Payment stopped because of attachment of the bank account by an order of the Court, NI ACt will not be applicable

* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Crl.M.C.No. 1328/2007
% Date of Decision : 06.05.2008
Shri Vijay Chaudhary …. Petitioner
Through: Mr. Ruchir Batra, Mr. Sandeep
Chaudhary and Mr. Vijay Chaudhary
Advocates
versus
Shri Gyan Chand Jain …. Respondent
Through: Mr. D.K.Thakur, Advocate.
CORAM:
HON’BLE MR. JUSTICE VIPIN SANGHI
1. Whether the Reporters of local papers may
be allowed to see the judgment?
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
VIPIN SANGHI, J. (Oral)
1. This petition u/s 482 of the Cr.P.C (for short ‘the Code’)
has been preferred for quashing the proceedings initiated u/s 138 of
the Negotiable Instruments Act titled “Gyan Chand Jain Vs. Vijay
Chaudhary”, earlier pending in the Court of Ms. Navita Kumari Bagha
and now pending in the Court of Mr. Sudesh Kumar, M.M., Patiala
House, New Delhi.
2. The case of the complainant/respondent in his aforesaid
complaint is that on 8.8.2004 (which according to the counsel for the
Crl.M(C)1328.07 page 1 of 20respondent should be read as 6.8.2004), the accused/petitioner
visited the shop of the complainant and took some diamonds and
diamond studded jewellery worth Rs.1,52,35,000/- on consignment/
sale basis and in lieu thereof, the accused/petitioner issued a cheque
bearing no.061630 for a sum of Rs.1,52,35,000/- drawn on Federal
Bank, Overseas Branch, New Delhi dated 10.4.2006. It is further
alleged that the complainant presented the said cheque through its
banker for collection and the same has been returned unpaid with the
remarks ”funds insufficient” and “payment stopped by
attachment order/court order”.
3. The submission of the petitioner is that even according to
the complainant, the said cheque was a post dated one, which was
presentable for encashment after nearly one year and eight months
from the date of its alleged issue. He submits that in the meantime,
the operation of the account on which the cheque was allegedly
issued was stopped on account of an attachment order/court order in
relation to FIR No.283/2005 u/s 406/420/467/468/471/120-B IPC
registered against the petitioner with P.S Connaught Place. On
account of the said attachment order, it was not possible for the
petitioner to operate the said account either to deposit any amount in
the account, or to withdraw any amount therefrom. For an offence
to be made out u/s 138 of the Negotiable Instruments Act, the
account must be “maintained” by the drawer with his banker for
payment of the amount for which the cheque is drawn. He submits
that on the date of the dishonour, it could not be said that the
Crl.M(C)1328.07 page 2 of 20account was maintained by the petitioner and, therefore, there was
no question of the offence u/s 138 of the Negotiable Instruments Act
having been committed by the petitioner.
4. There are various other allegations and cross-allegations
between the parties with regard to the alleged theft of the said
cheque; its being filled up by the respondent; and also with regard to
the dealings between the parties. However, I am not concerned with
any of those issues in the present proceedings. I am only confronted
with the issue whether, in a case where the payment has to be
stopped because of attachment of the bank account on which the
cheque is drawn by an order of the Court, in respect of a post dated
cheque, which attachment has taken place between the date of
issuance of the cheque and the date when the payment under the
cheque became due, the offence u/s 138 of the Negotiable
Instruments Act can be said to have been committed, if the cheque is
dishonoured for the reason “payment stopped by attachment
order/court order”, apart from the reason of the funds being
insufficient.
5. Learned counsel for the petitioner has placed reliance on
the following decisions in support of his submissions:
1. Ramesh Kumar Vs. State of Kerala, 2008(2) Civil Court
Cases 099 (Kerala);
2. Standard Chartered Bank & Anr. Vs. State & Anr.,
2008(1) Civil Court Cases 442 (DELHI), and;
3. Nagaraja Upadhya Vs. M. Sanjeevan, 2007(4) Civil
Court Cases 387 (Karnataka).
Crl.M(C)1328.07 page 3 of 206. On the other hand, the submission of the learned counsel
for the respondent is that while interpreting the provision of Section
138 of the Negotiable Instruments Act, the Court has to keep in view
the mischief that the said provision intends to remedy. He submits
that the Courts have, from time to time, interpreted Section 138 so as
to meaningfully apply the same to cases where the drawer of the
cheque resorts to ways and means to avoid payment of the cheque
by creating grounds other than those mentioned in Section 138,
such as, issuance of stop-payment instructions, closure of the bank
account and the like. In support of his submissions, learned counsel
for the respondent has relied upon the following decisions:-
1. Pawan Kumar V. Ashish Enterprises & Others,
1993(1) Crimes 51.
2. M/s. Modi Cement Ltd. V. Kuchil Kumar Nandi, IR
1998 SC 1057;
3. NEPC Micon Ltd & Others V. Magma Leasing Ltd.,
1999 Cri L.J. 2883;
4. Yogendra Kumr Gupta V. Ram Prakash Agarwal,
2007(2) Crimes 467 (M.P);
5. Vinod Tanna & Another V. Zaheer Siddqui,
2002(1) Crimes 104;
6. Bishan Dayal V. Dinesh Kumar Singal II(2007)
DLT(Cri) 630.
7. D. Vinod Shivappa V. Nanda Belliappa, 130(2006)
DLT 534(SC)
7. I proceed to examine the cases cited by the petitioner and
thereafter I shall examine the cases cited by the respondent.
In Ramesh Kumar (supra), on the same date on which
Crl.M(C)1328.07 page 4 of 20the accused issued cheques i.e. on 25.9.2000, the Company Court at
Thiruvananthapuram passed orders for winding up of the accused
company. One of the cheques was dishonoured for the reason “funds
insufficient”, while other two were dishonoured assigning the reasons
“operations stopped by the Court”. In relation to the cheque which
had been dishonoured on account of “funds insufficient”, the High
Court rejected the challenge to the complaint made by the accused.
However, it drew a distinction when it came to the complaints filed in
respect of the two cheques which have been dishonoured with the
reason “operations stopped by the Court”. The Court held that when,
by reason of an order of a Court, the bank was necessarily required
not to make any payment from out of the account of the accused
company, it is unjust and illegal to say that an employee of the
company, who had issued the two cheques on behalf of the accused
company can be held liable for an offence u/s 138 of the Act. In
Standard Chartered Bank (supra), the Tax Recovery Officer on
30.1.2003 issued warrants of attachment, attaching the account of
A.D Exports Private Ltd. On 11.2.2003, the Tax Recovery Officer
required the petitioner, Standard Chartered Bank to remit the money
lying in the account of A.D Exports Private Ltd in pursuance of the
attachment. On 3.3.2003, A.D Exports Pvt. Ltd got prepared a
banker’s cheque for Rs.4,86,000/- in favour of the complainant M/s.
Omni Plast Private Ltd and handed over the same to the said
company. When the bankers cheque was presented for encashment,
the same was returned unpaid with return memo having the
instructions “refer to drawer”. M/s Omniplast Private Ltd filed the
Crl.M(C)1328.07 page 5 of 20complaint u/s 138 of the Act against the Standard Chartered Bank.
This Court took the view that since the banker’s cheque was issued
after debiting the account of the customer, but after the account had
been lawfully attached by an authority competent to attach the
account, issuance of the pay order being the result of an oversight or
negligence would not give the complainant the right to prefer a
complaint u/s 138 of the Act, since such a complaint cannot be
founded on the tort of negligence. The sine qua non for fastening
liability u/s 138 of the Act is return of a cheque unpaid by the bank
either because the amount of money standing to the credit of that
account is insufficient to honour the cheque, or that the cheque
amount exceeds the amount arranged to be paid from that account
under an agreement between the account holder of the bank.
Consequently, the complaint filed by M/s Omni Plast Pvt. Ltd. was
quashed. In Nagaraja Upadhyay (supra), the Karnataka High Court
took the view that where the account of the accused had been closed
by the bank at the instance of the bank, and not at the instance of the
accused, the provisions of Section 138 of the Act are not attracted. In
this case the Court found as a matter of fact that the bank account
had been closed by the bank under its Rules on 25.6.1996 without
intimation to the account holder/accused, who had thereafter
proceeded to issue a cheque dated 3.6.1997. Since the account had
not been closed by the accused, but by the bank on its own without
intimation to the account holder, the Court held that the complaint u/s
138 of the Act was not maintainable.
Crl.M(C)1328.07 page 6 of 208. The respondent has relied on Pawankumar (supra) to
contend that Section 138 of the Act is attracted when the person
concerned who has issued the cheque does not have adequate funds
in his credit to honour the cheque. In this case the Bank had filed a
recovery suit against the drawer/account holder. The drawer/account
holder had no amount to his credit in his bank account. This decision
does not deal with a situation like the present, and is therefore of
hardly any assistance in deciding the present controversy. The
material difference was that the drawer did not have any amount in
his account on which the cheque was drawn and the suit was filed by
the same bank precisely for the same reason, that the
drawer/account holder had even not repaid the loan that he had
taken from the Bank. The real reason for dishonour was the
insufficiency of funds.
9. In M/s Modi Cements Ltd (supra), the Supreme Court
held that once the cheque is issued by the drawer, a presumption u/s
139 of the Act arises in favour of the holder, and merely because the
drawer issues a notice to the drawee or to the bank for stoppage of
payment, it will not preclude an action u/s 138 of the Act by the
drawee, or the holder of the cheque in due course. The Supreme
Court, while reversing its earlier view in Electronics Trade and
Technology Development Corporation Ltd., Secundrabad vs.
Indian Technologists & Engineers (Electronics) (P) Ltd. (1996)
2 SCC 739 wherein the Court had taken the view that “…..after the
cheque is issued to the payee or to the holder in due course and
Crl.M(C)1328.07 page 7 of 20before it is presented for encashment, notice is issued to him not
to present the same for encashment and yet the payee or holder
in due course presents the cheque to the bank for payment and
when it is returned on instructions, Section 138 does not get
attracted” (emphasis supplied), observed that if this proposition is
accepted Section 138 would be rendered a dead letter “for by
giving instructions to the Bank to stop payment immediately
after issuing a cheque against a debt or liability the drawer can
easily get rid of the penal consequences notwithstanding the fact that
a deemed offence was committed.” Once again, this decision does
not appear to be of much relevance to the present fact situation. It is
not the respondent’s case that the cheque has been dishonoured on
account of stop payment instructions given by the petitioner.
Similarly, the decision of the Supreme Court in NEPC MICON Ltd
(supra) is of no avail to the respondents, since the fact situation was
materially different from the facts of the present case. In that case
the drawer of the cheque had closed the account from which the
cheque was issued. The Supreme Court in that decision observed:
“After issuing the cheque drawn on an
account maintained, a person, if he closes
that account apart from the fact that it may
amount to another offence, it would certainly
be an offence under S.138 as there was
insufficient or no fund to honour the cheque in
‘that account.” (emphasis supplied)
10. From the aforesaid, it appears that to rope in the drawer
of the cheque within the ambit of Section 138 of the Act, when the
cheque is dishonoured for ostensible reasons different from those
Crl.M(C)1328.07 page 8 of 20specifically provided under the Act, it is necessary to establish that
the ostensible reason is one attributable to a voluntary act/omission
of the drawer, and that the same is merely a ruse to avoid payment of
the cheque and the real reason is the insufficiency of funds in the
account, or that the amount of the cheque exceeds the arrangement
that the drawer has with the bank under an agreement.
11. In Yogendra Kumar Gupta (supra) the Madhya Pradesh
High Court has expressed the view that the reason for dishonour of
cheque is wholly irrelevant, and if the amount remained unpaid
despite demand notice being served upon accused, he can be held
liable under Section 138 of the Act. With due respect, the
interpretation given by the Madhya Pradesh High Court in the
aforesaid decision does not appeal to me. For arriving at its aforesaid
conclusion, the Madhya Pradesh High Court has relied upon the
decision in Modi Cements Limited (supra), which was a case where
the drawer of the cheque had issued stop payment instructions after
drawing the cheque and before its presentation by the drawee. With
respect to the Madhya Pradesh High Court, the Supreme Court in this
decision does not appear to have laid down a general and broad
proposition that irrespective of the reason for the dishonour of the
cheque, the offence under Section 138 is made out if the drawer of
the cheque does not make payment despite issuance of statutory
notice by the payee. The Madhya Pradesh High Court also relies upon
a decision of a Division Bench of the Bombay High Court in Rakesh
Nemkumar Porwal v. Narayan Dhondu Joglekar 1993 Crl. LJ 680.
Crl.M(C)1328.07 page 9 of 20The various observations made in the decision of the Bombay High
Court in Rakesh Nemkumar Porwal(supra), no doubt supports the
proposition laid down by the Madhya Pradesh High Court in
Yogendra Nath Gupta (supra). The Bombay High Court in Rakesh
Nemkumar Porwal (supra) observed:
“21. A clear reading of section 138 leaves no doubt
in our mind that the circumstances under which
such dishonour takes place are required to be
totally ignored. In this case, the law only takes note
of the fact that the payment has not been
forthcoming and it matters little that any of the
manifold reasons may have caused that situation.
If, for instance, the closure of an account or the
stoppage of payment or any other of the
commonplace reasons for dishonour were to be
justifiable, then, the Legislature would have set
these out in the section as exceptions not
constituting an offence. No such intention can be
read into section 138, as none exists. The solitary
exception made by the Legislature is with regard to
the drawer being offered a final opportunity of
paying up the amount within 15 days from the
receipt of notice which, in other-words, provides a
last opportunity to prove one’s bona fides. It is
obvious, that having regard to the widespread
practice of issuing cheques which are dishonoured
and the many ingenious methods of avoiding
payment that are practiced, the Legislature has
opted for a non-nonsense situation. The possibility
has not been overlooked whereby an account any
inadvertently be overdrawn or a dishonour may be
for technical reasons or where a genuine mistake
has occurred and the grace period provided for by
the Legislature after service of notice on the drawer
is in order to afford an opportunity to the drawer to
rectify these. Undoubtedly, even when the
dishonour has taken place due to the dishonesty of
the depositor, the drawer is still given a last chance
to act otherwise. Consequently, the reasons for
dishonour even if they be very valid as was sought
to be pointed out in this case, should not and
cannot be taken into account by a Magistrate when
such a complaint is presented.”
Crl.M(C)1328.07 page 10 of 20“28. ……………………………….. The wording and the
endorsement from the bank or the circumstances
under which a cheque is returned are not the
guiding criterion but the fact that on presentation
of the cheque, the payment was not made. There
could be a host of reasons for this (i.e. for the
dishonour of the cheque) but the bottom line of the
situation is that the payment could not be made by
the banker and the mechanics of the reasons
apart, the irresistible conclusion that, had the
funds been available, the payment would have
been made leads back to the position that
dishonour, therefore, implies insufficiency of funds.
We are reinforced in this view by the definition of a
cheque as appears in section 6 of the Negotiable
Instruments Act which defines it as a bill of
exchange drawn on a specified banker. A bill of
exchange is defined in section 5 which reads as
follows :
“A bill of exchange is an instrument in
writing containing an unconditional order
signed by the maker directing a certain
person to pay a certain sum of money only
to, or to the order of, a certain person or to
bearer of the instrument.”
12. It may be pertinent to analyze the dispute before the
Bombay High Court in Rakesh Nemkumar Porwal(supra) and the
circumstances in which these observations were made by the Court.
The Court was dealing with a situation where a complaint under
Section 138 the Act had been filed by the complainant within the
notice period of 15 days after dishonour as provided by the Section.
In this factual background, the real controversy that arose for
consideration was whether the complaint when filed was premature
or not. However, it appears that arguments were advanced on
various other issues, which strictly were not even required to be gone
into, to decide the primary issue arising in the case. The Court had
framed the following questions for its considerations:
Crl.M(C)1328.07 page 11 of 20“(a) Whether it is open to a complainant to invoke the
process of a criminal court alleging an offence under
section 138 of the Negotiable Instruments Act at any
point of time earlier to that as it prescribed in the
section and whether this infirmity is at all curable or
whether it is fatal to the prosecution ?
(b) What is the correct manner in which the time-frame
as is prescribed in sections 138 and 142 of the
Negotiable Instruments Act is required to be
computed ?
(c) Whether it would be open to the complainant, in the
course of proceedings under section 482 of the Code of
Criminal Procedure, to produce material before the
High Court for purposes of effectively amendings
statements or the factual position or as has happened
in the present case, the material date set out in the
complaint or conversely, whether the record of the
lower court is sacrosanct and cannot be altered at this
stage ?
(d) Is section 138 to be afforded restrictive application
by confining it to the narrow category of cases where
the rejection slip reads “insufficiency of funds” or was it
prescribed as an antidote for the malignant trade
practice of indiscriminately issuing cheques that are
dishonoured without any compunction, in other words,
would dishonour of a cheque attract criminal
consequences in the normal course ?”
13. The Court answered the first question against the
complainant, and held that the complaint was premature and liable to
be dismissed. Therefore, in my humble view, question(d) was not
required to be considered. The decision of the Court on question(d)
was, in my view an obiter dicta.
14. Even otherwise, the above extracted observations do not
seem to be in consonance with the clear and unambiguous language
of the Statute. Section 138 of the Act is a comprehensive provision. It
firstly creates the offence that defines the ingredients that must exist
Crl.M(C)1328.07 page 12 of 20for the offence to get completed and thereafter also prescribes the
punishment with which the offender can be punished. The Section is
divided into two parts. The first part deals with the essential
ingredients which constitute the offence. The second part is a proviso,
which lays down certain preconditions which must be fulfilled before
the Section can be applied. The essential preconditions found in the
main body of the Section cannot be obliterated by focussing only on
the preconditions laid down in the proviso, for the application of the
Section.
15. The Legislature, in its wisdom has cautiously not used
the expression “irrespective of the reasons for dishonour” and instead
has used the words “either because of the amount of money standing
to the credit of that account is insufficient to honour the cheque or
that it exceeds the amount arranged to be paid from that account by
an agreement made with that bank”.
16. The necessary ingredients of the offence have been
noticed by the Supreme Court in Kusum Ingots & Alloys Ltd V.
Pennar Peterson Securities Ltd., (2000) 2 SCC 745 and the same
read as follows: –
“(i) a person must have drawn a cheque on an
account maintained by him in a bank for
payment of a certain amount of money to
another person from out of that account for the
discharge of any debt or other liability;
(ii) that cheque has been presented to the bank
within a period of six months from the date on
which it is drawn or within the period of its
validity, whichever is earlier;
Crl.M(C)1328.07 page 13 of 20(iii) that cheque is returned by the bank unpaid,
either because the amount of money standing
to the credit is insufficient to honour the cheque
or that it exceeds the amount arranged to be
paid from that account by an agreement made
with the bank;
(iv) the payee or the holder in due course of the
cheque makes a demand for the payment of the
said amount of money by giving a notice in
writing, to the drawer of the cheque, within 15
days of the receipt of information by him from
the bank regarding the return of the cheque as
unpaid;
(v) the drawer of such cheque fails to make
payment of the said amount of money to the
payee or the holder in due course of the cheque
within 15 days of the receipt of the said notice.”
17. I may also refer to Section 140 of the Act, which states
that “It shall not be a defence in a prosecution for an offence under
section 138 that the drawer had no reason to believe when he issued
the cheque that the cheque may be dishonoured or presentment for
the reasons stated in that section.”(emphasis added). The
intention of the Parliament is, therefore, not to create the offence
under Section 138 of the Act in all cases of Dishonour of Cheque, but
only in such cases where the dishonour is “for reasons stated in that
Section.”
18. I am in respectful disagreement with the aforesaid view
of the Division Bench of the Bombay High Court. In my view one
cannot ignore the language used by the Parliament in the Statute and
stretch its meaning to such an extent as to obliterate the express
words used by the Parliament. Moreover, if this decision is understood
as laying down the correct law, then the same is irreconcilable with
Crl.M(C)1328.07 page 14 of 20the decision of the Supreme Court in Kusum Ingots(supra) wherein
the Supreme Court has held that proceedings under Section 138 read
with Section 142 of the Act would not lie where, before the date on
which the cheque was drawn or before expiry of the statutory period
of 15 days after notice, a restraint order of BIFR under Section 22A of
the SICA was passed against the company. In such a case it may
reasonably be said that the dishonouring of the cheque by the bank
and failure to make payment of the amount by the company and/or
its directors is for reasons beyond the control of the accused. This
Court has also held in M.L.Gupta & Anr. V. Ceat Financial
Services Ltd., 136(2007) DLT 308 that once the Company Court
passes an order for winding up of a company and appoints a
provisional liquidator, in respect of cheques which may have been
issued prior to the passing of such an order by the Court, which
became payable after the passing of the winding up orders, no
offence under Section 138 of the Act would be made out.
19. No doubt, the said provision has to be construed in a
meaningful way so as to advance the purpose for which it has been
enacted. However, the interpretation of the said section cannot be
stretched to such limits so as to render the drawer of a cheque liable
for penal action wherever the cheque has been returned by the bank
unpaid for whatever reason. It is well settled that penal Statutes
have to be construed strictly.
20. Chapter XVII of the Act is engrafted to discipline those
who discredit the system of making payment through cheques in
Crl.M(C)1328.07 page 15 of 20certain cases. While it creates legal sanction against the dishonour of
cheques and the subsequent failure to make payment in certain
circumstances, the objective of the said Chapter is not to provide a
remedy for recovery of the amount due. It is not that the payee or
the holder of the cheque in due course has no other remedy available
in law to enforce his claim. He has a remedy by way of filing a civil
suit, may be even a summary suit under Order 37 C.P.C to enforce his
claim independently. He may even initiate action for winding up u/s
433 of the Companies Act. Invariably, the dishonour of the cheque
may also involve the offence of cheating. Therefore, a complaint
under Section 420 IPC may also be maintainable.
21. The decision in Vinod Tanna (supra), in turn, relies upon
the decision of the Bombay High Court in Rakesh Nemkumar
Porwal (supra). Since I have expressed my disagreement with the
said decision, I do not feel persuaded to follow the decision of the
Bombay High Court in Vinod Tanna (supra). The decision of this
Court in Bishan Dayal (supra) has no application to the facts of the
present case. In Bishan Dayal (supra) the quashing petition had
been filed on the ground that the petitioner did not owe any amount
to the complainant. This Court held that it is not for the Court while
exercising jurisdiction u/s 482 of the Code to go into the veracity of
this assertion. As aforesaid, I am only concerned with the aforesaid
legal issue, and I am not going into the factual disputes between the
parties in the present case. The last decision relied upon by the
respondent is of the Supreme Court in D.Vinod Shivappa (supra).
Crl.M(C)1328.07 page 16 of 20The same has been cited to contend that the object of Section 138 of
the Act is to punish unscrupulous persons, who purport to discharge
their liabiity by issuing cheques without intending to do so which is
demonstrated by insufficient balance in account to discharge their
liability. In para 13 of the said decision, the Supreme Court held as
follows:-
“13. Section 138 of the Act was enacted to punish
those unscrupulous persons who purported to
discharge their liability by issuing cheques without
really intending to do so, which was
demonstrated by the fact that there was no
sufficient balance in the account to discharge
the liability. Apart from civil liability, a criminal
liability was imposed on such unscrupulous
drawers of cheques. The prosecution, however,
was made subject to certain conditions. With a
view to avoid unnecessary prosecution of an
honest drawer of a cheque, or to give an
opportunity to the drawer to make amends, the
proviso to Section 138 provides that after
dishonour of the cheque, the payee or the holder of
the cheque in due course must give a written
notice to the drawer to make good the payment.
The drawer is given 15 days time from date of
receipt of notice to make the payment, and only if
he fails to make the payment he may be
prosecuted. The object which the proviso seeks to
achieve is quite obvious. It may be that on account
of mistake of the bank, a cheque may be returned
despite the fact that there is sufficient balance in
the account from which the amount is to be paid.
In such a case if the drawer of the cheque is
prosecuted without notice, it would result in great
in-justice and hardship to an honest drawer. One
can also conceive of cases where a well
intentioned drawer may have inadvertently missed
to make necessary arrangements for reasons
beyond his control, even though he genuinely
intended to honour the cheque drawn by him. The
law treats such lapses induced by inadvertence or
negligence to be pardonable, provided the drawer
after notice makes amends and pays the amount
within the prescribed period. It is for this reason
that Clause (c) of proviso to Section 138 provides
Crl.M(C)1328.07 page 17 of 20that the section shall not apply unless the drawer
of the cheque fails to make the payment within 15
days of the receipt of the said notice. To repeat,
the proviso is meant to protect honest drawers
whose cheques may have been dishonoured for the
fault of others, or who may have genuinely wanted
to fulfil their promise but on account of
inadvertence or negligence failed to make
necessary arrangements for the payment of the
cheque. The proviso is not meant to protect
unscrupulous drawers who never intended to
honour the cheques issued by them, it being a part
of their modus operandi to cheat unsuspecting
persons.”(emphasis added).
22. A perusal of the above extract shows that the Supreme
Court consciously used the words “which was demonstrated by the
fact that there was no sufficient balance in the account to discharge
their liability”. This observation of the Supreme Court also reaffirms
my view that whatever be the reason for dishonour of the cheque, it
has to be co-related to the insufficiency of funds in the account or to
the lack of arrangement made by the drawer with his bank under an
agreement.
23. Turning to the facts of the present case, one finds that
the attachment by an order of the Court in this case was after the
alleged issuance of the cheque, but prior to its presentation for
encashment. The attachment of the bank account of the petitioner
had the effect of disabling the petitioner from operating or
maintaining the said account. The petitioner could not exercise his
right either to deposit into or withdraw from the said account. Even
if it were to be assumed for the sake of argument, that the cheque
was in fact issued in discharge of the petitioner’s liability owed to the
Crl.M(C)1328.07 page 18 of 20respondent, and that at the time of issuance of the cheque, he did not
have sufficient balance in the account, or an arrangement with his
banker, in case the bank account had not been attched under the
orders of a Court, nothing prevented the petitioner from either
depositing money in his account or entering into an agreement with
his bank to arrange for sufficient funds in the account, to be able to
honour the cheque in question by the date when the said cheque
could have been presented for payment at the earliest. This is so
because there was sufficient time gap i.e of nearly one year and eight
months between the date of alleged issue of cheque and the date of
its presentation. As held by the Hon’ble Supreme Court in Modi
Cements (supra), the issuance of the cheque without having
sufficient balance in the account of the drawer does not by itself
tantamount to the commission of an offence u/s 138 of the Act.
However, in the facts of this case, the petitioner could not have, even
if he would have so desired, either deposited funds in his account or
otherwise made arrangements for the payment of the cheque upon
its presentation by entering into an agreement with the bank, since
there was a Court attachment on the bank account of the drawer.
This Court attachment was by a Court ceased of the case arising out
of FIR No.283/2005 u/s 406/420/467/468/471 & 120-B IPC registered
with P.S. Connaught Place. The act of attachment of the bank
account of the drawer/petitioner cannot be said to be a voluntary act
of the drawer. It cannot be said that the petitioner contrived to have
the account attached only for the purpose of warding of the penal
consequences u/s 138 of the Act. It also cannot be said that after the
Crl.M(C)1328.07 page 19 of 20attachment of the bank account, the same was being maintained by
the petitioner. For an account to be maintained by an account holder,
it is essential that he is in a position to operate the said account by
either depositing monies therein or by withdrawing money therefrom.
He should be in a position to give effective instructions to his banker
with whom the account is maintained. However, in the present case,
once the account has been attached by an order of the Court, the said
account could not be operated by the petitioner. He could not have
issue any binding instructions to his banker, and the banker was not
obliged to honour any of his instructions in relation to the said
account, so long as the attachment under the court orders continued.
24. For all the aforesaid reasons, in my view, even if the
contents of the complaint are accepted in toto, no offence under
Section 138 of the Act can be said to have been committed against
the accused, this petition deserves to succeed. I, therefore, allow the
petition and quash the complaint filed by the respondent before the
learned Metropolitan Magistrate, New Delhi.
May 06, 2008 VIPIN SANGHI, J.
as
Crl.M(C)1328.07

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s