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ganesh (advocate)     03 February 2011

dishonour of cheque

1st accused issued a cheque to 2nd accused. the 2nd accused endorsed the same for collection in his  bank. The bank inturn send it for collection to the 1st  accused bank. but the cheque was returned as there is insuffient funds in the account of 1st accused.

1.whether the bank can file a private complaint against 1st and 2nd accused? if so under what liability?

2. whteher the court can spilt up the case agaist 2nd accused  under section 317(2) of Cr.P.C and try against only 1st accused as the 2nd accused was abscond to somewhere and the warrant is pending against him? 

give me some citations with regard to 1st accused for his accuqital.


 2 Replies

DEEPAK ASSOCIATES (08010117611)     03 February 2011

As Ist accused has issued the cheque to 2nd and 2nd has endorsed the same, in this case, the ist accused is liable to prosecuted as contempleted in section 138 N.I.Act.

Further, the only way is that to accuqital the !st accused to clear before the court that the same was not issued against legal debt otherwise it depand upon the complaint filed to see the technical error therein


Thanks & Rgds

Deepak kapoor

Hemant Agarwal ( Mumbai : 9820174108)     04 February 2011

My Perceptions :

1.  The drawer is XYZ & drawee is ABC.  BANK IS NOT THE DRAWEE.  ONLY the "drawee" has the jurisdiction to file grievances under the provisions of the N.I.Act.

2.  By the above parameter XYZ has (presumably) given cheque to ABC for some legal debt or liability.  There is no "debt or liability" factor between XYZ  & Bank.  By endorsing a cheque of XYZ  in favour of the Bank,  NO TRI-PARTY agreement or liability or privity of contract can be created automatically, unless there is a registered deed to that affect.

3.  ABC endorses the cheque in favour of BANK.  Here due to other parameter under the N.I.Act,  ABC becomes the deemed "drawer" to the bank and the Bank becomes the beneficiary drawee.

4.  Now there is a privity of contract born between ABC and the Bank.  XYZ is nowhere in the picture and there is NO  "privity of contract"  between XYZ and the Bank   "NOR"  THERE IS ANY LEGAL DEBT OR LIABILITY FROM  XYZ (original drawer)  TOWARDS THE BANK.

5.  THIRD PARTY "debt or liability" is outside the purview of the N.I.Act.  The N.I.Act has given a Criminal Fiction to dishonouring of a "DRAWER"s cheque and further the component of  "Vicarious liability" is absent in third party debt or liability, specially so under the N.I.act.  Here the Bank cannot make "averment" against orginal drawer XYZ, in its complaint under the N.I.Act.

6.  Cheque gets dishonoured. ONLY THE first "DRAWEE"  (ABC) has the jurisdiction to file case under the N.I.Act against the Drawer (XYZ).      In the issue instant,   if I were to advise then XYZ may just simply claim that XYZ issued the said cheque as a "GIFT" or a "friendly LOAN"  to ABC (drawee) (specially so after ABC is absconding).

7.  In above instant Bank not being the original drawee and not having any debt & liability component against the original drawer (XYZ)  can-NOT seek redressal under the N.I.Act, against XYZ. 

8.  Bank can file redressal complaints under other laws, against ABC (the endorser of the cheque).

Keep Smiling .... Hemant Agarwal

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