Advent of cheques in the market have given a new dimension to the commercial and corporate world, its time when people have preferred to carry and execute a small piece of paper called Cheque than carrying the currency worth the value of cheque. Dealings in cheques are vital and important not only for banking purposes but also for the commerce and industry and the economy of the country. But pursuant to the rise in dealings with cheques also rises the practice of giving cheques without any intention of honoring them. Before 1988 there being no effective legal provision to restrain people from issuing cheques without having sufficient funds in their account or any stringent provision ot punish them in the vent of such cheque not being honoured by their bankers and returned unpaid. Of course on dishonour of cheques there is a civil liability accrued. However in reality the processes to seek civil justice becomes notoriously dilatory and recover by way of a civil suit takes an inordinately long time. To ensure promptitude and remedy against defaulters and to ensure credibility of the holders of thenegotiableinstrumenta criminal remedy of penalty was inserted inNegotiableInstrumentsAct, 1881 in form of the Banking, Public Financial Institutions andNegotiableInstruments Laws (Amendment)Act, 1988 which were further modified by theNegotiableInstruments (Amendment and Miscellaneous Provisions)Act, 2002[3]. This article endeavours to elucidate the penal provision[4] light of the amendments and the judicial interpretations. Scope: Of the ten sections comprising the chapter of theAct, section138creates statutory offence in the matter of dishonour of cheques on the ground of insufficiency of funds in the account maintained by a person with the banker. Section138of theActcan be said to be falling either in the acts which are not criminal in real sense, but are acts which in public interest are prohibited under the penalty or those where although the proceeding may be in criminal form, they are really only a summary mode of enforcing a civil right. Normally in criminal law existence of guilty intent is an essential ingredient of a crime. However the Legislature can always create an offence of absolute liability or strict liability where ‘mens rea’ is not at all necessary. While elucidating on this aspect the Kerala High Court in K. S. Anto v. Union of India held that: "Knowledge or reasonable belief, that pre requisite could be statutorily dispensed with in appropriate cases by creating strict liability offences in the interest of the Nation." Further the creation of the strict liability is an effective measure by encouraging greater vigilance to prevent usual callous or otherwise attitude of drawers of cheques in discharge of debts or otherwise attitude of drawers of cheques in discharge of debts or otherwise. The words as appearing in clause (b) of S.138cannot be construed even to imply failure without reasonable cause in view of the explicit language in which the provision is couched, the principle of strict liability incorporated in the main enacting clause. Circumstances of dishonour: The circumstances under which dishonour of cheque takes place or that may contribute to the situation would be irrelevant and are required to be totally ignored. InRakesh Nemkumar Porwal v. Narayan Dhondu Joglekar the Bombay High Court held that: "A clear reading of Section138leaves no doubt in our mind that the circumstances under which such a dishonour takes place are required to be totally ignored. In such case, the law only takes cognizance of the fact that the payment has not been forthcoming and it matters little that any of the manifold reasons may have caused that situation." Ingredients and requirements of the penal provisions: Section138creates an offence for which the mental elements are not necessary. It is enough if a cheque is drawn by the accused on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharge in whole or in part, of any debt or other liability due. Therefore, whenever the cheques are on account of insufficiency of funds or reasons referable to the drawer’s liability to provide for funds, the provisions of section138of theActwould be attracted, provided the following conditions are satisfied: 1. Existence of a live account Existence of a"live account"at the time of issue of cheque is a condition precedent for attracting penal liability for the offence under this section. A cheque cannot be issued de hors an account maintained by its drawer with the banker. When the cheque is returned by the bank unpaid because of the account of money standing to the credit of the cheque, to make demand for payment as provided for payment as indicated in clause (b) of the proviso. The words"that account"in the section denote to the account in respect of which the cheque was drawn.
Posted on: Sat, 15 Jun 2013 15:37:24 +0000
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