38.6c New Delhi, India, Monday, July 15, 2024
Judiciary

No liability under NI Act for dishonoured cheques of merged banks presented after validity period [Read Order]

By Saket Sourav      11 June, 2024 11:29 AM      0 Comments
No liability under NI Act for dishonoured cheques of merged banks presented after validity period

Allahabad: The Allahabad High Court has recently issued a significant ruling regarding cheque bounce cases involving merged bank accounts. The court held that dishonoured cheques from a bank that has undergone a merger cannot attract liability under Section 138 of the Negotiable Instruments Act, 1881.

The court was hearing an application seeking to quash criminal proceedings initiated against the petitioner in a complaint case under Section 138 of the Negotiable Instruments Act, 1881.

"If a cheque is presented after the validity period for cheques of a merged bank, dishonouring it will not attract liability under Section 138 of the NI Act," the court observed while allowing the application.

FACTS:

The case pertained to a cheque dated 02.06.2023, issued by Smt. Archana Singh Gautam from her account with the erstwhile Allahabad Bank. However, the Allahabad Bank had already merged with the Indian Bank on 01.04.2020. The cheque was presented to the Indian Bank on 21.08.2023 after the validity period for Allahabad Bank cheques had expired on 30.09.2021.

The Indian Bank dishonoured the cheque on 25.08.2023 with the endorsement "wrongly delivered, not drawn on us." After this, a complaint case was filed against her under Section 138 of the Negotiable Instruments Act in the court of the Special Judicial Magistrate-II, Banda.

ARGUMENTS:

The counsels appearing on behalf of the applicant argued that the cheque was invalid as it was issued from an account of the erstwhile Allahabad Bank, which had already merged with the Indian Bank. Therefore, dishonouring such an invalid cheque would not attract liability under Section 138 of the NI Act.

Also Read -  Demand Notice via courier valid in cheque bounce cases: Allahabad High Court [Read Order]

Per contra, the counsel appearing for the opposite party relied on the Supreme Court's judgment in NEPC Micon Ltd. v. Magma Leasing Ltd. and a Delhi High Court ruling in Sri Premanand Prusty v. Smt. Sita Devi to contend that an invalid cheque issued by a person is also covered under Section 138 of the Negotiable Instruments Act, 1881. 

Additionally, it was submitted that if the applicant was aware that the cheque in question had been declared invalid as the Allahabad Bank had already merged into the Indian Bank, then just to cheat the opposite party, such a cheque was issued. Therefore, they argued that the offence under Section 138 of the NI Act can be made out against the applicant.

DECISION:

The court, after hearing the submissions of both parties, referred to the provisions of Section 138 of the NI Act and observed:

"From the perusal of Section 138 of the NI Act, it is clear that if any invalid cheque is presented before the bank and the same is dishonoured, then no liability under Section 138 of the NI Act would be attracted, and the cheque of Allahabad Bank is invalid after 30.09.2021 following the merger of Allahabad Bank into Indian Bank on 01.04.2020. Therefore, dishonouring such cheques after 30.09.2021 will not attract liability under Section 138 of the NI Act."

Further, it also observed that the cheque in question, which was issued from the account maintained in the erstwhile Allahabad Bank after its merger with Indian Bank, was not a valid cheque on the date of presentation before Indian Bank as required by proviso (a) of Section 138 of the NI Act; therefore, dishonouring the same will not attract liability under Section 138 of the NI Act.

The court further stated, "This Court is also of the view that the above analogy will also be applicable to the cheques of all banks which had merged with other banks."

In conclusion, the court allowed the application and quashed the proceedings in the complaint case against the applicant. 

 

[Read Order]



Share this article:

About:

Legal Content Writer



Leave a feedback about this
Related Posts
View All

Ayodhya verdict: SC rules in favour of Ram Lalla, Sunni Waqf Board gets alternate land Ayodhya verdict: SC rules in favour of Ram Lalla, Sunni Waqf Board gets alternate land

SC bench led by CJI Ranjan Gogoi has allotted the dispute site to Ram Janmabhoomi Nyas, while directing the government to allot an alternate 5 acre land within Ayodhya to Sunni Waqf Board to build a mosque.

"No Loudspeakers For Azan, No Fundamental Right To Create Noise," Says Allahabad HC To Two Mosques [Read Judgment] "No Loudspeakers For Azan, No Fundamental Right To Create Noise," Says Allahabad HC To Two Mosques [Read Judgment]

Further reasoning of the court was based on consideration of the fact that a mixed population resides in that area, comprising Hindus and Muslims both, which lead to the tension between both the groups regarding the use of loudspeakers.

Allahabad High Court to Hear Ghazipur MP’s Plea against ‘Ban on Azaan’ Allahabad High Court to Hear Ghazipur MP’s Plea against ‘Ban on Azaan’

Hence, although an ongoing religious practice, the use of loudspeakers in the performance of Azaan remains a debatable question.

CBI failed to complete probe into Mathura’s 2016 Jawahar Bagh incident. HC to take up PIL by Ashwini Upadhyay CBI failed to complete probe into Mathura’s 2016 Jawahar Bagh incident. HC to take up PIL by Ashwini Upadhyay

NEW DELHI: The Allahabad High Court is scheduled to take up on Friday a plea filed by advocate Ashwini Kumar Upadhyay related to CBI probe into the infamous Jawahar Bagh incident of June 2, 2016, which the central investigating agency failed to complete even after 80 months of the order.

TRENDING NEWS


TOP STORIES

journalist-soumya-vishwanathan-murder-case-sc-issues-notice-to-4-convicts-on-appeal-by-delhi-police
Trending Crime, Police And Law
Journalist Soumya Vishwanathan murder case: SC issues notice to 4 convicts on appeal by Delhi police

SC issues notice to 4 convicts in Soumya Vishwanathan murder case on Delhi police's appeal against their bail. Convicts had served over 14 years.

09 July, 2024 09:49 AM
why-indian-high-courts-still-have-old-names-despite-change-in-city-name
Trending Judiciary
Why Indian High Courts still have old names despite change in city name ? [Watch Video]

Know the reasons why Indian High Courts, like Bombay HC, Madras HC, and Calcutta HC, Allahabad HC still retain their old names despite the cities’ name changes. LawStreet Journal delves into the historical and legal context. Watch report !

09 July, 2024 09:56 AM
what-is-keir-starmer-stance-on-kashmir-issue
Trending International
What is Keir Starmer’s stance on Kashmir issue ? [Watch Video]

Under Keir Starmer, the UK's Labour Party shifts its stance on Article 370, focusing on strategic ties with India, moving from past criticisms to cooperation.

09 July, 2024 10:04 AM
ed-moves-sc-against-jharkhand-hc-order-of-bail-to-cm-hemant-soren
Trending Judiciary
ED moves SC against Jharkhand HC order of bail to CM Hemant Soren

ED moves SC against Jharkhand HC's bail order for CM Hemant Soren in a money laundering case linked to an alleged land scam.

09 July, 2024 12:14 PM

ADVERTISEMENT


Join Group

Signup for Our Newsletter

Get Exclusive access to members only content by email