Cheque dishonoured as payer frozen his own bank a/c
Mahabir
(Querist) 26 March 2016
This query is : Resolved
I supplied materials in one Gramin Bank through contractor. Contractor gave post-dated cheque for Rs.12.00 lac. One presentation cheque was returned with remark - "A/c frozen by the a/c holder." It might be possible that contractor either issued cheque of his frozen a/c or freezed the a/c after issue of cheque, which is fraudulent act of payer. Notice sent u/s 138 IPC read with sec 403,406 & 420 of IPC to both contractor & bank(Beneficiary. Bank is enjoying the items supplied without our transfer of right to Contractor or Bank.
My query is; (1). Can FIR be filed directly in Police station rather than complain case? & 92). Whether Bank, as direct Beneficiary, is also liable for action or not?
Regards
Mahabir
SAINATH DEVALLA
(Expert) 27 March 2016
The transaction is between U and the contractor and hence the beneficiary is not involved.Contractor is liable to be criminally prosecuted under NI ACT.
Go through the below citations:
ACCOUNT CLOSED:DISHONOUR OF CHEQUE CITATIONS:
o Section 138 - Account closed - Dishonour of cheque - Offence will be committed only if account is closed after issuance of cheque and not when cheque is issued after closure of account. (Urban Co- op. Credit Society Vs State of Gujarat) 2004(1) CRIMINAL COURT CASES 527 (Gujarat)
o Section 138 - Account closed before issuance of cheque (In the instant case account was closed in 1987 whereas cheque from that account was issued in 1990) - Cheque dishonoured - No offence u/s 138 of Negotiable Instruments Act is made out - Offence would come within purview of Section 420 IPC. (Joseph Vs Philip Joseph) 2001(1) CIVIL COURT CASES 220 (Kerala)
o Section 138 - Account not in existence by the date on which the cheque was issued - Cheque dishonoured - No case is made out against the accused for the offence u/s 138 of the Act. (Deepa Finance Corpn. Vs A.K.Mohammed) 2001(3) CIVIL COURT CASES 382 (Kant.) : 2002 (1) ISJ (BANKING) 0087
o Section 138 - Cheque issued after closure of account - Cheque dishonoured - Such a cheque falls within the sweep of Section 138 of the Act. (Salim Vs Thomas) 2004(2) CIVIL COURT CASES 620 (Kerala)
o Section 138 - Closure of account - Offence u/s 138 of the Act is made out - Closure of account strengthens the intention of accused to cheat - Whether account was closed with dishonest intention or otherwise can be looked into at trial stage. (Rajendra Vasantrao Khode Vs Laxmikant Shantilal Choudhari) 2000(3) CIVIL COURT CASES 524 (Bom.) : 2000 ISJ (BANKING) 0461
o Section 138 - 'Account closed' - Cheque returned with this endorsement - Amounts to dishonesty as such comes within the definition of the provision. (Thirumala Agencies & Anr. Vs Samala Mareppa & Sons) 2001(3) CIVIL COURT CASES 423 (Kant.) : 2001 ISJ (BANKING) 0403
o Section 138 - 'Account closed' - Closure of account on a date antecedent to the date of cheque - it is open to the party to show that the cheque was drawn on date antecedent to the date which the cheque bears.(Japhari Vs Priya) 1993 CIVIL COURT CASES 563 (Kerala) : 1993 ISJ (BANKING) 0557 : 1994 (1) BANKING CASES 0642 : 1994 (1) BCLR 0294 : 1999 (96) COMP. CASES 0818 : 1994 (1) CRIMES 0379 : 1993 (2) KLT 0141
· Section 138 - 'Account closed' - Dishonour of cheque - It is an offence u/s 138 of the Act - Closure of the account would be an eventuality after the entire amount in the account is withdrawn - It means that there was no amount in the credit of "that account" on the relevant date when the cheque was presented for honouring the same. (NEPC Micon Ltd. Vs Magma Leasing Ltd.) 1999(2) CIVIL COURT CASES 471 (S.C.) : 1999(1) APEX COURT JOURNAL 624 (S.C.) : 1999 ISJ (BANKING) 0433 : 1999 (1) ALL INDIA CRIMINAL LR (CALCUTTA) 0147 : 1999 (2) MPLJ 0024 : 1999 (2) CTC 0347
· Section 138 - 'Account closed' - Offence is made out - Not necessary that bank account should be alive at the time of presentation of cheque. (NEPC Micon Ltd. Vs Magma Leasing Ltd.) 1999(2) CIVIL COURT CASES 459 (Calcutta) : 1999 (2) ALL INDIA CRIMINAL LR (S.C.) 0218 : 1999 (1) BANKING CASES 0269 : 1999 (96) COMP. CASES 0822 : 1998 (2) CLT 0505
o Section 138 - 'Account closed' - Once the cheque is issued, law takes care to see that it is honoured, failing which an erring drawer will be penalised - For constituting the offence dishonour of cheque is material and it can very well be on closure of account also.(Shivendra Sansguiri Vs Adineo) 1997(1) CIVIL COURT CASES 348 (Bombay) : 1996 (2) BANKING CASES 0569 : 1996 CRL. L.J. 1816 : 1996 (4) CCR 0429 : 1998 ALLMR 0880
o Section 138 - 'Account closed' - Prosecution can be launched. (J.Veeraraghavan Vs Lalith Kumar) 1995(2) CIVIL COURT CASES 206 (Madras) : 1995 (1) BANKING CASES 0318 : 1995 (2) BCLR 0428 : 1996 BJ 0191 : 1995 (3) CRIMES 0205 : 1995 CRL. L.J. 1882 : 1994 (2) LW (CRL.) 0663
o Section 138 - 'Closure of account' - Attracts penal liability irrespective of whether closure of account by drawer was prior or subsequent to issue of cheque - Ground on which cheque was dishonoured is not material. (S.R.Muralidar Vs Ashok G.Y.) 2001(3) CIVIL COURT CASES 155 (Kant.) : 2002 (1) ISJ (BANKING) 0402
o Section 138 - 'Closure of account' - Dishonour of cheque on account of closure of account before or after issuing a cheque - It means insufficiency of funds - Offence u/s 138 is committed. (G.Venkataramanaiah Vs Sillakollu Venkateswarlu & Anr.) 1999(1) CIVIL COURT CASES 674 (A.P.) : 1999 (2) ALL INDIA CRIMINAL LR (A.P.) 0156 : 1999 (97) COMP. CASES 0013
o Section 138 - Cheque issued after closure of account - Cheque dishonoured - Offence stands committed even if cheque is issued after closure of account because amount of money standing to credit of "that account" would be "nil" at the relevant time apart from it being closed. (Hashmikant M.Sheth Vs State of Gujarat) 2004(4) CRIMINAL COURT CASES 553 (Gujarat)
o Section 138 - Cheque issued after closure of account - Cheque dishonoured - Such a cheque falls within the sweep of Section 138 of the Act. (Salim Vs Thomas) 2004(2) CIVIL COURT CASES 620 (Kerala) = 2004(3) CRIMINAL COURT CASES 439 (Kerala)
· Section 138 - Cheque issued when account had already been closed - Provision of Section 138 will apply. (N.A.Issac Vs Jeemon P.Abraham & Anr.) 2005(1) CIVIL COURT CASES 690 (S.C.) : 2005(1) CRIMINAL COURT CASES 119 (S.C.)
o Section 138 - Cheque returned as "Account closed" - No offence is made out. (Prasanna Vs Vijaylakshmi) 1993 CIVIL COURT CASES 56 (Madras) : 1992 ISJ (BANKING) 0436
o Section 138 - Cheque returned with the endorsement 'Account closed' - Amounts to an offence under section 138 of the Act. (Japahari Vs Priya) 1993 CIVIL COURT CASES 563 (Kerala) : 1993 ISJ (BANKING) 0557 : 1994 (1) BANKING CASES 0642 : 1994 (1) BCLR 0294 : 1999 (96) COMP. CASES 0818 : 1994 (1) CRIMES 0379 : 1993 (2) KLT 0141
o Section 138 - Dishonour of cheque - 'Account closed' - Closure of account is not a bar on Magistrate to take cognizance of complaint u/s 138 of the Acct. (M/s G.M.Mittal Stainless Steels Ltd. Vs M/s Nagarjuna Investment Trust Ltd.) 1996(1) CIVIL COURT CASES 87 (A.P.) : 1995 (2) ALL INDIA CRIMINAL LR (A.P.) 0737 : 1996 BJ 0253 : 1995 (4) CRIMES 0379 : 1995 (2) ALT (CRL.) 0410
o Section 138 - Dishonour of cheque - Closure of account - Does not constitute offence under Section 138 of the Act. (Malikarjun Traders, Sindhanur Vs B.Pandurang Setty & Anr.) 1996(1) CIVIL COURT CASES 617(1)(Kant.) : 1996 ISJ (BANKING) 0456 : 1996 (1) KARLJ 0522
Rajendra K Goyal
(Expert) 27 March 2016
What is meant by account frozen, whether it is closed, turned dormant, in operative, transaction / operation in account stopped by court or otherwise?
It is advisable to file criminal complaint with the magistrate.
Mahabir
(Querist) 28 March 2016
Thank for replies
Account frozen means - A/c was frozen by A/c Holder himself and by no other authority/bank. The purpose was that Payer intentionally wanted my cheque to dishonored and in further communication he admited too
