Without Presenting The Cheque Before The 'Drawer Bank' Complaint Under Sec.138 NI Act Not Maintainanble- Calcutta High Court [Read Order]

The Calcutta High Court has held that without producing the cheque before the drawer bank, complaint under Section 138 of the Negotiable Instruments Act will not be maintainable. In the case, the cheque was returned by the bank of the complainant/payee, before forwarding it to the drawer bank for encashment. Curiously, the payee bank had endorsed in the return slip that ‘account name & cheque name differs/no funds’. It is quite unusual for the payee bank to endorse in the return memo that funds are insufficient. Be that as it may, the complainant lodged complaint thereupon, after sending the statutory notice. He had a case that the name was not written in full by the drawer deliberately to harass him. The respondent/drawer approached the High Court for quashing the proceedings before the Magistrate.The High Court quashed the proceedings on the ground that the cheque was not at all produced before the bank of the drawer. It was observed as follows. Section 138 of the N.I. Act, inter alia, makes the dishonour of a cheque punishable in law provided the cheque upon presentation for encashment before the bank on which it is drawn is returned unpaid due to insufficiency of funds and the drawer of the cheque upon receipt of notice of dishonour does not pay the value of the dishonoured cheque within the stipulated time. Hence, condition precedent for attracting penal liability under the aforesaid provision is that the cheque must be presented for encashment to the drawer bank. It was also held that if a cheque is returned by the banker of the opposite party without presenting the same before the bank on which it is drawn for encashment, the question of dishonour of the cheque due to insufficiency of funds in the drawee’s account shall not rise at all.Read the Order Here

Without Presenting The Cheque Before The 'Drawer Bank' Complaint Under Sec.138 NI Act Not Maintainanble- Calcutta High Court [Read Order]

Manu Sebastian