Section 138 Of The NI Act, 1881.
pratik
(Querist) 09 January 2011
This query is : Resolved
1) I have gone through a recent Bombay High Court Judgement that cheques, which are given for security/even PDC, do not attract 138.
2) a) Also I have heard that if the a/c is open as joint names as 50 % holder each that the first holder is liable if the case goes under section 138 of the NI Act, 1881.
b) Also I have heard that if the a/c is open as three holder than the above mentioned creitera are applicable (means the first holder is only liable under section 138 of the NI Act, 1881.
c) In case of (b) if the first holder is minor than the second holder will be responsible under section 138 of the NI Act, 1881 Or the guardian how has signed on behalf of the minor.
Pls Provided me with the case law pls .
Thanks In Advance.
Raj Kumar Makkad
(Expert) 09 January 2011
1. The cheque deposited for the purpose of security if bounces can also fatch proceeding under section 138 NI Act thoug some High Courts have given adverse view but general consensus is in favour of attraction of action.
2 a. Wo soever has issued the cheque is libale for prosecution.
b. No. The reply has already een given.
c. Minor cannot sign on cheque rather his guardian who as signed is liable.
Amit Minocha
(Expert) 10 January 2011
SC has conveyed that the Security cheque is also covered u/s 138. Irrespective of first or ii holder, it is the signatory who will be liable for prosecution.
malipeddi jaggarao
(Expert) 10 January 2011
Application of Sec.138 for PDCs are based on case to case. For example if the beneficiary has not presented the cheques periodically and opts to present them in bulk at one time, the court may conclude in such cases Section 138 is not applicable. In case of joint accounts, the person who signs the cheque is responsible except minor. Generally even in case of joint accounts where minor is one of the account holders, cheque signed by minor can not form security or valid discharge for any debt, as he is not capable of entering into any agreement as per the Indian Contract Act. And Mr.Amit perfectly advised about the liability in case of a joint account. The person whoever signs the cheque, is liable for the actions under Sec.138 if the cheque is bounced in terms of the provisions of the Act.
