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2018 (3) TMI 1134 - HC - Indian LawsDishonor of Cheque - maintainability of complaint u/s 138 of the N.I. Act - it was contended that the drawer and drawee of the cheques being one and the same, the Branch Manager of the Bank cannot maintain the complaint - whether the Bank was entitled for encashment of Cheque since the drawer and drawee were one and the same? Held that - The Supreme Court in similar nature of case in Punjab & Sind Bank Vs. Vinkar Sahakari Bank Ltd. 2001 (9) TMI 993 - SUPREME COURT OF INDIA , held that so long as the instrument is in possession of a holder in due course such instrument would be operative as a bill of exchange even if the drawer and drawee are happened to be the same person or banking institution. The orders passed by the Courts below cannot be held to be illegal and it shall always be open to the petitioners to rebut the presumption during the course of evidence that the Bank was not a holder in due course and it was not for any consideration of liquidation of the loan. Prima facie, the complaint having been registered on the basis of section 145 of the N.I. Act upon the affidavit, the same cannot be quashed at the threshold and the petitioners are liable to face the trial of complaint under Section 138 of the N.I. Act. Petition dismissed.
Issues:
Challenge to the maintainability of a complaint filed under section 138 of the Negotiable Instruments Act, 1881 where the drawer and drawee of the cheques are the same. Detailed Analysis: Issue 1: Challenge to Maintainability of Complaint The petition challenges the order maintaining charges framed by the CJM under section 138 of the NI Act. The petitioners argue that when the drawer and drawee of the cheques are the same, a third party, in this case, the Bank's Branch Manager, cannot file a complaint under section 138. They claim that the complaint is unsustainable as the Bank lacked the right or authority to file it. The petitioners further contend that the cognizance taken solely based on photocopies of the cheques is improper, and no statement under section 200 Cr.P.C. was recorded. Issue 2: Legal Standpoint of Respondent The respondent argues that the cheques were issued by the Company to discharge a loan liability, with the Bank acting as a 'holder in due course'. They assert that the Bank had the right to file the complaint under section 138 as the cheques were dishonored when presented for loan repayment. The respondent emphasizes that objections regarding the original cheques can be addressed during evidence, and the complaint's validity cannot be challenged prematurely. Issue 3: Examination of Complaint and Legal Precedents The Court examines the complaint filed by the Bank, detailing the loan facility availed by the respondent, the issuance of cheques for loan repayment, and subsequent dishonor. The Court refers to the definition of 'Holder in Due Course' under Section 9 of the NI Act. Citing a Supreme Court case, the Court establishes that a 'holder in due course' can maintain the validity of the instrument even if the drawer and drawee are the same. The Court emphasizes that the Bank, as a 'holder in due course', was entitled to possess and act upon the cheques. Issue 4: Consideration of Legal Principles The Court highlights that for a bank to be a 'holder in due course', endorsement on the cheque is not mandatory. It notes that the Bank, by accepting the cheques for loan repayment, became a 'holder in due course' as per the NI Act. The Court emphasizes that the Bank's credit to the customer can be discharged by a cheque, making the Bank a 'holder in due course' irrespective of endorsement status. The existing debt is deemed a valid consideration for the Bank's position as a 'holder in due course'. Conclusion: The Court concludes that the orders of the lower courts were legal, and the petitioners can challenge the presumption of the Bank being a 'holder in due course' during trial. As the complaint was registered based on section 145 of the NI Act, the Court dismisses the petition, stating that the petitioners must face trial under Section 138 of the NI Act.
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