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

Recently, the Supreme Court (on December 04) categorically held that in proceedings initiated for bounced cheques (under Section 138 of the Negotiable Instruments Act), 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 the dishonoured cheque which relates to specific bank account of the accused," held the bench of Justices Hrishikesh Roy and Sanjay Karol. In the present case, the complainant/ respondent (Dharam Singh) filed complaints for the dishonor of different cheques issued by the same accused, Harpal Singh. As per the case of the complainant, he invested various amounts from time to time in the company of the accused. The investment was made on the assurance given by the accused that the complainant would receive a certain amount of money. Consequently, to discharge his liability, the accused handed over several cheques to the complainant.However, when deposited, one of the cheques was returned unpaid due to insufficiency of funds. After receiving no response from the complainant, the accused filed a complaint under the relevant section of the NI Act. Additionally, the offence of cheating under IPC was also included. The trial court convicted the appellant and passed directions with respect to the compensation. The same was challenged before the High Court. Though the High Court modified the sentence, it did not interfere with the conviction. In this background, the matter came before the Apex Court. Before the Supreme Court, Senior Advocate Maninder Singh appeared for the appellant. The advocate contended that in the year 2015, the concerned bank account was frozen. However, the Court took objection to this argument. The Court stated that when the cheques were issued, the appellant did not have sufficient funds. “However, it is seen from the impugned judgment itself that although ten cheques totaling a sum of Rupees Eighty Lakhs was issued by the petitioner, at the relevant point of time, the concerned bank account had a maximum deposit of Rs. 18,52,033/.” Further, the counsel's argument related to the availability of funds with the appellant in different bank accounts did not find favor with Court. As mentioned above, the Court held the accused cannot rely upon other bank accounts for the dishonoured cheque which relates to specific bank account. “Accordingly, the argument advanced by Mr. Maninder Singh, learned Senior Counsel of having adequate funds by reference to the other bank accounts of the company, cannot be of any assistance to the accused.,” the Court added. In view of this, the Court dismissed the appeal.Case Title: HARPAL SINGH vs. THE STATE OF HARYANA., Diary No.- 44330 - 2023Citation : 2023 LiveLaw (SC) 1046Click here to read/download judgment

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

Gyanvi Khanna

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