Section 138 NI Act | Infirmity In Cheque Return Memo Does Not Render Entire Trial As Nullity: Delhi High Court

The Delhi High Court has held that any infirmity in the cheque return memo does not render the entire trial under Section 138 of the Negotiable Instruments Act as nullity.

Observing that cheque return memo is a memo informing the payee and its banker about the dishonour of a cheque, Justice Sudhir Kumar Jain said if the said cheque return memo is not bearing any official stamp of the bank, it does not render the same as invalid or illegal.

The court said neither Section 138 nor Section 146 of the enactment prescribes any particular form of cheque return memo.

"The section 138 of the NI Act does not mandate any particular form of cheque return memo which is nothing but a mere information given by the Banker of the due holder of a cheque that the cheque has been returned as unpaid," it added.

The court also observed that the cheque return memo is not a document which is not required to be covered under Section 4 of the Bankers Book (Evidence) Act, 1891.

"If there is any infirmity in the cheque return memo, it does not render entire trial under section 138 of the NI Act as nullity," the bench said.

The court made the observations while refusing to quash a criminal complaint and summoning order passed by the trial court in a case under NI Act.

A complaint was filed under Section 138 against International Trenching Pvt. Ltd., its directors and an employee handling accounting and finance. The trial court took cognizance of the offence in question against the entity and its two directors in August 2019.

One of the directors approached the high court challenging the summoning order on the ground that the complainant failed to file a cheque return memo before the trial court and only the photocopy of the cheque return memo was submitted.

It was the petitioner's case that the cheque return memo was filed without any bank seal and mark, thereby failing the presumption of Section 146 of the NI Act.

The court said that even if it is presumed that there was any irregularity or illegality in the format of the cheque return memo in question, the same can be addressed during the course of trial.

It added that petitioner has not disputed the issuance of cheque under his signature and its dishonour by the banker.

"There is no infirmity or illegality in the impugned order. The concerned Court has not committed any illegality while relying on the said cheque return memo dated 04.07.2019 before issuance of the summons against the accused no. 1 to 3 which also includes the petitioner as accused no. 2."

The court said the grounds taken by the petitioner to challenge the trial court order are "without any factual and legal basis." 

"The present petition is misconceived and it appears that, it has been filed to delay the proceedings of the case. Accordingly, the present petition alongwith pending applications, if any, is dismissed. The trial Court is directed to expedite the trial of the present complaint," it added.

Title: GUNEET BHASIN v. STATE OF NCT OF DELHI & ANR. & ORS.

Citation: 2022 LiveLaw (Del) 1123

Click Here To Read Order