Five Landmark Cheque Bounce Cases | Criminal Law Attorney in Delhi NCR | Criminal Lawyer in Delhi NCR |

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“Cheque bounce cases are quasi criminal in nature and is/are a bailable and compoundable offense. Further, the case is ultimately aimed at the discharge of the legal debt or the legit debt which the complainant had extended to the alleged accused. There are generally a very few criminal defenses available to the accused in a cheque bounce case. The affidavit of evidence and the documentary evidences are very important.”

The Negotiable Instruments Act of 1881 has a long-term goal in mind, and any decisions that have been made in cases involving this Act, have a huge impact on directing the Act along a road of progress, , and improvement. This is the primary reason why the importance of few major rulings must be explored and brought to light.

1. Dalmia Cement (Bharat) Ltd v. M/S.Galaxy Trades & Agencies Ltd. (Appeal (Crl.) 957 of 2000),In this case The Supreme Court noted that Section 138 of the Negotiable Instrument Act was enacted with the specific purpose of establishing a particular provision by including a strict responsibility in the case of a cheque and a negotiable instrument. As per the Court, the law pertaining to negotiable instruments is a business legislation that was enacted to ease trade and commerce, by granting sanctity to instruments of credit that might be regarded to be convertible into money, and easily transferable from one person to another. In the absence of such instruments, like a cheque, trade and commerce operations in the current day are likely to suffer, since it is impractical for the trading community to carry the majority of the cash in circulation. Thus, negotiable instruments are credit instruments that are convertible due to the legality of being bargained, and are easily transferable, from one hand to another. To fulfil the Act’s purposes, the legislature has deemed it appropriate to include provisions in the Act bestowing such privileges on the mercantile instruments envisioned by it, as well as particular fines and procedures in the event that the instruments’ duties are not met. Hence, the laws pertaining to the Act need to be construed in light of the goals intended to be attained by it, notwithstanding anomalies from general law and the mechanism established for the redressal of the litigants’ grievances.
2. Dashrath Roopsingh Rathod Vs. State of Maharashtra & Anr. (Criminal Appeal N0. 2287 of 2009), In this case the Supreme Court amended the fundamental criterion under Section 138 of the Negotiable Instruments Act, which allows an individual to be prosecuted if he or she submitted a cheque that was returned due to a lack of money or if the amount presented exceeds the amount in the payer’s bank account. Previously, the holder of the cheque could file a complaint under Section 138 at his place of business or residence. However, a three-judge panel comprising TS Thakur, Vikramjit Sen, and C Nagappan held that the lawsuit must be filed in the location where the bank branch on which the cheque was written is located. Additionally, the decision was retrospective in nature. On account of this verdict, there would be an interstate transfer of cheque bouncing cases in lakhs of cases, pending in various Courts throughout the country.
3. M/s Meters and Instruments Private Limited & Anr. v. Kanchan Mehta,(Arising out of Special Leave Petition (Crl.) No.5451 of 2017) in this case, a two-judge Supreme Court bench made several significant observations on instances of cheque dishonour, and gave orders for the expeditious disposal of cheque matters under Section 138 of the Negotiable Instrument Act. In context of the use of modern technology for quick case resolution, The Court evaluated the use of modern technology for quick case resolution under Section 138 of the Negotiable Instrument Act, noting that modern technology should be considered not just for paperless Courts but also to minimise Court overcrowding. In its observations, the Court held that “there appears to be a need to explore categories of cases that can be partially or fully resolved “online” without the actual presence of the parties by streamlining processes when highly contested issues do not need to be adjudicated”. If a complaint with affidavits and papers can be submitted online, a process issued online, and the defendant pays the stipulated sum online, it may eliminate the requirement for the complainant or the accused to attend in person, applicable in cases relating to traffic violations. Only if the defendant disputes, will the necessity for parties to present emerge through Counsel or wherever possible, video conference arise. On proper self-operating circumstances, personal appearances can also be avoided.
4. Canara Bank v. Canara Sales Corporation (1987 AIR 1603, 1987 SCR (2)1138)- This case serves as a foundation for understanding the connection between the banker and its clients, which is entwined with threads of obligations and equity, especially in the event of either party’s carelessness or involvement in fraudulent activities. In this instance, the defendant had a current account with the plaintiff’s bank that was later linked to fraudulent conduct due to encashed cheques that did not carry the initials of the managing director, the defendants. As a result, forgery occurred in the case at hand. The defendants have launched a lawsuit to recover the money they have lost. The Court stated that there was carelessness on the side of both the creditor and the debtor, but the balance of negligence favoured the lender over the firm. As a result, mere carelessness on the side of the bank cannot be used to justify not employing the same. Finally, the Court determined that the corporation is entitled to compensation, thus dismissing the lawsuit.
5. Dayawati v. Yogesh Kumar Gosain (Crl.Ref.No.1/2016), in this case the Delhi High Court, in a landmark decision, distinguished traditional criminal cases from offences under Section 138 of the Negotiable Instruments Act, 1881, holding that it is legal to refer a criminal compoundable case to mediation under Section 138 of the Negotiable Instrument Act. The Court in the case further elaborated on the method to be followed in situations of mediation for violations under Section 138 of the Negotiable Instrument Act, as well as the substance of the settlement. The Court ruled in the case that it is lawful to submit a criminal compoundable matter to mediation under Section 138 of the Negotiable Instrument Act.

Thus, all the obove mentioned dictums passed by different Courts elucidate the parameters for deciding a cheque bounce case.

Authored By: Adv. Anant Sharma & Swayamsiddha Das