arvind (Promoter) 20 March 2015

138 ni & 420

hello there, a friend of is in bit of trouble, below is the descripttion

he had an account with indiabulls for daily transaction (sale and purchase) of shares. usually all the transactions (sell or purchase of shares) was being done through telephonically. few days ago, he received a call from indiabulls (udaipur) that "to cover the difference amount for holding a share, indiabulls will sell all shares today". my friend had no objection in that so he communicated with YES.

Finally indiabulls sold the shares third day of the phone call. my friend eventually booked a loss of approx 1.20 lakhs for delay in selling of shares. on the other hand, to recover the difference in amount of shares (which were in hold of my friend), indiabulls used the agreement and created the case of 138 and 420 against my friend at delhi courts (where as all the shares, agreement was done at udaipur branch of indiabulls).

my friend was highly surprised to get a call from delhi (unknown number) that his case was filled in delhi metropoliun courts and he had to attend the date. my friend protested to that call in saying that kindly send the summon and then he will appear to the courts, few days later, delhi police approached my friend with the non-bailable arrest warrant.

kindly suggest for my friend on urgent basis so that he may defend himself.

regards

arvind

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4 Replies

DR. DIMPLE JINDAL (ADV.) (Advocate) 20 March 2015

By a landmark judgment, Dashrath Roopsingh Rathod Vs. Stae of Maharashtra & Anr.

In this case, the Supreme Court has changed the basic criteria under Section 138 of Negotiable Instruments Act which is to prosecute a person who had presented the cheque which had been returned due to insufficiency of funds or if the amount exceeds the amount in the bank of the payer.

Earlier, a case under Section 138 could be initiated by the holder of the cheque at his place of business or residence. But, a bench of justices TS Thakur, Vikramjit Sen and C Nagappan ruled that the case has to be initiated at the place where the branch of the bank on which the cheque was drawn is located.

And the judgment would apply retrospectively. This means, lakhs of cases pending in various courts across the country would witness a interstate transfer of cheque bouncing cases.

The bench said: “In this analysis, we hold that the place, situs or venue of judicial inquiry and trial of the offence must logically be restricted to where the drawee bank is located.”

Example: Mr. X who resides in Chennai owes Rs. 1 Lakh to Mr. B who resides in Chandigarh, Mr. X issues a cheque in delhi in favour of Mr. B. The cheque bounces in Ludhiana (place of bank where the cheque is given by Mr. B) for insufficiency of funds.

According to the earlier law Mr. X could have chosen any of the four places. But by the recent judgment the only place for institution of case would be Ludhiana, i.e. where the cheque has dishonored at the payee bank which is located in Ludhiana in this example.

Ompal Aggarwal (Advocate) 21 March 2015

Section 138 of NI Act applicable where cheque is issued. In the present case no cheque was issued by ur friends. So 138 would not be applicable in this case