Himachal Pradesh High Court
Reserved On: 26.09.2024 vs Khajan Singh on 21 October, 2024
2024:HHC:9988 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Criminal Revision No. 367 of 2024 Reserved on: 26.09.2024 Date of Decision: 21.10.2024 Virender Singh Dhanta ....Petitioner Versus Khajan Singh ....Respondent Coram Hon'ble Mr Justice Rakesh Kainthla, Judge. Whether approved for reporting? Yes For the Petitioner : Mr. N.S. Chandel, Senior Advocate with Mr. Vinod Kumar Gupta, Advocates.
For the Respondent : Mr. Bhupinder Singh, Advocate. Rakesh Kainthla,Judge The present revision is directed against the judgment dated 24.05.2024 passed by learned Additional Sessions Judge-I, Shimla, District Shimla, H.P. (learned Appellate Court) vide which judgment of conviction dated 09.06.2023 and order of sentence dated 16.06.2023 passed by learned Judicial Magistrate First Class, Chopal, District Shimla, H.P. (learned Trial Court) were upheld. (Parties shall hereinafter be referred to in the same Whether reporters of the local papers may be allowed to see the judgment? Yes 2 2024:HHC:9988 manner as they were arrayed before the learned Trial Court for convenience).
2. Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint before the learned Trial Court for the commission of an offence punishable under Section 138 of the Negotiable Instruments Act (N.I.Act). It was asserted that the accused is working as a Fruits and vegetables commission agent under the name and title of Dhanta Fruit Traders (D.F.T), Shop No. 33, Fruit Mandi, Parala Sainj, District Shimla, H.P. The complainant sent apple boxes for sale to the shop of the accused on 29.08.2017. The accused sold the apple boxes for ₹2,26,436/- and issued a cheque drawn on ICICI Bank, Theog Branch to discharge his legal liability. The complainant presented the cheque for its collection on 17.01.2018; however, the same was dishonoured on 23.01.2018. The complainant issued a legal notice to the accused asking him to pay the amount within 15 days from the date of the receipt of the notice. However, the accused failed to pay the amount. The notice issued to the complainant was also not served but was returned with an endorsement of unclaimed. Hence, the 3 2024:HHC:9988 complaint was filed against the accused for taking action against him as per law.
3. The learned Trial Court found sufficient reasons to summon the accused and when the accused appeared, a notice of accusation was put to him for the commission of an offence punishable under Section 138 of the N.I.Act. The accused pleaded not guilty and claimed to be tried.
4. The complainant examined himself (CW-1) and Vishal Chaudhary (CW-2) to prove his case.
5. The accused in his statement recorded under Section 313 of Cr.P.C. denied the case of the complainant in its entirety. He stated that he was innocent and wanted to lead defence evidence. He examined Jai Chand Chandel (DW-1) in his defence.
6. Learned Trial Court held that there is a presumption under Section 139 of the N.I. Act regarding the consideration. The accused has to rebut the presumption. The statement of the complainant proved that he had sent the apple boxes to the accused. It was corroborated by the statement of DW-1, who stated that the licence was issued to Dhanta Fruit Traders (DFT). 4
2024:HHC:9988 The accused did not dispute his signatures on the cheque and presumption of consdeiration applied. There was no material to rebut the presumption and the suggestion made to the complainant does not amount to any proof. The cheque was presented within three months from the date of issuance viz 21.10.2017 and was dishonoured for the reason of instrument out dated/stale on 23.01.2018. The demand notice was issued on 03.02.2018 and the complaint was filed within the statutory period. All the ingredients of Section 138 of the N.I.Act were duly satisfied. Hence, the accused was convicted for the commission of an offence punishable under Section 138 of N.I.Act and sentence to undergo simple imprisonment for six months and to pay compensation double of the cheque amount viz total ₹4,52,872/- for the commission of the aforesaid offence and in default of payment of compensation to undergo simple imprisonment for six months.
7. Being aggrieved from the judgment passed by the learned Trial Court, the accused filed an appeal which was decided by the learned Additional Sessions Judge-I, Shimla H.P. (learned Appellate Court). Learned Appellate Court held that the 5 2024:HHC:9988 complaint was filed against the accused in his capacity as a proprietor of the concern. There is no distinction between a proprietorship concern and the person. The cheque carried with it a presumption of consideration and the accused failed to rebut the presumption. The accused had failed to pay the amount within fifteen days from the date of his appearance. Hence, the learned Trial Court rightly convicted and sentence the accused. No interference was required with the judgment and order passed by the learned Trial Court. Hence, the appeal was dismissed.
8. Being aggrieved from the judgments and order passed by the learned Courts below,the accused has filed the present revision asserting that learned Courts below erred in appreciating the material placed before them. The complainant had failed to prove that the cheque was issued in the discharge of his debt or legal liability. The complaint was barred by limitation. The Firm was not impleaded as a party and the accused could not be held liable. Jai Chand Chandel (DW-1) deposed that the shop was allotted to one Govind, which showed that the plea of the complainant that the accused was running 6 2024:HHC:9988 the shop was incorrect. The notice was never served upon the accused and this aspect was overlooked by the learned Courts below. Therefore, it was prayed that the present revision petition be allowed and the judgments and orders passed by the learned Courts below be set aside.
9. I have heard Mr. N.S. Chandel, Senior Counsel instructed by Mr. Vinod Kumar Gupta, learned counsel for the petitioner/accused and Mr. Bhupinder Singh, learned counsel for the respondent/complainant.
10. Mr. N.S. Chandel learned Senior Counsel for the petitioner/accused submitted that the cheque was dishonoured with an endorsement instrument outdated /stale. It was not presented before the bank within three months from the date of its issuance. The dishonour of an outdated/stale cheque does not give rise to a liability under Section 138 of the N.I Act. Therefore, he prayed that the present petition be allowed and the judgments and order passed by the learned Courts below be set aside.
11. Mr. Bhupinder Singh, learned counsel for the respondent/complainant supported the judgments and order passed by the learned Courts below and submitted that the 7 2024:HHC:9988 cheque was presented before the bank of the complainant on 17.01.2018 within the period of limitation and was wrongly dishonoured with an endorsement instrument out dated/stale cheque. The learned Courts below had rightly held that the accused was liable for the commission of an offence punishable under Section 138 of N.I. Act. Hence, he prayed that the present revision be dismissed.
12. I have given considerable thought to the submissions made at the bar and have carefully gone through the records.
13. It was laid down by the Hon'ble Supreme Court in Malkeet Singh Gill v. State of Chhattisgarh, (2022) 8 SCC 204: (2022) 3 SCC (Cri) 348: 2022 SCC OnLine SC 786 that the revisional court does not exercise an appellate jurisdiction and it can only rectify the patent defect, errors of jurisdiction or the law. It was observed on page 207: -
"10. Before adverting to the merits of the contentions, at the outset, it is apt to mention that there are concurrent findings of conviction arrived at by two courts after a detailed appreciation of the material and evidence brought on record. The High Court in criminal revision against conviction is not supposed to exercise the jurisdiction like to the appellate court and the scope of interference in revision is extremely narrow. Section 397 of the Criminal Procedure Code (in short "CrPC") vests jurisdiction to satisfy itself or himself as to the 8 2024:HHC:9988 correctness, legality or propriety of any finding, sentence or order, recorded or passed, and as to the regularity of any proceedings of such inferior court. The object of the provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error which is to be determined on the merits of individual cases. It is also well settled that while considering the same, the Revisional Court does not dwell at length upon the facts and evidence of the case to reverse those findings.
14. This position was reiterated in State of Gujarat v. DilipsinhKishorsinh Rao, 2023 SCC OnLine SC 1294 wherein it was observed:
"13. The power and jurisdiction of the Higher Court under Section 397 Cr. P.C. which vests the court with the power to call for and examine records of an inferior court is for the purposes of satisfying itself as to the legality and regularities of any proceeding or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law or the perversity which has crept into such proceedings. It would be apposite to refer to the judgment of this court in Amit Kapoor v. Ramesh Chandra, (2012) 9 SCC 460 where the scope of Section 397 has been considered and succinctly explained as under:
"12. Section 397 of the Code vests the court with the power to call for and examine the records of an inferior court for the purposes of satisfying itself as to the legality and regularity of any proceedings or order made in a case. The object of this provision is to set right a patent defect or an error of jurisdiction or law. There has to be a well-founded error and it may not be appropriate for the court to scrutinise the orders, which upon the face of it bear a token of careful consideration and appear to be in accordance with the law. If one looks into the various judgments of this 9 2024:HHC:9988 Court, it emerges that the revisional jurisdiction can be invoked where the decisions under challenge are grossly erroneous, there is no compliance with the provisions of law, the finding recorded is based on no evidence, material evidence is ignored or judicial discretion is exercised arbitrarily or perversely. These are not exhaustive classes but are merely indicative. Each case would have to be determined on its own merits.
13. Another well-accepted norm is that the revisional jurisdiction of the higher court is a very limited one and cannot be exercised in a routine manner. One of the inbuilt restrictions is that it should not be against an interim or interlocutory order. The Court has to keep in mind that the exercise of revisional jurisdiction itself should not lead to injustice ex-facie. Where the Court is dealing with the question as to whether the charge has been framed properly and in accordance with law in a given case, it may be reluctant to interfere in the exercise of its revisional jurisdiction unless the case substantially falls within the categories aforestated. Even framing of charge is a much-advanced stage in the proceedings under the CrPC."
15. The present revision has to be decided as per the parameters laid down by the Hon'ble Supreme Court.
16. It is undisputed that the cheque was dishonoured with an endorsement instrument outdated/stale. This endorsement is dated 23.01.2018. It was submitted on behalf of the complainant that the cheque was presented before the State Bank of India on 17.01.2018. Reliance was placed on pay-in-slip 10 2024:HHC:9988 (Ext.CW-1/C). The complainant also asserted in para 5 of the complaint that he presented the cheque to the State Bank of India Jhiknipul Branch on 17.01.2018. It was submitted that the presentation before the bank of the complainant within limitation is sufficient compliance. This submission is not acceptable. Hon'ble Supreme Court held in Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., (2001) 3 SCC 609 : 2001 SCC (Cri) 582 :
2001 SCC OnLine SC 447 that the cheque has to be presented within the period of validity in the bank of the accused and the presentation before the bank of the complainant is of no avail to him. It was observed at page 612: -
"8. Section 138 provides that where any cheque drawn by a person on an account maintained by him with a "banker" for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by "the bank" unpaid, 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, such person shall be deemed to have committed an offence punishable with imprisonment as prescribed therein subject to the conditions mentioned in clauses (a), (b) and (c) of the proviso. Section 3 of the Act defines the "banker" to include any person acting as a banker and any post office savings bank. Section 72 of the Act provides that a cheque must, in order to charge the drawer, be presented at the bank upon which it is drawn before the relations between the drawer 11 2024:HHC:9988 and his banker has been altered to the prejudice of the drawer.
9. The use of the words "a bank" and "the bank" in the section is an indicator of the intention of the legislature. The former is an indirect (sic indefinite) article and the latter is prefixed by a direct (sic definite) article. If the legislature intended to have the same meanings for "a bank" and "the bank", there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the word "banker" in Section 3 of the Act is prefixed by the indefinite article "a" and the word "bank" where the cheque is intended to be presented under Section 138 is prefixed by the definite article "the". The same section permits a person to issue a cheque on an account maintained by him with "a bank" and makes him liable for criminal prosecution if it is returned by "the bank"
unpaid. The payment of the cheque is contemplated by "the bank" meaning thereby where the person issuing the cheque has an account. "The" is the word used before nouns, with a specifying or particularising effect as opposed to the indefinite or generalising force of "a" or "an". It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. "The" is always mentioned to denote a particular thing or a person. "The" would, therefore, refer implicitly to a specified bank and not any bank. "The bank" referred to in clause (a) to the proviso to Section 138 of the Act would mean the drawee bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued.
10. It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words 12 2024:HHC:9988 a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to (C) bank. The non-presentation of the cheque to the drawee bank within the period specified in the section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 3, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee.
11. We have perused the judgments of the Punjab and Haryana, Gujarat and Madras High Courts and their conflicting views and are of the opinion that the Madras High Court has not correctly interpreted the provisions of law in this behalf.
12. As, admittedly, in this case the cheque was not presented before the drawer's bank within the statutory period of six months, the criminal court had no jurisdiction to issue the process against the appellant. The impugned judgment of the High Court being contrary to law is thus not sustainable. The appeal is accordingly allowed and the impugned judgment is set aside."
17. Thus the presentation of the cheque before the bank the complainant will not assist him 13 2024:HHC:9988
18. The cheque was dishonoured by the bank of the accused on 23.01.2018. The cheque was issued on 21.10.2017 and was to be presented before the drawee bank within three months excluding the date of drawing of the cheque. The cheque was to be presented before the drawee bank on or before 21.01.2018 but it was presented on 23.01.2018 after the lapse of the statutory period of validity of the cheque. Thus, it was rightly dishonoured with an endorsement outdated/state cheque.
19. Delhi High Court held in H.D. Gumber v. Ashok Sachdeva, 2012 SCC OnLine Del 2037 that when the cheque was was not presented within a period of validity the cheque became invalid and could not be held liable. It was observed: -
"8. Admittedly, the cheque was drawn on 23rdNovember, 2002 and the period of six months within which, it could be presented to the bank on which it was drawn, expired on 22.5.2003. However, the cheque was presented by the complainant on 23.5.2003 i.e. one day after the expiry of the statutory period of six months. Consequently, the cheque became invalid and thus the petitioner could not be made criminally liable for its dishonour under the provisions of Section 138 of the Act."
20. The cheque was dishonoured with an endorsement 'Instrument outdated/stale'. It was laid down by Madras High Court in M. Meeran Mohideen vs. B. Vijayakumar 2019 (4) Civil 14 2024:HHC:9988 Court Cases 642 that when the cheque was returned with the reason 'Instrument outdated/stale", the cheque became invalid and the proceedings were vititated. It was observed:
"7. In view of the same, the instrument viz., the Cheque is valid only for a period of 6 months from the date of issuance of the same. In the case on hand, admittedly, the cheque was presented only after the period of 6 months viz., 26.09.2017. Therefore, the cheque dated 10.03.2017 became invalid and hence, the entire proceedings have been vitiated and the learned Judicial Magistrate without even considering the said fact, mechanically took cognizance and issued a summons to the petitioner. Therefore, this Court is of the view that the proceedings under Section 138 of the Negotiable Instrument is liable to be quashed."
21. Gujarat High Court held in Anil Vasudev Rajgor v. State of Gujarat, 2017 SCC OnLine Guj 2799 that when the cheque was presented beyond the period of validity and was dishonoured with the endorsement instrument outdated, the proceedings under Section 138 of N.I.Actdoes do not lie. It was observed:
"11. From the above proviso, it is clear that the provisions of Section 138 of the Negotiable Instruments Act are enacted taking into consideration the currency of cheques for, a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general Banking practice and' stipulates that the cheque should be presented for encashment1 either within the period of six months or within the period of validity of the cheque, whichever is earlier. Hence, a cheque, which is 15 2024:HHC:9988 issued with the reduced validity period, has to be presented for encashment within the expiry of that period so as to attract the provisions of Section-,138 of the Negotiable Instruments Act. Indisputably, in the case on hand, the cheque was presented by the complainant for encashment after the expiry of currency of three months and in such circumstances, the provisions of Section 138 of the Negotiable Instruments Act are not attracted in this case in view of Clause (a) of the proviso to Section 138 of the. Negotiable Instruments Act. The Supreme Court, in the case of Shri Ishar Alloys Steels Ltd. v. Jayaswals NECO Ltd. [(2001) 3 SCC 609 : AIR 2001 SC 1161, observed in para 9 as under:--
"It, however, does not mean that the cheque is always to be presented to the drawer's Bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any Bank including the collecting Bank 'where he has his account but to attract the criminal liability of the drawer of the cheque such collecting Bank is obliged to present the cheque in the drawee or payee Bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a Bank named (C) where the drawer has an account can be presented by the payee to the Bank upon which it is drawn i.e. (C) Bank within a period of six months or present. it to any other Bank for collection of the cheque amount provided such other Bank including the collecting Bank presents the cheque for collection to the (C) Bank. The non presentation of the cheque to the drawee-Bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall other wisemay be liable to pay the cheque amount to the payee in a civil action initiated _under the law. A combined reading of Sections 2, 72 and 138 of the Act "would"
leave no doubtin our mind that the law mandates the 16 2024:HHC:9988 cheque to be presented at the Bank on which it is drawn if. the drawer is to be heldcriminally liable. Such presentation is necessarily to be made within six months at the Bank on which the cheque is drawn, whether presented personally or through another Bank, namely, the collecting Bank of the payee."
12. A learned Single Judge of this Court in the case of ArunbhaiNilkantharai v. Jayaben Prahladbhai [2000 Cri LJ 1152] had an occasion to consider almost an identical issue. In the said case, it was contended on behalf of the complainant that what should the payee of the cheque do if the cheque is returned holding that the validity period had expired. In the said case, an argument was canvassed that there may be a delay on the part of the collecting' Bank in sending the cheque to the paying Bank though it had been within the period of validity, or because of the delay on the part of the postal Authority, the cheque might reach the paying Bank after the expiry of the period of validity or six months, as the case may be, the holder of the cheque, in such circumstances, would be helpless. The learned Single Judge rejected the contention observing as under:----
"10...The contention must fail. In that case initiation of criminal action is view of non-fulfilment of the requirements of Sec. 138 of the Act would certainly be barred, but it will be open to the payee to initiate the civil action filing the suit for the recovery of the cheque amount subject to the law of limitation. The civil Court will certainly pass the decree if the case alleged in plaint is proved. The payee qua the recovery of the sum will not be helpless. It may however be stated that when the cheque is required to be presented at the paying Bank before it becomes a stale cheque, the holder of the cheque or the payee has to present the cheque well in advance, considering the exigencies or contingencies or delay that is likely to occur on the part of the collecting Bank or the postal Authorities. He cannot wait till the last day of the period of validity for presentment of the cheque, 17 2024:HHC:9988 because proviso (a) to Sec. 138 makes it abundantly clear that if presentment of a cheque is not made within 6 months from the date on which the cheque is drawn or within the period of its validity whichever is earlier, the cause to lodge the complaint does not subsist or live on, for in that case the offence cannot be said to have been constituted and payee or holder of a cheque loses his right if there be any to initiate criminal action.
11. In this case, presentment of the cheque to the paying Bank is, in view of the above stated dates, not made within 6 months of the date of the cheque. The presentment is late by four days. The cheque, therefore, became a stale cheque and the same was, therefore, bounced without honouring the same. As the presentment is not inconsonance with Sec. 138 of the Act, and is lateby 4 days, one of the essential requirements of Sec. 138 of the Act for initiating penal action is not satisfied. When that is so, the complaint lodged cannot be entertained, the same has to be quashed, and the petitioner, who is the accused, in that case, is required to be discharged."
13. In taking the aforesaid view, I am supported by a decision of the Kerala High Court in the case of Kesavan Thankappan v. State of Kerala [1999 Cri LJ 714], I may quote the relevant observations as under:--
"5. The counsel for the appellant vehemently argued that the dishonour of the cheque on the ground that the cheque was out of time since the cheque drawn on Treasury Saving Bank Is Current only for three months from the date of issue as against the Banking practice of the currency of cheques for six months from the date of issue, and the provisions of the Negotiable Instruments Act, are illegal and unsustainable. The Treasury Code is framed by the Government of Kerala as empowered under Art. 283(2) of the Constitution and promulgated by the Governor of Kerala by notification No. 54282 dated 6-4-1983.18
2024:HHC:9988
6. As per List 1 which is styled as Union List in 7th Schedule of the Constitution, all the items mentioned therein fall within the exclusive jurisdiction of the Union of India and item 45 in the list I of Schedule 7 is Banking and entry 46 therein is Bill of Exchange, Cheques etc. Therefore, the counsel for the appellant argued that Banking comes within the exclusive jurisdiction of the Government of India and the same can be regulated only by the Government of India and Reserve Bank of India.
7. The counsel for the appellant further argued that the Treasury Code is intended for transactions in Government money only and not for Banking business for the public and if the Treasuries conduct Banking business the entire rules and regulations regarding Bank including those rules applicable to cheques etc. contained in the Negotiable Instruments Act and the Banking Practice should be followed by the Treasuries. According to him, though the Treasury can regulate the period of validity of cheques, it will bind only the Treasuries and persons who are transacting with the Treasury by opening accounts with them and it cannot bind a person who has no dealings with the Treasury and in whose favour a Treasury cheque is issued.
8. The learned counsel for the appellant also argued that appendix 3 to Treasury Code Vol. II relates to rules regulating transactions in the Treasury Savings Bank, Rule 1 in appendix 1 states that the object of the Government in establishing Treasury Savings Bank Scheme is to provide a ready meansfor the deposit of savings and so to encourage thrift. Treasury Code Vol. I, Part I, Rule 2(c) defines 'cheque' and Rule 61(1) deals with non-Banking Treasuries and Rule 61(2) deals with Banking Treasuries. Chapter III of the Kerala Treasury Code Vol. II deals with the rules relating to Treasury Savings Bank. The counsel for the appellant argued that transaction in the Banking Treasury is similar to the transaction in ordinary Banks and the 19 2024:HHC:9988 Treasury cheque drawn has to be treated as a cheque drawn on a Bank for all purposes under S. 138 of the Negotiable Instruments Act and there cannot be any distinction between ordinary Bank and the Treasury dealing with Banking transactions.
9. The counsel for the appellant further argued that Banking being Union subject in the first list of Schedule 7 of the Constitution, the Treasury Code which is a subordinate legislation promulgated by the Governor of Kerala applicable to the territory in Kerala under Art. 283(2) of the Constitution, cannot have overriding effect on the provisions of the Negotiable Instruments Act enacted by the Parliament and the Banking Rules and Regulations and the Banking Practice approved and enforced by the Central Government. Therefore, according to him, the provisions regarding the currency of cheque drawn on a Banking Treasury reducing, the period of currency to three months as provided under Rule 245(b) of Vol. I of the Treasury Code cannot be pressed into service in this case as against the prevailing Banking practice of currency of cheques for six months as provided under the Negotiable Instruments Act.
10. Though the above arguments advanced by the counsel for the appellant are very attractive, they cannot be accepted on the face of clause (a) of the proviso to S. 138 of the Negotiable Instruments Act which reads as follows:--
"Provided that nothing contained in this Section shall apply unless- (a) the cheque has been presented to the Bank within the period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier."
From the above proviso, it is clear that the provisions of S. 138 of the Negotiable Instruments Act are enacted taking into consideration of the currency of cheques 20 2024:HHC:9988 for a period of six months from the date of issue or the reduced period of validity, whichever is earlier. Therefore, this provision of the Negotiable Instruments Act contemplates cheque with lesser period of validity than six months, which is the general Banking practice and stipulates that the cheque should be presented for encashment either within the periodof six months or within the period of validity of the cheque, whichever is earlier. Hence a cheque which is issued with the reduced validity period has to be presented for encashment within the expiry of that period so as to attract the provisions of S. 138 of the Negotiable Instruments Act. Therefore, the argument advanced by the counsel for the appellant that the Treasury Code promulgated by the Governor of Kerala should be subject to the provisions of the Negotiable Instruments Act, the Banking Rules and Regulations issued by the Government of India, the Banking Practice and the Rules promulgated by the Reserve Bank of India and the provisions of the Treasury Code cannot have overriding effect against the provisions of the Negotiable Instruments Act and the Banking Practice, need not be considered in this case.
11. In view of the fact that the cheque was presented by the appellant for encashment after the expiry of currency of three months, the provisions of S. 138 of the Negotiable Instruments Act are not attracted in this case in view of clause (a) of the proviso to S. 138 of the Act."
22. A Similar view was taken by Delhi High Court in Ansh Chugh vs. Pradeep Gupta, 2020 STPL 8425 Delhi, wherein it was held:-
21
2024:HHC:9988 "7. Admittedly, the cheque was presented to the drawee bank after the period of expiry of its validity of three months, which is to be calculated from the date mentioned on the cheque. The Clause (a) of Proviso to Section 138 of N.I. Act stipulates that Section 138 shall not be applicable unless the cheque is presented to the bank within a period of six months (the period has been reduced from 6 months to 3 months vide the aforementioned RBI notification dated 04.11.2011) from the date on which it is drawn or within the period of its validity, whichever is earlier.
8. In Shri Ishar Alloys Steel Ltd. v. Jayaswals NECO Ltd., (2001) 3 SCC 609 , the Supreme Court held that non-
presentation of the cheque to the drawee bank within the period specified in the section would absolve the person issuing the cheque of his criminal liability under Section 138 N.I. Act.
9. The Supreme Court in MSR Leathers v. S.Palaniappan& Anr.,2012 SCCOnLineSC 791 , it was held as under:-
"14. Presentation of the cheque and dishonour thereof within the period of its validity or a period of six months is just one of the three requirements that constitutes cause of action' within the meaning of Sections 138 and 142(b) of the Act, an expression that is more commonly used in civil law than in penal statutes...."
xxx
19. ....A careful reading of Sections 138 and 142, as noticed above, makes it abundantly clear that the cause of action to institute a complaint comprises the three different factual prerequisites for the institution of a complaint to which we have already referred in the earlier part of this order. None of these prerequisites is in itself sufficient to constitute a complete cause of action for an offence under Section 138. For instance if a cheque is not presented within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier, no cause of action would accrue to the holder of the cheque even 22 2024:HHC:9988 when the remaining two requirements, namely service of a notice and failure of the drawer to make the payment of the cheque amount are established on facts...."
10. Learned counsel for the respondent has fairly not disputed the aforesaid legal position, though he urged that all such issues could be considered at the stage of framing of notice.
11. Reliance placed by the learned counsel for the respondent in Rajeev Ranjan Sinha(supra), Jitender Singh(supra), Thomas Varghese(supra) and A.V Murthy(supra) is misplaced as the issue involved in the present case was not raised in the aforesaid judgments. The validity of a cheque goes to the root of the initiation of proceedings under the Negotiable Instruments Act. There is no cause of action if the cheque presented was not valid."
23. This Court also took a similar view in Dolma Devi Vs. Roshan Lal, 2023 STPL 4524 HP, wherein it was held :-
"8. The reasons, on account of which the complaint of the present appellant has been dismissed, already stand spelled out by me in the above part of the judgment. It is not in dispute that the cheque in issue is dated 14.09.2004. The same was drawn upon H.P. State Cooperative Bank, branch Beri, District Bilaspur, H.P. This cheque though was presented by the appellant with her bank on 07.03.2005, yet the same was received by the payee bank, i.e. H.P. State Cooperative Bank, branch Beri, District Bilaspur, H.P. on 15.03.2005, i.e. after six months from the date of issuance of the cheque which lapsed on 13.03.2004.
9. Hon'ble Supreme Court in Shri Ishwar Alloy Steels Ltd. Versus Jayaswals Neco LTD., (2003) 3 Supreme Court Cases 609, has been pleased to hold that the law mandates a cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable necessarily within six months as from the date of its issuance (this 23 2024:HHC:9988 judgment relates to the period when the validity of cheque used to be for a period of six months). In Para10 of said judgment, Hon'ble Supreme Court has been pleased to hold as under:
"It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (C) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to the (C) bank. The non presentation of the cheque to the drawee bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section 138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee."24
2024:HHC:9988
24. Punjab and Haryana High Court also took a similar view in Nitin Mahajan vs. Vinod Kumar (11.05.2023 - PHHC) :
MANU/PH/3563/202326.) and held:
"5. From a perusal of proviso (a) to Section 138, it is apparent that one of the essential condition to bring into effect the substantive provision i.e. Section 138 of NI Act is that cheque be 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. In the present case, cheque in question was issued on 18.05.2018, therefore, as per RBI circular/notification dated 04.11.2011 which is in vogue, the same was valid till 17.08.2019 only and it was ultimately dishonoured on 8.11.2018, clearly showing that it was presented in the bank much beyond its validity. Reliance has rightly be placed on Ansh Chugh's case (supra), wherein it was held that the validity of a cheque goes to the root of initiation of proceedings under Negotiable Instruments Act and there is no cause of action if the cheque presented was not valid. Even learned Counsel for the respondent has not been able to produce any judgment to counter the same."
25. Telangana High Court has also held similarly in Boddu Jhansi Rani vs. The State of Telangana (12.04.2023 - TLHC) :
MANU/TL/0599/2023 27. and held:-
7. It is not in dispute that the subject cheque was presented beyond the three month period of the date of the cheque. The Reserve Bank of India had issued notification on 04.11.2011 signed by the Chief General Manager in-Charge. The said notification was issued in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and accordingly directed the Banks not to make payment of the cheques/drafts/pay order/bankers cheque if the cheques are 25 2024:HHC:9988 presented beyond the period of three months from the date of such instruments.
Section 35A in BANKING REGULATION ACT,1949 reads as follows:
35A Power of the Reserve Bank to give directions. - Where the Reserve Bank is satisfied that- in the 178 [public interest]; or 179 [ in the interest of banking policy; or] to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or to secure the proper management of any banking company generally, it is necessary to issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions. The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect.]
8. Under Section 138-A of N I Act, it is mentioned that the cheque should have been presented to the Bank within a period of six months from the date on which it is drawn or within the period of validity. Section 35-A of the Banking Regulation Act, 1949 confers powers to the Reserve Bank for giving directions in the interest of public or banking policy.
Accordingly directions were issued that the Banks should not make payment of the cheques which are presented beyond the period of three months from the date of such instrument.
9. Section 138-A of the Negotiable Instruments Act deals with two contingencies, firstly, the cheque being presented within a period of six months and the secondly, within the period of its validity whichever is earlier. By virtue of the notification of the Reserve Bank of India, the period of 26 2024:HHC:9988 validity would be three months and the cheque should have been presented within a period of three months. The Bank has committed an error in entertaining the cheque and giving memo stating that the cheque was returned for the reason of 'insufficient funds'. It is the specific direction of the Reserve Bank of India that the Banks should not entertain the cheque beyond the period of three months which had to be scrupulously followed by the Bank and should have returned the cheque on the ground of being stale or invalid.
10. The basis for prosecution is the return of the cheque which was presented beyond the period of its validity. Applying the judgment reported in Shri Ishar Alloy Steels Ltd., v. Jayaswals Neco Limited's case (supra), the Criminal Court does not have jurisdiction to proceed with the trial of the petitioner."
26. In the present case, the learned Trial Court noticed the date of presentation of the cheque before the bank of the complainant but failed to notice that presentation of the cheque before the bank of the complainant was not material and the presentation before the bank of the accused was necessary within three months to confer a cause of action upon the complainant. The learned Trial Court also failed to appreciate the significance of the memo of dishonour, in which the reason for dishonour was mentioned as out dated/state and the fact that such a memo does not confer a cause of action to file complaint under Section 138 of the N.I.Act. The learned Appellate 27 2024:HHC:9988 Court failed to notice both these aspects. Hence, the judgments and order passed by the learned Courts below are not sustainable. The learned Courts below had failed to notice the most import ingredients of the commission of the offence punishable under Section 138 of the N.I.Act, which is not merely an error in the appreciation of the evidence but a defect of jurisdiction because dishonour of cheque on the ground of it being out dated/stale does not fall within the purview of Section 138 of N.I.Act as noticed above. Hence, the judgments and order passed by the learned Courts below cannot be sustained.
27. In view of above, the present appeal is allowed and the judgments and order passed by the learned Courts below are ordered to be set aside. The complaint is dismissed not maintainable. The accused is acquitted for the commission of an offence punishable under Section 138 of N.I. Act. The fine/compensation amount be refunded to the petitioner/accused after the expiry the period of appeal.
28. In view of the provisions of Section 437-A of the Code of Criminal Procedure (Section 481 of Bhartiya Nagarik Suraksha Sanhita, 2023) the petitioner is directed to furnish his personal 28 2024:HHC:9988 bonds within four weeks in the sum of ₹25,000/- with one surety each in the like amount to the satisfaction of the learned Trial Court, which shall be effective for six months with stipulation that in the event of Special Leave Petition being filed against this judgment, or on grant of the leave, the appellants on receipt of notice(s) thereof, shall appear before the Hon'ble Supreme Court.
29. Records of the learned Trial Court be sent back along with a copy of this judgment. Pending applications, if any, also stand disposed of.
(Rakesh Kainthla) 21 October, 2024 st (Ravinder) Digitally signed by KARAN SINGH GULERIA DN: C=IN, O=HIGH COURT OF HIMACHAL KARAN PRADESH, OU=HIGH COURT OF HIMACHAL PRADESH SHIMLA, Phone=e5d61f6599be410af7c5f0b57379e225878f 23c9ea27b281046985b3b1fe0b75, SINGH PostalCode=171001, S=Himachal Pradesh, SERIALNUMBER=f72cf9165791d55ec939375291 962d0d90d094876bd59591426c0b1ce651f01f, CN=KARAN SINGH GULERIA GULERIA Reason: I am the author of this document Location:
Date: 2024-10-21 15:07:26