court expressed doubts about the applicability of Section 138 to the current case based on specific prescriptions within the Act.

2. Validity of the complaint filed under Section 138 against the respondents:
The complaint filed by the appellant under Section 138 of the Negotiable Instruments Act was challenged by the respondents in the High Court. The High Court quashed the complaint entirely, leading the appellant to appeal to the Supreme Court. The court observed that once Respondent No. 1 was excluded from the proceedings, maintaining the complaint against Respondent No. 2, who was a Branch Manager of Respondent No. 1/Bank, was not feasible. The court highlighted the complexities arising from the pay order issuance and return by Respondent No. 1, emphasizing the need for the concerned accused, the Bank, to be part of the proceedings for a thorough examination.

3. Exclusion of Respondent No. 1 from the proceedings and its impact on the complaint against Respondent No. 2:
The court noted that Respondent No. 1/Bank had been dropped from the proceedings earlier, rendering the complaint against Respondent No. 2 legally untenable. Without the Bank's involvement, issues related to the pay order issuance and return could not be adequately addressed. The absence of the Bank as a party precluded any relief for the appellant in pursuing the complaint against Respondent No. 2. The court emphasized the necessity of all relevant parties being present for a fair and comprehensive legal examination.

4. Lack of necessary pleadings and details in the transaction between the parties:
The court acknowledged the respondent's contention regarding the lack of specific details and pleadings concerning the property transaction between the parties. The doubts raised about the transaction's authenticity, especially concerning the substantial sum involved and the subsequent return of funds by the Bank, added complexity to the case. The court refrained from delving deeply into these doubts but recognized their significance in casting suspicion on the transaction's validity. Ultimately, the court found no merit in the appellant's appeal and dismissed it, citing the insufficiency of grounds to grant relief based on the circumstances presented in the case.