S.138 NI Act | Director Who Signed Cheque Not Liable For Dishonour When Company Hasn't Been Added As Accused : Supreme Court
1 day, 7 hours ago

S.138 NI Act | Director Who Signed Cheque Not Liable For Dishonour When Company Hasn't Been Added As Accused : Supreme Court

Live Law  

The Supreme Court reiterated that the authorised signatory of a company cannot be held liable under Section 138 of the Negotiable Instruments Act, 1881 for dishonour of a cheque drawn on the company's account unless the company is arraigned as the principal accused. The Sessions Court upheld the conviction, but the Calcutta High Court reversed it, ruling that the cheque was issued on behalf of the hospital, and Manna could not be held liable under Section 141 of the NI Act unless the company was also arraigned as an accused. The Supreme Court highlighted that under the NI Act, only the drawer of the cheque can be made liable under Section 138. The High Court, however, held that the signatory could be considered the “drawer” of the cheque and liable under Section 138.

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History of this topic

Cognizance Of Cheque Dishonour U/S 138 NI Act Can Be Taken Only Upon A Written Complaint: Jharkhand High Court Reiterates
1 month ago

Cognizance Of Cheque Dishonour U/S 138 NI Act Can Be Taken Only Upon A Written Complaint: Jharkhand High Court Reiterates

Live Law  

While hearing a cheque bouncing case, the Jharkhand High Court has reaffirmed that cognizance of offences under Section 142 of the Negotiable Instruments Act does not require a report to the police nor empowers the court to direct the police to investigate the complaint. The court further clarified that under Section 142 of the NI Act the cognizance of an …

Complainant's Burden Shifting Under Section 139 of the Negotiable Instruments Act: High Court Observation
1 month, 3 weeks ago

Complainant's Burden Shifting Under Section 139 of the Negotiable Instruments Act: High Court Observation

Live Law  

The Jammu and Kashmir and Ladakh High Court has observed that once the complainant proves that a cheque was issued by the accused to discharge a debt, Section 139 mandates that the burden of proof shifts to the accused. The court dismissed an appeal filed by one Choudhary Piara Singh against an acquittal order issued by the Trial Court in …

Cheques Dishonored With Endorsements 'Insufficient Fund', 'Account Closed', 'Signature Mismatch' Attract S. 138 NI Act: Allahabad HC
6 months, 3 weeks ago

Cheques Dishonored With Endorsements 'Insufficient Fund', 'Account Closed', 'Signature Mismatch' Attract S. 138 NI Act: Allahabad HC

Live Law  

The Allahabad High Court has observed that if the cheque is dishonoured and returned with the endorsements - case referred to drawer, instruction for stoppage of payment, exceeds arrangement, insufficient fund, signature differed or mismatch or account closed - then it will be sufficient for prima facie case for issuing process under Section 138 NI Act. A bench of Justice …

S.138 NI Act | Courts Can't Compel Complainant To Give Consent For Compounding, Mere Repayment Won't Absolve Accused : Supreme Court
7 months, 3 weeks ago

S.138 NI Act | Courts Can't Compel Complainant To Give Consent For Compounding, Mere Repayment Won't Absolve Accused : Supreme Court

Live Law  

Recently, the Supreme Court observed that the Courts cannot compel the complainant in a cheque dishonour case to give consent for the compounding of the complaint merely because the accused has compensated the complainant.The Court also observed that mere repayment of the amount cannot mean that the appellant is absolved from the criminal liabilities under Section 138 of the. Recently, …

S.138 NI Act | Availability Of Funds In Other Bank Accounts Not A Defence; Cheque Dishonour Relates To Specific Account: Supreme Court
1 year ago

S.138 NI Act | Availability Of Funds In Other Bank Accounts Not A Defence; Cheque Dishonour Relates To Specific Account: Supreme Court

Live Law  

Recently, the Supreme Court categorically held that in proceedings initiated for bounced cheques, the defence that there are sufficient funds in the other bank accounts cannot be appreciated.“In a proceeding under Section 138 of the Negotiable Instruments Act, the accused cannot rely upon other bank accounts for. Recently, the Supreme Court categorically held that in proceedings initiated for bounced cheques, …

S.138 NI Act | Offence Can Be Compounded At Initial Stage Without Complainant's Consent, Provided They Are Duly Compensated
1 year ago

S.138 NI Act | Offence Can Be Compounded At Initial Stage Without Complainant's Consent, Provided They Are Duly Compensated

Live Law  

The Bombay High Court recently held that a court can compound the offence in check bounce cases without the complainant's consent provided that the accused applied for compounding in the initial stages of the case and the complainant was adequately compensated. “when the application for compounding offences u/s 138 of the NI Act is made at the initial stage of …

S.142 NI Act | Third Party Cannot Prosecute Drawer For Dishonour Of Cheque: Kerala High Court
1 year, 3 months ago

S.142 NI Act | Third Party Cannot Prosecute Drawer For Dishonour Of Cheque: Kerala High Court

Live Law  

The Kerala High Court recently laid down that a third party cannot prosecute the drawer of cheque for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881. Perusing Section 142 of the Act which provides that no court shall take cognizance of. Perusing Section 142 of the Act which provides that no court shall take cognizance of …

NI Act | Complainant Can't Seek To Prosecute Company's Former Directors For Cheque Issued To Repay Amount Invested When They Held Office: Karnataka HC
2 years, 1 month ago

NI Act | Complainant Can't Seek To Prosecute Company's Former Directors For Cheque Issued To Repay Amount Invested When They Held Office: Karnataka HC

Live Law  

The Karnataka High Court has quashed the proceedings initiated against two former directors of a company under Section 138 of the Negotiable Instruments Act by the complainant claiming that when he invested the money in the company they were directors. A private complaint was filed under Section 200 of the Code of Criminal Procedure, 1973 for the offence punishable under …

S.138 NI Act | Director Cannot Be Prosecuted For Cheque Dishonour Without Arraying Company As Accused: Kerala High Court Reiterates
2 years, 1 month ago

S.138 NI Act | Director Cannot Be Prosecuted For Cheque Dishonour Without Arraying Company As Accused: Kerala High Court Reiterates

Live Law  

The Kerala High Court has reiterated that when a cheque issued by a company is dishonored, prosecution under Section 138 of the Negotiable Instruments Act against its Director shall not sustain if the company is not arrayed as an accused. Justice A. Badharudeen relying on the law laid down by the Apex Court, observed that prosecution against the director of …

No Offence Under Section 138 NI Act If Cheque Is Presented For Full Amount Without Endorsing Part Payment Made By Borrower : Supreme Court
2 years, 2 months ago

No Offence Under Section 138 NI Act If Cheque Is Presented For Full Amount Without Endorsing Part Payment Made By Borrower : Supreme Court

Live Law  

In a significant judgment, the Supreme Court on Tuesday held that no offence for dishonour of cheque under Section 138 of the Negotiable Instruments Act is made out if the cheque is presented for the full amount without endorsing the part-payment made by the borrower after the issuance of the cheque.The Court held that the sum reflected on the cheque …

S.141 NI Act | Sole Proprietor Alone Can't Be Sued For Offence U/S 138, Sole Proprietary Concern Must Also Be Arrayed As Accused: P&H High Court
2 years, 3 months ago

S.141 NI Act | Sole Proprietor Alone Can't Be Sued For Offence U/S 138, Sole Proprietary Concern Must Also Be Arrayed As Accused: P&H High Court

Live Law  

The Punjab and Haryana High Court recently held that when a cheque issued by a sole proprietary entity is dishonoured, it is necessary to array the proprietary concern as an accused, along with the sole proprietor. It observed, When the statutory signification assigned to a 'Company', does visibly cover not only any corporate body, but also covers a firm, or …

S.138 NI Act | Non-Executive Directors Not Liable For Company's Actions/ Omissions Unless Involved In Day-To-Day Affairs: Bombay High Court
2 years, 5 months ago

S.138 NI Act | Non-Executive Directors Not Liable For Company's Actions/ Omissions Unless Involved In Day-To-Day Affairs: Bombay High Court

Live Law  

The Bombay High Court has quashed criminal proceedings against independent non-executive directors of Tecpro Systems Ltd while stating that they were not responsible for day-to-day functioning of the company. Elektromag Devices Private Ltd. Elektromag had filed a complaint under Section 138 of NI Act against Tecpro Systems, a material handling company, alleging that the cheque worth almost Rs. The court …

Section 138 NI Act - Prima Facie Indication That Complaint Is Filed By Authorized Person Of Company Sufficient For Magistrate To Take Cognisance : Supreme Court
2 years, 10 months ago

Section 138 NI Act - Prima Facie Indication That Complaint Is Filed By Authorized Person Of Company Sufficient For Magistrate To Take Cognisance : Supreme Court

Live Law  

The Supreme Court observed that, in a cheque bounce case, when the complainant/payee is a company, an authorized employee can represent the company. "Indication in the complaint and the sworn statement to the effect that the complainant is represented by an authorized person who has knowledge, would be sufficient. In addition, the supporting documents which were available on the record …

Section 138 NI Act : Supreme Court Seeks Centre's Views On Creation Of Additional Courts For Cheque Dishonour Case
3 years, 9 months ago

Section 138 NI Act : Supreme Court Seeks Centre's Views On Creation Of Additional Courts For Cheque Dishonour Case

Live Law  

The Supreme Court on Thursday sought the views of the Central Government on the creation of additional courts for the trial of cheque dishonour cases under Section 138 of the Negotiable Instruments Act, 1881.A bench comprising Chief Justice of India S A Bobde, Justices L Nageswara Rao and S Ravindra Bhat asked the Additional Solicitor General Vikramjit Banerjee if the …

Dishonour Of Cheques- Blank Cheque Would Attract Presumption U/s 139 NI Act If Signatures Are Admitted: Supreme Court
3 years, 10 months ago

Dishonour Of Cheques- Blank Cheque Would Attract Presumption U/s 139 NI Act If Signatures Are Admitted: Supreme Court

Live Law  

The Supreme Court observed that even a blank cheque leaf would attract presumption under Section 139 of the Negotiable Instruments Act when signatures are admitted by the accused.The bench comprising Justices NV Ramana, Surya Kant and Aniruddha Bose observed that 'reverse onus' clauses under Section 118 and Section 139 of the Negotiable Instruments Act become operative once the signature. The …

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