The Presumption under Section 139 of NI Act : The Law
S.139
It shall be presumed, unless
the Contrary is proved, that the holder of a cheque received the cheque of the
nature referred to in section 138 for the discharge, in whole or in part, or
any debt or other liability.
For easy understanding relevant
part of S.118 is also reproduced below.
S.118
Until the contrary
is proved, the following presumptions shall be made:-
(a) of
consideration-that every negotiable instrument was made or drawn for
consideration, and that every such instrument, when it has been accepted,
indorsed, negotiated or transferred, was accepted, indorsed, negotiated or
transferred for consideration;
Both these presumptions are rebuttable.
The present
interpretation: The Incorrect view
That if the signature is admitted or proved, then there is
not much onus on the complainant to prove the liability, he need not prove the existence of facts behind the liability, it
is up to the accused to disprove the liability. The cheque is taken as the
acknowledgement or the proof of legally enforceable debt in support of
complainant. If the accused fails to disprove, a thing which is not even proved
by complainant, then he is convicted. This interpretation is illegal,
absolutely incorrect, and perverse, we all will be embarrassed but we must set
it right.
I need not mention any specific order of Hon Apex Court or
Hon High Courts across India, but this is how almost all the courts in India
are interpreting this section, except Kerala High Court.
The Correct view : The
intent of legislature
1. That the cheque is issued to clear any debt or liability,
in whole or in part.
2. This presumption is given to Holder only.
Let me explain
A cheque can be issued
by the drawer A to the payee B for following purpose.
1. For any single debt or liability.
2. For clubbing
multiple liabilities on A (of B)
3. For a single liability even though multiple liabilities
are existing.
2. For Gift.
3. To disburse a loan.
4. For security.
5. For some advance payment.
6. For some margin money to stock broker.
7. For some Earnest Money to participate in some commercial
activity.
8. For Charity.
This list is not exhaustive, but what it says that a cheque
can be issued for many purposes, so the legislature has just frozen the purpose
of the cheque that it was received by the Holder to clear any debt or
liability, or for consideration. If this presumption is not there, then
prosecution can never nail the drawer, simply because the drawer can say that
he issued this cheque for Gift or for loan or for charity.
But the courts of India, think that this presumption of liability is much more than the purpose, this
is beyond the jurisdiction of the courts, because legislation does not say so,
it is sinful even to think that this presumption is about truthfulness of existence
of facts behind the liability. Once the presumption is not about the existence
of facts behind the liability, accused cannot be asked to rebut, unless
prosecution first proves the liability attached by them.
If we take the amount aspect then it is illegal even to think
that there could be any presumption with respect to amount of liability in
criminal case. It is against the natural justice and against the well
established principle of innocent till proven guilty, to even ask the accused
to prove his innocence, so if we interpret that the presumption is with respect
to the amount on the cheque, then a considerably heavy onus is present on the
accused to disprove it, thus leading to helpless conviction of accused, why
helpless, simply because court is bound to draw the presumption, and since
accused failed to disprove it, so court is equally helpless but to convict. No
one gets convicted for being not able to disprove something, that thing has to
be proved first, the well established principle that the prosecution must prove
the guilt of accused beyond doubt goes to toss, if we follow the principle that
it is accused who has to prove his innocence.
S.20 of the NI Act suggests that if an
inchoate instrument is filled up by the possessor, then the amount must be
justified by him. It is the different thing that S.20 is not applicable on
cheques, simply because cheque is not a stamped instrument. Justification of
the amount means he has to prove the existence of facts behind the liability
attached.
S.43 of NI Act talks of possibility of failed consideration, even
after the instrument is drawn for any money consideration/liability, onus
cannot be only on accused to prove the part or full failure of consideration,
simply because complainant may not come forward with the liability evidence in
his possession.
S.44 of NI Act talks of partial absence of money consideration even
after drawn and
S.45 of the said act talks of partial failure of non money
consideration.
S.209 of IPC talks of offense for claiming more money then due.
S.208 and S.210 of IPC talks of accepting a decree of more money than due.
So there cannot be any question of any kind of positive
presumption with respect to amount of money, the amount of money due has to be
proved by the prosecution. In fact as recorded by Hon Apex Court in Mandvi
Cooperative bank vs Nimesh Thakur case even the
minister has cleary stated that if the person does not come forward to
clear his dues, after his cheque gets dishonored, then he is liable for
criminal prosecution. The intent of the parliament is not at all there that the
cheque is the conclusive proof of existence of truthful liability and
complainant is not required to do anything. It has just stated that the cheque
is received for some liability.
The Most astounding argument against the prevalent interpretation
The law commission in its 11th
Report on Negotiable Instrument Act as back as 26th Sep 1958
proposed to the legislature an amendment in the definition of word “Holder” as
follows, after extensive deliberation..
Page #74 of the said report
recommends:
“Holder means payee or endorsee of an instrument, who is in possession
of the instrument or the bearer thereof but does not include a beneficial owner
claiming through a benamidar.”
This was the definition proposed
by the law commission, but honorable legislature in its wisdom apparently did
not heed to this proposal by law commission and insisted with the prevalent
definition which is applicable even now, that is,
S.8.
Holder
The “holder” of a promissory note, bill of exchange or cheque
means any person entitled in his own name to the possession thereof and to
receive or recover the amount due thereon from the parties thereto.
There is absolutely no
jurisdiction with the honorable courts to presume or proceed with the fact that
the complainant or the payee is the holder. The courts have unwittingly usurped
the role of legislature in this case. Unfortunately the Hon courts feel that
the word Holder used in S.139 is a plain vanilla use meaning just the possessor,
or complainant or payee.
On the literal footing, the court does not have the right to
interpret the law differently if the meaning is clear, once the legislature
says that presumption is available to Holder, not to payee, then there is no
right with the courts to give benefit of presumption to payee or complainant,
without him first proving that he is the Holder. If Hon court starts equating
the payee or complainant with Holder, then there was no need for legislature to
define holder in S.8 of the NI Act. As
per derived and acceptable definition, complainant is the person who is
examined under S.200 CrPC, payee is the person whose name is mentioned in the
cheque, he can be a fraudster a prospective offender as per various IPC
sections as discussed below, but holder is person who is entitled to receive
the cheque in his name for dues. No law gives any power to Hon courts to
presume that complainant or payee is the holder, he has to first demonstrate
that he is the Holder.
It is sad that courts all over India are mechanically
insisting the accused to disprove the liability without even first asking the
complainant to prove his entitlement. Shocking part is complainant may not
succeed in civil case but he may succeed in getting conviction. What a travesty
and murder of fundamental right of liberty. What a comedy that people are facing
the risk of being convicted because they failed to disprove the presumption
supported liability. The court must understand that the presumption is about
whatever liability type the complainant comes forward with, not about the veracity
of the liability as such.
Example 1
A and B collude together and A issues the cheque for X
Amount, which gets dishonored, B files the complaint under S.138, and without
proving the liability gets the benefit of presumption under S.139, now both A
and B enact the drama of compounding under S.147 of NI Act, matter closed, but
in principle A has violated IPC S.208 and S.210 and B has violated IPC S.209.
So, if rightly B is asked to prove the entitlement to become
the Holder, before presumption can be granted to him, surely he would fail and
lawfully both A and B can be prosecuted under IPC S.208, S.209 and S.210 if
required.
Example 2
There are numerous illustrations in IPC, take for example
S.403 of IPC illustration (Misappropriation)
A finds a cheque payable to
bearer. He can form no conjecture as to the person who has lost the cheque. But
the name of the person, who has drawn the cheque, appears. A knows that this person can direct him to the person
in whose favour the cheque was drawn. A appropriates the cheque without
attempting to discover the owner. He is guilty of an offence under this
section.
What will happen to A under negotiable Instrument Act, he
will deposit the cheque on his name, if gets bounced, then will institute a
complaint under S.138 of NI Act, and he will only say that out of friendly loan
he got this cheque, since he is not required to prove the liability. The poor
drawer has to not only disprove the liability (which even Supreme Court
acknowledges that is not a simple task), but he also has to undergo a very
rigorous trial because presumption is against him as he is the drawer.
The practical problem is that it is not so simple to prove
that the drawer lost the cheque, the another danger is that dishonest drawer,
after issuing the cheque for legal liability can rush to the police station and
file a cheque lost complaint, thus saving himself from prosecution under S.138.
This all can be avoided if A is required to prove the
entitlement first, which is the correct interpretation of the law under S.139,
once the entitlement is proved by A, then he becomes the holder and whatever
liability he attaches with this cheque shall be presumed by the court, now the
drawer cannot simply say that he lost the cheque, he has to prove with cogent
evidence. This again emphasizes the fact
that presumption is with respect to whatever liability A attaches in his
complaint, nothing more or nothing less.
Example 3
S.101 of the Indian Evidence Act is reproduced below..
101. Burden of proof.-Whoever desires any Court to give judgment as to
any legal right or liability dependent on the existence of facts which he
asserts, must prove that those facts exist.
This section signifies that the liability or legal right is
made up of existence of many facts. These facts will have to be proved by the
complainant to get the benefit of presumption. The presence of dishonored
cheque cannot prove the existence of these facts behind the liability. At
present if the execution is proved or admitted the Hon courts grant the
presumption to the complainant that liability was present, this is in clear
violation of above section.
Example 4
Let us consider that A issues a cheque in favor of Share
Broker B as margin money for his future trades, this cheque bounces, B after
following the statutory procedure files a complaint against A under S.138. Under this circumstance it will be
unfathomable how A can prove that there is no liability on him, poor fellow is
stuck, the law or judiciary cannot be so unrealistic or cannot create such
harsh condition for accused. The right interpretation of S.139, that is if B is
able to bring on record the evidence or existence of facts, with respect to the
liability, then B becomes the Holder and he gets the presumption that yes
cheque was indeed issued to clear this liability only. Now A is required to
either disprove that in fact the facts as brought on record by A are false or
he can also prove by cogent evidence that the cheque was not issued to clear
the liability but was issued as a margin money for trades.
Without positive evidence with respect to existence of facts
creating liability on drawer, the presumption cannot be given to complainant
and drawer cannot be asked to disprove the liability.
Example 5
IPC S.415 C (Illustration)
(h) A intentionally deceives Z into a belief that A has performed A's
part of a contract made with Z, which he has not performed, and There by
dishonestly induces Z to pay money. A
cheats.
Suppose Z, innocently issues a cheque fully trusting A, but
just before the cheque is encashed, he realizes and ensures its dishonor by
stop payment, Z is still doomed, because A will say that for so and so contract
(or for so and so friendly loan or some other ghost story) Z issued the cheque,
and A gets the presumption benefit. Now expecting Z to first prove that there
was no liability or consideration failed is again a very harsh condition, But
if A is asked to prove the liability first (the facts constituting the
liability), then A becomes the holder and he gets the benefit, once A becomes
the holder, now Z has to disprove the case of A, Z cannot simply say without
legally admissible evidence that cheque was issued for some Gift or for some
other liability or there is no liability. This is perfectly valid
interpretation of law and violates nothing.
Example 6
463. Forgery.--Whoever makes any false document or part of a Document
with intent to cause damage or injury, to the public or to any person, or to
support any claim or title, or to cause any person to part with property, or to
enter into any express or implied contract, or with intent to commit fraud or
that fraud may be committed, commits forgery……..
(c) A picks up a cheque on a banker signed by B, payable to bearer,
but without any sum having been inserted in the cheque. A fraudulently fills up
the cheque by inserting the sum of ten thousand rupees. A commits forgery.
This is quite in conflict with respect to present
interpretation of presumption under S.139.
In case the cheque gets dishonored, A is just required to proceed with a
complaint case under S.138 of NI Act, and he can state any cock and bull story
about liability, now the poor drawer has to prove that he has bloody no
business with A. How can B do? At the best B can be termed as negligent person
in securing his property, which is no crime. But if rightly “A” is asked to
prove the entitlement first by bringing some evidence, then he becomes the
Holder and gets the presumption that in fact this cheque was issued by B to
clear this liability only, once A proves the liability which he asserts in his
complaint, then B cannot take any defense which cannot be proved by him, he has
to either disprove the liability or he has to prove that in fact the said
cheque was lost and not issued by him voluntarily, or given to clear some other
liability. If A fails the the hon court may prosecute A for forgery.
Example 7
S.72 of The Indian Contract Act
72. Liability of person to whom money is paid or thing delivered by
mistake or under coercion.-A person to whom money has been paid, or anything
delivered, by mistake or under coercion, must repay or return it.
If the money is paid by cheque, the present interpretation of
S.139 may make such person, the king, rendering the above section at least
partially useless. Why partially because it is proved beyond doubt that by
nature not all human beings are honest creatures. How can the person who issued
the payment in the form of cheque prove that he issued the cheque by mistake?
This ridiculous situation will not arise if the claimant is asked to come
forward with the proof of his story, then he becomes the Holder and gets the
benefit of presumption.
Illustration under S.72 of the Indian Contract Act
(a) A and B jointly owe 100 rupees to C. A alone pays the amount to C,
and B, not knowing this fact, pays 100 rupees over again to C. C is bound to
repay the amount to B.
Now let us presume that transactions between B to C took
place by cheque, then before C could deposit the mistaken cheque of B to Bank,
the drawer B gives the stop payment instruction. Now C, an ordinary fallible
fellow, after following statutory requirement, files a complaint under S.138 of
NI Act and lo behold he gets the benefit of presumption, the presumption is
further re-enforced as honest B, also admits that he issued the cheque by
mistake, but unfortunately he has no means to prove the mistake, as C has come
forward with some other cock and bull story of friendly loan. But rightly if C
is asked to prove the liability arising out of his claim, then things will be
as per law, fair and just.
Example 8
S.59 of The Indian Contract Act
59. Application of payment where debt to be discharged is indicated.-Where
a debtor, owing several distinct debts to one person, makes a payment to him,
either with express intimation, or under circumstances implying that the
payment is to be applied to the discharge of some particular debt, the payment,
if accepted, must be applied accordingly.
No
other section can explain the need of presumption under S.139, then this. In
general in criminal trials, accused is not required to do anything, it is the
prosecution which is required to prove the guilt to hilt, that is without any
shreds of doubt. Now if there are multiple debts, if presumption is absent,
then that nagging doubt will remain, that the cheque was issued for debt A not
for debt B as alleged by complainant. Accused will maintain his silence, and it
will be very onerous now on complainant to prove that the cheque was indeed
issued for debt B only as claimed by him and not for debt A. So the presumption
is with respect to distinctness of the debt, whatever Debt A or Debt B or Debt
C as alleged, but the presumption is not about existence and truthfulness of
that debt. That debt must be proved by complainant then only he becomes the
holder and gets the presumption, now accused cannot say that it was issued for
some other debt X, Y Z.
A further prodding of S.118 or S.139 confirms that nowhere
the amount is part of presumption, the S.118 presumption is that the cheque is
drawn for some consideration, the S.139 adds to whom this presumption is given,
both these sections do not talk about amount part.
Then what does this S.139/S.118 talk about ? What is this
presumption all about?
To understand it better we will further see what will happen
in the court in absence of S.118/S.139. In absence of this presumption, the
accused can simply say that the cheque was issued as a Gift or present on the
birthday, accused is safe on a quite forceful defense. In this case prosecution
will have one additional burden of proving that the cheque was issued for some
consideration/debt. Because it cannot be ruled out beyond doubt that even while
having a bonafide liability a drawer cannot still issue a cheque to such person
for Gift on his birthday. So prosecution can never show that the cheque was not
issued against Gift but it was issued against liability, thus making the entire
statute dud.
So, by introducing S.139 the legislature just frozen one
aspect in favor of prosecution, that is whatever type of liability prosecution
attaches to the cheque, it shall be presumed that the cheque was drawn to clear
that liability, but then the amount and
the facts behind the liability must be proved by the prosecution. So in all
such cases purpose of cheque is fixed, complainant will always come with this
averment that cheque was issued to clear some existing liability, the
presumption just freezes the liability attached to the cheque. The accused is
at liberty to prove that the cheque was issued as Gift or for some different
liability or the liability attached by prosecution stands fully or partially
settled, and then the case fails.
Example 9
Suppose X has taken Scooter Loan, Car Loan and Home Loan from
Y. Now X has settled his Scooter Loan and Car Loan but failed to repay the Home
Loan and Y used a cheque lying with him and gets the same dishonored and files
the complaint.
In this case, Y shall be required
1. To prove the liability dues on account of Home Loan.
2. Once the same is proved, the court shall presume that the
cheque was issued to settle this liability against Home Loan.
The accused shall be at liberty to prove any or all of
followings:
1. The cheque was issued for Scooter Loan or Car Loan, not
for home Loan. If he succeeds, he is free.
2. The accused can prove that the liability amount as proved
by complainant is less than what is stated on the cheque and asked. He is free.
3. Even otherwise accused can prove that the cheque was
issued six months prior to date of dishonor.
What accused cannot say without evidence is that it was
issued for car Loan or scooter loan, but nonetheless it does not give any
presumption to the complainant on the truthfulness of the loan amount, this
aspects will have to be proved by the prosecution, court will just grant the
presumption to the type of liability asserted by the prosecution, that too when
the complainant proves himself to be the Holder by proving the entitlement.
Court cannot ask the accused, that, complainant has stated that you had issued
the cheque to settle this outstanding dues against Home Loan, so disprove it.
How absurd and anti fair play? Accused can only be asked to disprove once it is
proved by complainant.
Example 10
Another tremendously simple example
X, a dishonest trader, promises to sell, some commodity to Y,
but insists for advance payment. Y, a simple and trustworthy man, issues the
cheque but does not receive the material but realizes the dishonest intent of X
and gives stop payment instruction to his Bank. On dishonor, X, after statutory
formalities approaches the court and files the complaint against Y, stating
that for the supply of so and so material he has received the cheque, and the
court grants him the presumption and now asks the Y to disprove. How can Y do so? I challenge any or
all of the Hon judges and magistrates to come forward and disprove the claim of
X, in the light of present understanding of presumption under S.139. It cannot
be done. But if rightly X is asked to prove the liability and the amount
attached with it, then Y has no escape till he proves the contrary.
Example 11
Another simple example, any state or central government or
PSU cheque gets misplaced in connivance with some dishonest employee, this
cheque goes in the hands of some unscrupulous person A and gets dishonored on
account of signature mismatch (now brought under S.138), then it is ridiculous
to ask such institution to disprove the only presumption supported claim
of A. But rightly if A is asked to prove
the liability and he proves it, then even government will not have any problem.
The statute merely gives presumption to the specific purpose
of the cheque, the presumption just links the cheque with type of liability
averred by complainant, nothing more, nothing less. One cannot be convicted
without proof of liability in toto. It will be nothing but shear injustice.
The people can say that this kind of proposed interpretation
will defeat the very purpose of statue. Such people are vastly mistaken for the
simple reason, where is the need and jurisdiction for alternative
interpretation when the statute itself says that presumption is available to
holder only, not to any one else. After the enactment of S.138 onwards, only assistance
is given to the complainant that the cheque is issued for some legally
enforceable debt or liability, the accused cannot say when confronted with
established liability that he issued the cheque for gift or for some other
liability. As stated earlier if the S.139 is not present, then even if
complainant proves the liability, then also accused can claim that the cheque
was issued for Gift. Then it becomes
very difficult for prosecution to disprove this, simply because of existence of
Gift cheque cannot be ruled out even when liability exists.
Moreover can this right interpretation frustrate the
intention of parliament? Parliament has not given any presumption whatsoever to
payee or complainant, the presumption is given to Holder, which is much more
than possessor. Neither the presumption is given under S.139 for the truthfulness
of amount. And in fact no substantial benefit goes to accused if complainant is
first asked to prove his entitlement for whatever liability he asserts. Once the complainant proves the entitlement,
the existence of facts behind liability as per S.101 of The Indian Evidence
Act, he gets the presumption that yes, the cheque was issued for this liability
only.
Summary
So the presumption
under S.139 is available to the complainant or payee, if he can demonstrate
that he is the Holder, for that he has to prove the facts behind the existence
of liability first.
Other orders by Hon SC, possibly driven with the intent to
tighten the situation against drawers, but we must realize that in order to
give respectability to an instrument called cheque, millions of people cannot
be made accused, and moreover the prevalent criminal jurisprudence cannot be
taken lightly or cannot be given a short shrift in the zeal to curb the menace
called cheque bounce.
1. The competence of
complainant: MMTC order is questionable.
It violates S.200 of The Indian Contract Act. The Hon apex court
when rules in MMTC Ltd. and Anr. v. Medchi Chemical Pharma that the jurist
company can send any body subsequently with proper authorization, even if no
authorization was present at the time of complaint, straight away violates
S.200 of The Indian Contract Act. S.200 does not grant any powers to the Hon
courts to regularize the acts of a person done without proper authority of the
competent person. The argument of the
court that anybody can move the criminal law in motion is also not of any help,
for the simple reason that the legislature can always define the competence of
a person who can set the criminal law in motion. Once the mandatory time bar
and the competence of complainant is defined in the statute, then the courts
have no jurisdiction to come up with any excuse to circumvent the same. The
competence must be existent at the time of filing of complaint, period.
2. Date of drawn of PDC
It cannot be the date which a PDC bears. It is the date on
which the PDC was made or delivered. The Supreme Court order in Anil Kumar Sawhney vs Gulshan Rai on 11 October,
1993 that a PDC is a
Bill of Exchange till the date which it bears and becomes the cheque on that
date and the six months period must be calculated from the date on the PDC, I
am sure, is decided without considering S.68 of The Indian Stamp Act.
I will not comment about illegality of a PDC by referring to
S.68 of The Indian Stamp Act, but this section and S.46 of the NI Act,
conclusively defines the date of drawn, so S.138(a) the date of dishonor within
6 months of date of drawn must be seen in this light. Supreme Court has
unwittingly taken away this defense from drawer, no court of law has any power
or right to take away the defense of any accused person. S.46 alone must be
honored in conjunction with S.138(a) in absence of any new consent by drawer,
where is the need for Hon courts to register the complaint if the S.138 itself
is not applicable. It is quite disturbing that applicability is decided during
or at the conclusion of the trial while it should be decided at the threshold
itself.
3. General Power of Attorney
aspect
Small 3 Section Act, has thousands of orders by Hon SC and
various High Courts, still confusion.
All confusion can be settled if courts clarify as follows:
1. Anybody can authorize anybody to be the complainant, the
person behind the complaint. This person can give evidence in his personal
capacity not on behalf of actual aggrieved person.
2. To give evidence on behalf of some natural person (like
individual or proprietorship firm) for certain transactions, then such person
must have a valid registered GPA at the time of transaction for doing such
transaction. Nobody can be given GPA/SPA at the time of filing of case to give
evidence on behalf of some natural person if they had no GPA for the
transaction. Managers or employees or relatives cannot give evidence on behalf
of some one if having no GPA for the transaction in question. That natural
person must give evidence for himself in absence of any GPA to carry out those
transactions.
3. For non natural complainants like companies or association
of people, anybody can be authorized under a simple registered SPA to become
the complainant, along with few witnesses who have witnessed the transactions.
There cannot be any question of giving evidence on behalf of a non-jurist complainant;
all the witnesses are giving evidence in their personal capacity, or from the
record. The evidence must be admissible and proved as per The Indian Evidence
Act.
It is absurd even to think that X can give evidence on behalf
of Y. A GPA holder is a de facto Y for the transactions GPA holder carried out
after he received the GPA for the said transaction. So a GPA holder of a
natural person (individual or proprietor) is defecto that person after he has
received the GPA. For non jurist persons there is no question of giving
evidence on behalf of non jurist person, all those who have witnessed the
transaction can be competent witness with or without the record.
4. Jurisdiction Aspect
This calls for re-look simply because accused are coming from
Kanyakumari to Delhi. In the present computer era, a big company who has head
office and legal team situated in Mumbai, but carrying out local transactions
with the local sales office in some remote corner of India, can harass the
drawer with Mumbai jurisdiction. Despite a very good analysed order of Hon Apex
Court in M/S. Harman Electronics
(P) Ltd. & ... vs M/S. National Panasonic India Ltd on 12 December, 2008 an old order of
Hon Apex court in K.
Bhaskaran vs Sankaran Vaidhyan Balan And Anr on 29 September, 1999 is cited. This order of
K Bhaskaran is absolutely against equality and natural justice and calls for an
immediate re look.
5. Compounding order
The Hon SC has fixed some arbitrary compounding charges for
various stages including appeal stage at SC level in Damodar S.Prabhu vs Sayed Babalal H on 3 May, 2010. In Para # 15 of the said order the
Hon SC issued certain guidelines, the guidelines as enumerated in 15 (a) and 15
(b) looks proper and fair but certainly not 15(c) and 15(d). Once the accused
is convicted, it cannot be compounded. Compounding can only be during any stage
before the final order is pronounced by the trial court. A convicted person,
who is about to go to jail, can easily, be blackmailed by complainant to do
almost anything. It is also not fair to accept the convict’s proposal of
compounding at SC level, if complainant objects.
6. Cheque issued at the
time of Loan disbursement
a. Must fail instantly if date of receipt of cheque by payee
is more than 6 months from the date of dishonor.
It is abundantly
evident that such cheques are being used as collateral security due to apparent
harshness of S.138. A person who gives loan must be prudent enough to take some
proper collateral security in the form of gold or property as mortgage, he
cannot use the cheque as the security.
7. Banks or NBFC filing
cases even though they have mortgage property under their control
This is illegal, if they have a property of drawer as
mortgaged to them, then as per law, they must re claim their dues by the proper
recovery mechanism. They cannot arm twist the drawer while holding his asset in
their pocket.
8. Un-registered
partnership firm
They cannot file the civil suit, but they can certainly file
the case under S.138 of NI Act? After
all a cheque bounce is a kind of regulatory offense, quasi civil and moreover
why this indulgence is given to unregistered partnership firm? They must
register, they must pay revenue to the government, they must be transparent in
their constitution, then only they be allowed to file any case arising out of
regulatory offense.
9. Blank Cheque
When S.20 of the NI Act is not applicable on cheques, then
which law gives prima facie authority to the possessor of the cheque to fill up
the blanks? And a blank cheque with no amount is a no cheque at all.
10. And Adalat Prasad
I wonder if the Hon trial court has any power to send the
reference to Hon Session court or to Hon high court for quashing of complaint
after cognizance is taken and it is found suo moto or otherwise that in fact
cognizance was a mistaken.
The order of Hon SC in Adalat Prasad v. Roop Lal Jindal is perfectly fine that the trial court
magistrate cannot go back one step and quash the complaint once the cognizance
is taken, but the remedy suggested in such case is very harsh and unjust
that a person who is mistakenly summoned must rush to HC under S.482 CrPC, he should be allowed to
test the waters at trial court level by filing discharge application, which if
the trial court magistrate finds reasonable then he can refer to session court
or to HC as per law for quash. A similar order of jurisdictional High Court or
the Hon Apex court can be cited for discharge. The point is accused may not
have resources or will power to go to HC under S.482, the counsel may misguide
the accused about possible back lash if HC dismisses the petition, the
magistrate may continue mechanically even if he comes to know on his own that
indeed cognizance was defective, so the Hon SC must issue the guidelines that
magistrate either suo moto or on application of accused can send the reference
to Session Court or HC for quash. This will be perfectly fine because no
litigant should suffer for the mistakes of the courts.
Finally it is apparent that even the Hon Law Commission
thinks that cheque bounce cases are petty and not so serious, then where is the
needs for Hon courts to make it so complex, why courts are taking minimum five
years to settle such petty cases, there is a plethora of wisdom available in
the orders of Hon Apex Court and various High Courts on almost all the aspects
of cheque bounce, why cannot the same be channelized and a comprehensive
guideline made, where is the need for magistrate to keep conducting the trial
in most mechanical manner.
Idea is to increase the acceptability of cheque, not to send
people to jail. Dishonest drawer must fear, but equally important is that
dishonest possessor must also fear.
