sanjay haritwal (prop) 08 July 2024

Can prosecution be filed if dishonor is on account of blockage of account by the police?

CAN ANY ONE SHARE VIEWS AND JUDGMENT ON THE POINT - - WHETHER PROSECUTION CAN BE FILED UNDER 138 NI Act if dishonor is on account of blocking of bank account by police ?

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Quick Summary

This discussion explores whether prosecution under Section 138 of the Negotiable Instruments Act is possible when a cheque dishonours because the account was blocked by the police. A key case, M/s Ceasefire Industries Ltd. V. State & Ors., suggests that if an account is frozen by an authority, it's beyond the accused's control, meaning the account wasn't maintained by them. Therefore, the primary ingredient for an offence under Section 138 may not be met, potentially preventing prosecution.

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T. Kalaiselvan, Advocate (Advocate) 08 July 2024

The bank will return the cheque with the reasons for not honoring the same for the reasons mentioned in the return memo, and if the reason stated therein is one of the valid reason attracting the ingredients of section 138 NI act, then only the complainant can initiate prosecution against the accused.

P. Venu (Advocate) 08 July 2024

What are the facts? What is the context?

sanjay haritwal (prop) 08 July 2024

My clients bank account has been frozen by EOW in the meanwhile 3cheque has bounced from the account and the memo says dishonor is because of 'account blocked'

S.K. Prabhakar Shetty 08 July 2024

In M/s Ceasefire Industries Ltd. V. State & Ors. (2017) DLT (Crl.) 951,that it was beyond the control of the accused to deal with his own account as the same was blocked at the instance of the other authority, thus, it can be said that the account was not maintained by the accused. Hence, the first ingredient to the offence under section 138 does not stand to be proved.

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