However, when the post-dated cheque retains the nature of a negotiable instrument bills of exchange then such post-dated cheque cannot be presented to the bank and subsequently the question of return or dishonour of cheque does not arise.
Instead, the complainant-payee of the cheque had presented the cheque for collection once again, which was dishonoured a second time for want of sufficient funds.
The aim of this post is delve upon the nature of a post-dated cheque, the importance of the intention of the parties while executing a contract and the circumstances in which dishonour of post-dated cheques will attract the penal provisions of law with reference to landmark case law.
When the present appeal first came up for hearing before a bench comprising Markandey Katju and B. In other words, this provision of law is hailed by the lenders whereas the borrowers dread it the most as the dishonour of cheques may lead to months of imprisonment. What is the object of sending notice.
That is precisely how the present appeal has come up for hearing before us. Thus, courts of such place would have the territorial jurisdiction to try the offence under the Act.
Then only he initiated proceedings under the Act. Companies should be aware of when their right to initiate action against a party commences or lapses under Indian law and this judgment provides clarity on the principles to be followed in computing the period of limitation.
Commission of Offence Relying on the decision in Harman, the Court held that the offence is committed when a cheque is drawn by an accused in discharge of debt or liability and such cheque is returned unpaid for insufficiency of funds or the amount exceeds the arrangement made with the bank.
If it appears that the obvious aim and object of the statutory provisions would be frustrated by accepting the literal construction suggested by the respondent, then it may be open to the Court to enquire whether an alternative construction which would serve the purpose of achieving the aim and object of the Act, is reasonably possible.
Pending Cases Having decided the issue of appropriate territorial jurisdiction, the Court considered the various options available in regard to the cases that are pending before the various Courts in India.
This was so recognised judicially also by this Court in Subodh S. Upon dishonor, the holder of cheque or some party thereto who remains liable thereon, must give notice that the instrument has been so dishonoured to all other parties whom the holders seeks to make severally liable and to some one of several parties whom he seeks to make jointly liable thereon.
Additionally, in a move that will have significant and far-reaching consequences, the Court also directed that pending cases in which the accused had not been properly served would be returned to the complainants for filing before the appropriate courts i.
ISSUE Acknowledging the fact that it had become commonplace for the courts to encounter a notice issued under Section of the Negotiable Instruments Act,from a place that had no connection with the accused or with any facet of the transaction, the Court stated that misemployment insofar as the choice of place of suing now calls for a stricter interpretation of the statute.
Drawing of the cheque; Presentation of the cheque to the bank; Returning the cheque unpaid by the drawee bank; Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount; Failure of the drawer to make payment within 15 days of the receipt of the notice.
There will also be a return of pending cases where recording of evidence has not yet begun. National Panasonic India Pvt.
Click to Login as an existing user or Register so you can print this article. The Statement of Objects and Reasons appended to the Amendment Bill, suggests that the introduction of this proviso was recommended by the Standing Committee on Finance and other representatives so as to provide discretion to the Court to waive the period of one month, which has been prescribed for taking cognizance of a case under the Act.
In the past, the Court had passed several decisions giving divergent views on the issue.
The Court held that: At that stage, it will not be a question of waiver of the right of the payee to prosecute the drawer but of absolution of the drawer of an offence, which stands already committed by him and which cannot be committed by him again. That necessarily means that for similar failure after service of fresh notice on subsequent dishonour, the drawer cannot be liable for any offence nor can the first offence be treated as non est so as to give the payee a right to file a complaint treating the second offence as the first one.
This will lead to procedural red-tape and further delays; Complaints where recording of evidence has commenced will continue where currently filed. It becomes payable only from the mentioned date on the face of the document, which is also known as the post-dated cheque validity. ISSUE Acknowledging the fact that it had become commonplace for the courts to encounter a notice issued under Section of the Negotiable Instruments Act,from a place that had no connection with the accused or with any facet of the transaction, the Court stated that misemployment insofar as the choice of place of suing now calls for a stricter interpretation of the statute.
What is happens when the addressee is not available at the time of delivery or premises remain locked. The matter was eventually brought up to this Court by special leave. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee.
It states that the payee or holder in due course of the cheque as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
The proviso thereto merely enlisted the conditions necessary for taking cognizance of the offence; If mere presentation of the cheque or issue of notice would bestow upon a court the territorial jurisdiction to try offences under Section of the Act, it would inevitably lead to harassment of the drawer.
Therefore, keeping in mind the essential elements of post-dated cheques, as elucidated above, it can be concluded that section of the Act, shall be attracted only when such post-dated cheque attains the nature of a cheque, i.
At the very outset, it must be understood that the nature of post-dated cheques is such that it acts as a two-fold weapon in the hands of the lenders by means of which they pressurise the borrowers as well as create a deterrent impact on all the other borrowers or debtors so that there is no room for default on repayment of outstanding debt to the creditors.
This Court has in a long line of decisions recognized purposive interpretation as a sound principle for the Courts to adopt while interpreting statutory provisions. Where a payee was able to establish that the inducement for accepting a cheque which subsequently was dishonoured had occurred where he resides or transacts business, he will not have to suffer the travails of journeying to the place where the cheque had been dishonoured.
It is needless to emphasize that the complaint must contain basic facts regarding the mode and manner of the issuance of notice to the drawer of the cheque. Dishonor of post-dated cheques: Supreme Court's latest judgment Post Dated Cheques (PDC) are the cheques that are to be drawn only on a future date.
PDC are. Trial of cheque dishonour pending for nearly a decade- Direction by Supreme Court that if the appellants file applications in terms of Section of the Code for dispensing with their personal attendance, the trial court will do to take note of the same and dispense with the personal attendance by stipulating conditions in terms of Section (2) of the Code.
Dishonour of cheque. Filing a complaint under Section of the Act. In this case, a 3-Judge bench of the Supreme Court had held that a cheque bouncing case can be filed only in a court which has the territorial jurisdiction over the place where the cheque is dishonoured by the bank on which it is drawn.
(2) LAW HERALD (SC) IN THE SUPREME COURT OF INDIA Before The Hon’ble Mr. Justice S.B. Sinha The Hon’ble Mr. Justice Markandey Katju Criminal Appeal No. Jan 14, · The Hon`ble Supreme Court of India has now held that all the criminal matters relating to dishonour of cheques would only be entertained by the court where the cheque was dishonoured.
India Litigation, Mediation & Arbitration Mansukhlal Hiralal & Company 14 Jan Supreme Court has held time and again that a cause of action for filing a complaint under section accrues to the drawee of a cheque only after a notice is issued to the drawer within the prescribed period after receipt of information by him regarding the dishonour of cheque and the subsequent failure of the drawer to make the cheque payment.Dihonour of cheque supreme court of