cheque issued by dealer but not from his account
Dinkar Vidyarthi
(Querist) 13 July 2009
This query is : Resolved
Dear Sir,
I had recived a cheque from one of our dealer in favour of our company but the cheque is not of dealers account and he provide us a cheque of his wife account duly singed by his wife in case of any default can company file a complaint against the dealer u/s 138 N. I. Act
A V Vishal
(Expert) 13 July 2009
In my opinion it does not attract S.138, there is a recent judgement in this regard, if I come across I will post it here.
adv. rajeev ( rajoo )
(Expert) 13 July 2009
U can file a complaint, but averments should be like this. A:2 i.e., wife of the A:1(dealer)issued the cheque to clear the leglly payable debt of A:2.
I did like that but the case is compromised, the case was admitted.
PALNITKAR V.V.
(Expert) 13 July 2009
You should add the wife as one of the accused and aver what is suggested by Rajeev.Law will not help those who adopt such tactics to by pass the provisions of 138.
Jayashree Hariharan
(Expert) 13 July 2009
You can file complaint against his wife under sec. 138 NI Act, but not on the dealer. The debt liability is by his wife, as per Law.
sanjeev murthy desai
(Expert) 13 July 2009
Dealer and his wife are liable, You should make wife and husband as parties in the NI act, 138 complaint.
sanjeev desai
Khaleel Ahmed
(Expert) 13 July 2009
In case of default, you can file a complaint against the wife of dealer only, as she issued the cheque from her own account.
A V Vishal
(Expert) 13 July 2009
Dear Sir,
Although the judgement is remotely connected with the query, none the less the court has explained the liability of the debtor and not that of the person who has issued the cheque.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29.06.2009
CORAM
THE HONOURABLE MR. JUSTICE P.R.SHIVAKUMAR
Crl.O.P.No.446 of 2009
N.Gopalan
S/o.Natarajan
Authorised Signatory
Darshini Fabrics
58, Ramasamy Gounder Lane
Erode-1, Erode District .. Petitioner
-Vs-
K.Udhayakumar .. Respondent
A V Vishal
(Expert) 13 July 2009
I quote S 138 for kind attention of the members:
"138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person 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 the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid. either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice. to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless- ........."
In this context, I again quote" Where any cheque drawn by a person 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 the discharge, in whole or in part, of any debt or other liability...", the section clearly states discharge of liability, the wife cannot be liable for the debts of her husband, hence I opined that a case u/s.138 can be instituted against the wife nor can she joined as a party to the suit.
PALNITKAR V.V.
(Expert) 13 July 2009
The judgment quoted by Mr. Vishal itself shows that the drawer of the cheque being wife, she can be prosecuted.
A V Vishal
(Expert) 13 July 2009
Dear Palnitkar Sir
Kindly comment on the second part of my comment posted above regarding 138. Can you please enlighten on the scope of the word "in discharge, in whole or in part, of any debt or liabiity...", how has this to be interpreted, should it mean one own debt or liability or any cheque issued to discharge the debts or liability of the principal debtor who is different from the drawer of the cheque.
A plain reading of Section 138 of the Act makes it manifest that if a cheque is drawn by a person on an account maintained by him and issued for the discharge of an existing debt and the cheque bounces either on account of insufficiency of the funds in the account or on account of a fact that it exceeds the amount arranged to be paid from that account, that person is deemed to have committed an offence. The section leaves no doubt and makes it manifest
that the person who has drawn the cheque on his account is alone liable in the event of that cheque drawn by him having bounced.
Y V Vishweshwar Rao
(Expert) 14 July 2009
Wife undertook the liability of Husband and issued the cheque for payment of her husband liablity - Each liability Transaction need not be in writing . It can be by Circumstances & implications!
A V Vishal
(Expert) 14 July 2009
Dear YVV
I am seeking a advice on the meaning of the wording of the S 138, let us not deviate with if and buts and circumstances and implications.
A V Vishal
(Expert) 14 July 2009
Dear Palnitkar Sir
Kindly comment on the second part of my comment posted above regarding 138. Can you please enlighten on the scope of the word "in discharge, in whole or in part, of any debt or liabiity...", how has this to be interpreted, should it mean one own debt or liability or any cheque issued to discharge the debts or liability of the principal debtor who is different from the drawer of the cheque.
A plain reading of Section 138 of the Act makes it manifest that if a cheque is drawn by a person on an account maintained by him and issued for the discharge of an existing debt and the cheque bounces either on account of insufficiency of the funds in the account or on account of a fact that it exceeds the amount arranged to be paid from that account, that person is deemed to have committed an offence. The section leaves no doubt and makes it manifest
that the person who has drawn the cheque on his account is alone liable in the event of that cheque drawn by him having bounced.
J K Agrawal
(Expert) 14 July 2009
Ooooooops friends.
We are talking about a NEGOTIABLE INSTRUMENT which means an instrument which can be negotiated ( section 13 of NI ACT)
and negotiation?
'When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute the person the holder thereof, the instrument is said to be negotiated.' (section 14)
Pl again look at section 138 proviso (b) which says not only about payee but also about 'holder in due course'
here drawer is wife as she may having some account payable to her husband, her husband is payee as well as holder in due course and again he handed over the cheque to you. you are again an holder in due course if the cheque is in your name only, You are payee as well as holder in due course and the status of husband is only as holder in due course.
The wife is liable for criminal prosecution and the husband is liable for civil action if the cheque bounces. The wife is not liable for civil action by you as you have no ‘privity of contract’ with her. The husband is not liable for criminal action as he in not drawer of cheque.
Pl think about an example A gives a bearer cheque to B. B then negotiate it to C, C to D and D to E. If the cheque is bounces, who is liable? How practically E can get relief when he knows nobody else D?
Dinkar Vidyarthi
(Querist) 15 July 2009
Thanks to all to provide me vision related to my querry in case of default in future.
A V Vishal
(Expert) 17 July 2009
Dear friends
Aren't we all beating round the bush for a simple query. In order to constitute a case u/s. 138, the cheque must be issued by the account holder for repayment of a legally enforceable debt, in the instant case the debtor is the husband and the wife has issued the cheque, there is no enforceable debt against the wife by the creditor, for purpose of admission of the case based on presumption the wife can be joined as a party, but in absence of proof of any enforceability the wife is discharged from S 138. Hence in my opinion a case u/s.138 is not maintainable.
PALNITKAR V.V.
(Expert) 18 July 2009
Maintainability of a case and proof of a case at the time of trial are two different aspects. Maintainability necessarily relates to the stage of initiation of the proceeding where as proving of case is a subsequent stage.if the complainant is able to prove that the wife had issued the cheque for discharge of the debt of her husband, it implies that she undertook to discharge that debt. In other words, it has to be said that the cheque was issued for discharge of the debt.Presumption u/s 118 will favour the complainant. If this logical conclusion is not allowed then the provision of sec. 138 can be made redundant because in every case the debtor will give cheque that is not issued from somebody else's account and neither he nor the drawer of cheque can be punished if the logic applied by Mr. Vishal is to be adopted. But ofcourse, it has to be proved that the wife issued cheque knowing that she was issuing it for the discharge of debt of her husband. One way, she treats the debt to be her own and issues the cheque for discharge of that debt.
A V Vishal
(Expert) 18 July 2009
Palnitkar Sir
I am trying to convey the same idea, which are expressed by you, Maintainability necessarily relates to the stage of initiation of the proceeding where as proving of case is a subsequent stage. It has to be proved that the wife issued cheque knowing that she was issuing it for the discharge of debt of her husband beyond reasonable doubt.
