TMI Blog2003 (3) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... plaints filed by the appellant herein on merits in accordance with law. All the appeals are allowed. Nothing contained in this judgment be taken as expression of opinion on merits. - CRL. APPEAL NOS. 315-321 OF 2003 - - - Dated:- 7-3-2003 - M.B. SHAH AND ARUN KUMAR, JJ. Dhruv Mehta, Mohit Choudhary, Ms. Shalini Gupta and Ms. Ruby Singh Ahuja for the Appellant . Ms. A. Subhashini for the Respondent . JUDGMENT Arun Kumar, J. - Leave granted in all the appeals. 2. These appeals involve a pure question of law as to applicability of section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as Act ) to a case in which a person issuing a post-dated cheque stops its payment by issuing instructions to the drawee bank before the due date of payment. The facts involved in all the appeals are almost similar except variations in dates and amounts of cheques involve in each case. For purpose of this judgment we have taken the facts in Criminal Appeal No. 315/2003 [arising out of SLP (Crl.) 2742/2002]. The facts are in a very narrow compass. Respondent No.1 addressed a letter to the appellant on 20-7-1992 enclosing therewith ten post-dated cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct behind introduction of Chapter XVII containing sections 138 to 142. This Chapter was introduced in the Act by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (Act 66 of 1988) with the object of inculcating faith in the efficacy of banking operations and giving credibility to negotiable instruments in business transactions and in order to promote efficacy of banking operations. With the policy of liberalisation adopted by the country which brought about increase in international trade and commerce, it became necessary to inculcate faith in banking. World trade is carried through banking operations rather than cash transactions. The amendment was intended to create an atmosphere of faith and reliance on banking system. Therefore, while considering the question of applicability of section 138 of the Act to a situation presented by the facts of the present case, it is necessary to keep the objects of the legislation in mind. If a party is allowed to use a cheque as a mode of deferred payment and the payee of the cheque on the faith that he will get his payment on the due date accepts such deferred payment by way of cheque, he should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only on the date shown on it, prior to that it remains a bill of exchange. In Anil Kumar Sawhney s case ( supra ) this Court was concerned with the question of limitation as provided in proviso ( a ) to section 138 of the Act. This proviso requires that a cheque should 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. The cheques in question in Anil Kumar Sawhney s case ( supra ) were dated 15-12-1991 and 15-5-1991 totalling an amount of Rs. 5,00,000. These cheques were returned by the Banker with the endorsement not arranged for - no fund . The payee thereafter issued notice as contemplated under section 138 of the Act followed by complaint under section 138 being filed in the Court of the Chief Judicial Magistrate at Karnal. It appears from the judgment that these cheques were handed over to the payee in a settlement arrived at in a Court case on 5-3-1990. The question for consideration was as to the date on which the cheques in question could be taken as drawn, in other words, what is the starting point of limitation of six months provided in proviso ( a ) to section 138 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que under the Act and the provisions of section 138( a ) would squarely be attracted. In the present case the post-dated cheques were drawn in March 1990 but they became cheques in the year 1991 on the dates shown therein. The period of six months, therefore, has to be reckoned from the dates mentioned on the face of the cheques." 5. From the above it will be seen that in Anil Kumar Sawhney s case ( supra ) the point for consideration was the date from which the period six months provided in proviso ( a ) to section 138 should be counted. The Court clearly held that a post-dated cheque becomes a cheque only on the date it bears when it becomes payable on demand, and therefore, limitation will start from that date. 6. In the present case the issue is very different. The issue is regarding payment of a post-dated cheque being countermanded before the date mentioned on the face of the cheque. For purpose of considering the issue, it is relevant to see section 139 of the Act which creates a presumption in favour of the holder of a cheque. The said section provides that "it shall be presumed that, unless the contrary is proved, that the holder of a cheque received the chequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise intended to inspire regarding payment being available on the due date. 7. NEPC Micon Ltd. v . Magma Leasing Ltd. [1999] 4 SCC 253 was a case in which the drawer of the cheque closed the account in the Bank before presentation of the cheque and the cheque when presented was returned by the Bank with the remark account closed . The question arose whether in this situation section 138 of the Act would be attracted. It was contended on behalf of the appellant that section 138 being a penal provisions it should be strictly interpreted. Section 138 according to the appellant applied only in two situations i.e. either because the money standing to the credit of the account of the drawer is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with the bank. Rejecting the contentions raised on behalf of the accused this Court held that return of a cheque on account of account being closed would be similar to a situation where the cheque is returned on account of insufficiency of funds in the account of the drawer of the cheque. Before one closes his account in the Bank he withdraws the entire amount standin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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