1

EffectofRecentAmendmentsinNegotiableInstrumentsActon
thependingCasesasWellasAppeals.

1. EvolutionofNegotiableInstrumentAct,1881with
referencetoamendments(From2002to2015).
TheNegotiableInstrumentActwasoriginallydraftedin1866by
the 3rd Indian Law Commission and introduced in December, 1867 in the
CouncilanditwasreferredtoaSelectCommittee.Objectionswereraisedbythe
mercantilecommunitytothenumerousdeviationsfromtheEnglishLaw,which
itcontained.TheBillhadtoberedraftedin1877.Afterthelapseofasufficient
periodforcriticismbytheLocalGovernments,theHighCourtsandthechambers
of commerce, the Bill wasrevised bya SelectCommittee. Inspiteof thisBill
couldnotreachthefinalstage.In1880bytheOrderoftheSecretaryofState,
theBillhadtobereferredtoanewLawCommission.Ontherecommendationof
thenewLawCommissiontheBillwasredraftedandagainitwassenttoaSelect
CommitteewhichadoptedmostoftheadditionsrecommendedbythenewLaw
Commission.Thedraftthuspreparedforthefourthtimewasintroducedinthe
Councilandwaspassedintolawin1881beingtheNegotiableInstrumentsAct,
1881(ActNo.26of1881)

NegotiableInstrumentshavebeenusedincommercialworldfora
long period of time as one of the convenient modes of transferring money.
Developmentinbankingsectorandwiththeopeningofnewbranches,cheque
became one of the favourite Negotiable Instrument. A cheque is an
acknowledgedbillofexchangethatisreadilyaccepted inlieuofpaymentof
moneyanditisnegotiable.However,bythefallofmoralstandards,eventhese
NegotiableInstrumentslikechequesissued,startedlosingtheircredibilitybynot
beinghonouredonpresentment.Itwasfoundthatanactioninthecivilcourtfor
collectionoftheproceedsofnegotiableinstrumentlikeachequetarried,thus
defeatingtheverypurposeofrecognizinganegotiableinstrumentasaspeedy
vehicleofcommerce.Consequently,Section4oftheBanking,PublicFinancial
InstitutionsandNegotiableInstrumentsLaws(Amendment)Act,1988,inserted
ChapterXVIIintheNegotiableInstrumentsAct,1881. NegotiableInstruments
 2

Actisbasedonprinciplesof Englishlaw and wherenospecialconsideration

arisewithreferencetoIndiancircumstances,Courtsarejustifiedinconstruing
statute conformably to provisions of English Law which follows the general
commerciallawoftherestoftheworld.

There are certain differences between the English Act and the
IndianActwhichprecededtheformerbyayear.ButsubstantiallythetwoActs
correspond.
ContractActisgeneralstatutedealingwithcontracts.Negotiable
InstrumentsActisstatuedealingwithparticularformofcontractandlawlaid
downforspecialcasesmustalwaysoverruleprovisionsofgeneralcharacter.
TheNegotiable InstrumentsActwasprima facie intended to lay
downthewholelawregardingcheques,billofexchangeandpromissorynotes.
Section6oftheNegotiableInstrumentsActdefinesachequeasa
billofexchangedrawnonaspecifiedbankerandnotexpressedtobepayable
otherwisethenondemandanditincludestheelectronicimageofatruncated
chequeandacheuqeiselectronicform.
According to explanation I For the purpose of this section the
expression
a) a cheque in the electronic form means a cheque which
containstheexactmirrorimageofabearercheque,andisgenerated,written
andsignedinasecuresystemensuringtheminimumsafetystandardswiththe
useofdigitalsignature(withorwithoutbiometricssignature)andasymmetric
cryptosystem.
b) a truncated cheque means a cheque which is truncated
duringthecourseofaclearingcycle,eitherbytheclearinghouseorbythebank
whether paying or receiving payment, immediately on generation of an
electronicimagefortransmission,substitutingthefurtherphysicalmovementof
thechequeinwriting.
ExplanationII.Forthepurposesofthissection,theexpression
clearinghousemeanstheclearinghousemanagedbytheReserveBankofIndia
oraclearinghouserecognizedassuchbytheReserveBankofIndia.
Aspersection9oftheNegotiableInstrumentsActHolderin
 3

duecoursemeansanypersonwhoforconsiderationbecamethepossessorofa
promissorynote,billofexchangeorcheuqeifpayabletobearer,orthepayeeor
indorseethereof,if(payabletoorder)beforetheamountmentionedinitbecame
payable,andwithouthavingsufficientcausetobelievethatanydefectexistedin
thetitleofthepersonfromwhomhederivedhistitle.
Aspersection11oftheNegotiableInstrumentsAct Inland
instrumentmeans apromissorynote,billofexchangeorchequedrawnor
madein(India)andmadepayablein,ordrawnuponanypersonresidentin
(India)shallbedeemedtobeaninlandinstrument.
As per section 13 of the Negotiable Instruments Act
NegotiableInstrumentAnegotiableinstrumentmeansapromissorynote,bill
ofexchangeofchequepayableeithertoorderortobearer.
Explanationi Apromissorynote,billofexchangeorchequeis
payabletoorderwhichisexpressedtobesopayableorwhichisexpressedtobe
payabletoaparticularperson,anddoesnotcontainwordsprohibitingtransfer
orindicatinganintentionthatitshallnotbetransferable.
Explanationii Apromissorynote,billofexchangeorchequeis
payabletobearerwhichisexpressedtobesopayableoronwhichtheonlyor
lastendorsementisanendorsementinblank.
ExplanationiiiAnegotiableinstrumentmaybemadepayableto
twoormorepayeesjointly,oritmaybemadepayableinthealternativetoone
oftwo,oroneorsomeofseveralpayees.
TheParliamentinitswisdomhadchosentobringsection138on
theStatutebookinordertointroducefinancialdisciplineinbusinessdealings.
Prior to insertion of section 138 of the Negotiable Instruments Act, a
dishonouredchequeleftthepersonaggrievedwiththeonlyremedyoffilinga
claim.TheobjectandpurposeofbringingnewprovisionsintheActwastomake
the persons dealing in commercial transactions work with a sense of
responsibilityandforthatreason,undertheamendedprovisionsoflaw,lapseon
their partto honourtheircommitmentrenders theperson liableforcriminal
prosecution.

Inourcountry,inalargenumberof commercialtransactions,it
 4

wasnotedthatthechequeswereissuedevenmerelyasadevicenotonlytostall
but even to defraud the creditors. The sanctity and credibility of issuance of
cheques in commercial transactions was eroded to a large extent. The
Parliament, in order to restore the credibility of cheques as a trustworthy
substituteforcashpayment,enactedtheaforesaidprovisions.

TheremedyavailableinCivilCourtisalongdrawnmatterandan
unscrupulousdrawernormallytakesvariouspleastodefeatthegenuineclaimof
thepayee.

Aspersection138oftheNegotiableInstrumentsActwhereany
chequedrawnbyapersononanaccountmaintainedbyhimwithabankerfor
paymentofanyamountofmoneytoanotherpersonfromoutofthataccountfor
thedischarge,inwholeorinpart,ofanydebtorotherliability,isreturnedbythe
bankunpaid,eitherbecauseoftheamountofmoneystandingtothecreditof
thataccountisinsufficienttohonourthechequeorthatitexceedstheamount
arrangedtobepaidfromthataccountbyanagreementmadewiththatbank,
suchpersonshallbedeemedtohavecommittedanoffenceandshall,without
prejudicetoanyotherprovisionofthisAct,bepunishedwithimprisonmentfora
termwhichmaybeextendedtotwoyears,orwithfinewhichmayextendto
twicetheamountofthecheque,orwithboth.

Providedthatnothingcontainedinthissectionshallapplyunless
a)thechequehasbeenpresentedtothebankwithinaperiodofsix
monthsfromthedateonwhichitisdrawnorwithintheperiodofitsvalidity,
whicheverisearlier.
b)thepayeeortheholderinduecourseofthecheque,asthecase
maybe,makesademandforthepaymentofthesaidamountofmoneybygiving
a notice in writing, to the drawer of the cheque (within thirty days) of the
receiptofinformationbyhimfromthebankregardingthereturnofthecheque
asunpaidand
c)thedrawerofsuchchequefailstomakethepaymentofthesaid
amountofmoneytothepayeeorasthecasemaybe,totheholderinduecourse
ofthechequewithinfifteendaysofthereceiptofthesaidnotice.
 5

Explanation For the purposes of this section, debt or other

liabilitymeansalegallyenforceabledebtorotherliability.
Asper section141oftheNegotiableInstrumentAct offence
bycompanies1)IfthepersoncommittinganoffenceunderSection138isa
company,everypesowho,atthetimetheoffencewascommitted,wasincharge
of, and was responsible to the company for the conduct of business of the
company,aswellasthecompany,shallbedeemedtobeguiltyoftheoffenceand
shallbeliabletobeproceededagainstandpunishedaccordingly.

Provided that nothing contained in this subsection shall render

anypersonliabletopunishmentifheprovesthattheoffencewascommitted
withouthisknowledge,orthathehadexercisedallduediligencetopreventthe
commissionofsuchoffence.

Providedfurtherthat,whereapersonisnominatedasaDirectorof
acompany by virtue of his holding any office or employment in the Central
GovernmentorStateGovernmentorafinancialcorporationownedorcontrolled
bytheCentralGovernmentortheStateGovernment,asthecasemaybe,he
shallnotbeliableforprosecutionunderthisChapter.

As per Section 142 of the Negotiable Instrument Act

cognizanceofoffences
a)noCourtshalltakecognizanceofanyoffencepunishableunder
section138exceptuponacomplaint,inwriting,madebythepayeeor,asthe
casemaybetheholderinduecourseofthecheque.

b)suchcomplaintismadewithinonemonthofthedateonwhich
thecauseofactionarisesunderclause(c)oftheprovisotosection138.

Providedthat,thecognizanceofacomplaintmaybetakenbythe
Courtaftertheprescribedperiod,ifthecomplainantsatisfiestheCourtthathe
hadsufficientcausefornotmakingacomplaintwithinsuchperiod.

c) no Court inferior to that of a Metropolitan Magistrate or a

Judicial Magistrate of the first class shall try any offence punishable under
Section138.
 6

As per Section 143 of the Negotiable Instrument power of

CourttotrycasessummarilyalltheoffencesunderthisChaptershallbetried
byaJudicialMagistrateofthefirstclassorbyaMetropolitanMagistrateandthe
provisionsofSections262to265oftheCodeofCriminalproceduresoasfaras
maybeapplytosuchtrials.

2. AmendmentoftheNegotiableInstrumentActof2002

Havingregardtotheworkingofthesepenalprovisionsondishonourof
chequesandthebottlenecksthathavesurfacedinstrictlyimplementingthese
provisions, Parliament enacted the Negotiable Instruments (Amendment and
MiscellaneousProvisions)Act,2002(55of2002)1,whichisintendedtoplugthe
loopholes. This amendment Act inserts five new sections from 143 to 147
touching various limbs of the Parent Act and the amendment Act had been
broughtintoforceonFeb.6,2002.Section143isintendedtoachievespeedy
trial.ByapplyingprovisionsofSections262to265CrPC,itenablesaJudicial
Magistrate or Magistrate of the First Class to conduct the trial. Then it
contemplatessummarytrialandprovidesforcontinuousdaytodayhearingof
thecasetillitsconclusionandfurtherstipulatesthatthetrialistobecompleted
within 6months fromthedateoffilingofthecomplaint.Itfurtherempowers
theMagistratetopassasentenceforimprisonmentforatermnotexceedingone
yearorafinenotexceedingtwicetheamountofthechequenotwithstanding
anythingcontainedtothecontraryinCrPC.
ThenewSection144dealswiththeserviceofsummons.Itwould
now enable the Magistrate not to follow the elaborate procedure for serving
summonsasrequiredbySections61to90CrPC.Thesubsectionofthissection
allowsthesummonstobeservedthroughthespeedpostandnotifiedprivate
couriersbesidesthenormalprocess.Preciselyspeaking,thissectionhasbrought
abouttheconceptof"constructiveservice".Thisprovisionisanalogoustothe
principleincorporatedinSection27oftheGeneralClausesAct,1897.According
tothiswherethesenderhasdispatchedthenoticebypostwithcorrectaddress
writtenonit,thenitcanbedeemedtohavebeenservedonthesenderunlesshe
provesthatitwasreallynotserved.Thisisthepositionwhichgotendorsedby
 7

theSupremeCourtinK.Bhaskarancase.Alsoonrefusaltotakedeliveryofthe
summons,theCourtcandeclarethatthesummonshavebeendulyserved.
AccordingtoSection145thecomplainantcangivehisevidenceby
wayofanaffidavitandthesamemaybeattachedwiththecomplaintandifthe
accusedwantstocontradictthecontentsoftheaffidavitthecomplainantmaybe
calledforexamination.
Then Section 146 provides for presumption to bank
memorandums.Earlierwheneveraquestionarosewhethertherewasinsufficient
fundsintheaccountofthedrawerofthecheque,itwasconceivedtobeamatter
ofevidencebeingaquestionoffactandonuswasplacedonthecomplainantand
fordischargingthisonusthebankpersonnelwastobeexamined.Thisnaturally
delayedthings.Ithas,therefore,beenprovidedthatbasedonthebankslipthe
Court would presume the fact of dishonour, unless and until such fact is
disproved.
Now lastly, Section 147 provides for compounding of offences
underthisAct.TherewasadifferenceofopinionindifferentHighCourtsonthe
questionwhetheroffencesundertheprovisionsoftheActwerecompoundable
ornot.TheKeralaHighCourt'sviewwasinthenegativewhereastheviewofthe
AndhraPradeshHighCourtwasintheaffirmative.Unfortunatelythematterdid
notreachtheApexCourt.Parliament,therefore,hasresolvedthecontroversy
andprovidedthatoffencesundertheActwouldbecompoundable.
BesidesthisSections138,141and142havealsobeenamendedby
enhancingtheimprisonmenttermfromoneyeartotwoyearsandtheperiodof
time to issuedemand noticeto thedrawer from15 daysto 30 days and by
providing immunity from prosecution for nominee director. It has also been
providedthattheMagistratecancondonethedelayinfilingthecomplaintin
specialandpeculiarcircumstances.
Anobjectiveperusaloftheaforesaidamendmentwouldrevealthat
theActhasbecomeaselfcontainedstatutewhereinan"inhousemechanism"
hasbeenprovidedintheActitself,whichwouldtakecarethatthetrialisa
speedy one, no undue delay occurs, the bouncer is booked and he does not
escape the rope on flimsy grounds and that a more deterrent punishment is
 8

provided.Similarlytheserviceofsummonshasbeenmadeeasyandtheoffence
ismadecompoundable.It,therefore,followsthattheamendmenthasaddressed
itselfsquarelytotheshortcomingsthatwereperceivedandexposedhithertoin
itsadministrationrightfromthe1988amendment.Simultaneouslyprocedural
norms have been simplified and some "determinatives" have been put forth,
whichwouldtakecareofeveryconceivablecontingency,whichcouldpermitthe
bouncertorocktheboatofproceedingsduringtrialasallthebottleneckshave
beenunplugged.Let"bouncers"bemorebewarenow.

3. JURISDICTIONALDEVELOPMENTUNDERSECTION138

TheActissilentonthematterpertainingtotherelevantjurisdictionwith
respecttofilingofcriminalcomplaintincasetheoffenceofDishonourofthe
Cheque is committed under Section 138. Since the Criminal courts are
approached, the issue needs to be examined from the point of view of the
Criminal Procedure Code, 1973. Section 177 of CrPC provides that "Every
offenceshallordinarilybeinquiredintoandtriedbyaCourtwithinwhoselocal
jurisdiction it was committed". Section 178 provides that "(a) When it is
uncertain in which of several local areas an offence was committed, or (b)
Whereanoffenceiscommittedpartlyinonelocalareaandpartyinanother,or
(c)Where anoffenceisacontinuing one,and continuestobecommitted in
morelocalareahasone,or(d)Whereitconsistsofseveralactsdoneindifferent
localareas,Itmaybeinquiredtoortriedbyacourthavingjurisdictionoverany
ofsuchlocalareas."

Thus,inalltheabovesituations,thecourthavingjurisdictionover
anyofsuchlocalareasmaytrytheoffence.

ThejurisdictionisexplainedwithreferencetotheLandmarkcases
of K.Bhaskaran Vs. Sankaran VaidhyanBalan and Anr and the later case of
DashrathRupsinghRathodv.StateofMaharashtra&Anr,whileassessingthe
positionbeforeandafterthesejudgements.
 9

PositionBeforeK.BHASKARANCase

JugalKishoreArunv.V.A.Neelakandan
( Jugal Kishore Arun v. V.A. Neelakandan 1990 L.W. (Cri.) 492)
Bellie, J. observed, that a prosecution for issuing of a cheque without
sufficientfundsintheBank,willhavetobeinstitutedbeforetheCourt
withinwhosejurisdictionthechequewasissued.

.K.Muraleedharanv/sC.K.PareedandAnr
InP
(P.K. Muraleedharan v/s C.K.Pareed and Anr 1993(1)ALT(Cri)424)
KeralaHighcourtheldthattheplacewherethecreditorsresidesorthe
placewherethedebtorresidescannotbesaidtobetheplaceofpayment
unlessthereisanyindicationtothateffecteitherexpresslyorimpliedly.
ThecauseofactionascontemplatedinS.142oftheActarisesatthe
place where the drawer of the cheque fails to make payment of the
money.ThatcanbetheplacewheretheBanktowhichthechequewas
issuedislocated.Itcanalsobetheplacewherethechequewasissuedor
delivered. The Court within whose jurisdiction any of the above
mentioned places falls has therefore got jurisdiction to try the offence
underSection138oftheAct.

M/s.EssbeeFoodSpecialtiesandOrs.v.M/s.KapoorBrother(Essbee
Food Specialties and Ors. v. M/s. Kapoor Brother 1992
(Suppl)MWN(Cri.132)
HighCourtofPunjabandHaryanaonthequestionofjurisdictionstated
asunder:Astothequestionofjurisdiction,itistobeconsideredthatthe
issuanceofthechequesandtheirdishonoringareonlyapartofcauseof
action; the offence was complete only when the petitioner failed to
dischargetheirliabilitytotherespondentfirm.Fordischargingadebt,it
isthedebtorwhohastofindouthiscreditorandsinceinthepresent
case,therespondent,whoisthecreditor,hasitsofficeatPanchkula,the
CourtatAmbalahadtheterritorialjurisdiction.
 10

Rakesh NemkumarPorwal v/s Narayan DhonduJoglekar and anr.

( Rakesh NemkumarPorwal v/s Narayan DhonduJoglekar and anr

Cri.L.J680)
TheanatomyofS.138comprisescertainnecessarycomponentsbeforethe
offencecanbesaidtobecomplete,thelastofthembeingtheactofnon
paymentinspiteof15dayshavingelapsedafterreceiptofthefinalnotice.
Itistruethatthechequesmayhavebeenissuedbytheaccusedathis
placeofresidenceorbusiness,theBankonwhichitisdrawnbeingoften
locatedatasecondspotandinevitablythecomplainantorthepayeehas
hisplaceofresidenceorbusinessatyetanotherlocation.Itwasforthis
reason that the Kerala High Court in the case of

P.K.Muralendharanv.C.KPareed15, took the view that any of the three

Courts could exercise jurisdiction. In our considered view, where
undoubtedlyeachofthecomponentsconstituteastageinthecommission
oftheoffence,thefinalnonpaymentbeingtheultimateone,S.178
Cr.P.C.wouldclearlyapplytoanoffenceofthistype."

Gautham T. V. Centre v. Apex Agencies( 1993) Crimes 723

High Court of Andhra Pradesh held that the Court within whose
jurisdictionthechequeisgiven,orwheretheinformationofdishonouris
receivedorwheretheofficeofthepayeeissituate,willhavejurisdiction
totrytheoffence.

Canbank Financial Services Ltd. v/s Gitanjali Motors and Ors

(CanbankFinancialServicesLtd.v/sGitanjaliMotorsandOrs1995
Cri.L.J.1272)
Delhi High Court held that the place where the cheque was given or
handed over is relevant and the Courts within that area will have
territorialjurisdiction.Alsoheld,"ThenasperSection179whenanactis
an offence by reason of anything which has been done and of a
consequencewhichhasensued.Theoffencemaybeinquiredintoortried
byacourtwithinthoselegaljurisdictionsuchthinghasbeendoneorsuch
 11

consequencehasensued.Paymentofchequeagainstanaccounthaving
sufficientfundstomeettheliabilityunderthechequeisoneactwhile
dishonorofthechequeisaconsequenceofsuchanact.Thereforeasper
Section179alsotheplacewherethechequewasgivenorhandedover
willhavejurisdictionandthecourtsofthatplacewillhavejurisdictionto
try the offence. Likewise for purposes of Section 178(b) payment of
chequemaybeonepartofanoffenceanddishonorofthechequemaybe
anotherpartand,therefore,bothplacesi.e.placewherethechequewas
handed over and the place where it was dishonored will have
jurisdiction."

Sanjai Makkar and Ors.Vs.Saraswati Industrial Syndicate Limited

andOrs. (SanjaiMakkarandOrs.Vs.SaraswatiIndustrialSyndicate
Limite dand Ors 1999 Cri LJ 1958)
TheHigh CourtofAllahabad held"...so farasterritorialjurisdictionis
concerned,thecauseofactionarisesataplacewherethechequewas
drawn,oraplacewherethechequewaspresented,oraplacewherethe
payeemadeademandforpaymentofthemoneybygivinganoticein
writingtothedrawerwithinthestipulatedperiodandataplacewhere
thedrawerfailedtomakethepaymentwithin15daysofthereceiptof
notice."

SunilSrivastavaVs.ShriAshokKalra

(Sunil Srivastava Vs. Shri Ashok Kalra 101(2002)DLT245)
Itismanifestfromthelawlaiddownintheaforementionedjudgment
thatthecauseofactionforfilingacomplaintunderSection138oftheAct
mayalsobeataplacewherethedrawerofthechequeresidedorthe
placewherethepayeeresidedfortheplacewhereeitherofthemcarried
onbusinessortheplacewherepaymentwastobemade.Thecomplaint
can be filed before the court which has jurisdiction over any of these
places.InthecitedcaseacomplaintunderSection138wasfiledbeforea
Magistrate at Adoor in Pathanamthitta District in Kerala. The accused
challenged the territorial jurisdiction of the court of try the case. His
 12

contention was that the cheque was dishonoured at the bank of the
BranchatKayamkulam,situatedinanotherDistrict.healsodeniedthe
issue of cheque and also receipt of notice of demand. The later two
objections were decided against the accused. On the first question the
SupremeCourtenunciatedthelawasreproducedabove.

Shri Ishar Alloy Steels Ltd. v. JayaswalsNeco Ltd.

(Shri Ishar Alloy
Steels Ltd. v. JayaswalsNeco Ltd (2001) 3 SCC 609)
The dishonoured cheque had been presented for encashment by the
Complainant/holderinhisbankwithinthestatutoryperiodofsixmonths
butbythetimeitreachedthedrawer'sbanktheaforementionedperiodof
limitationhadexpired.ThequestionbeforetheCourtwaswhetherthe
bankwithinthepostulationofSection138readwithSections3and72of
theNIActwasthedraweebankorthecollectingbankandthisCourtheld
that it was the former. It was observed that "nonpresentation of the
cheque to the drawee bank within the period specified in the Section
wouldabsolvethepersonissuingthechequeofhiscriminalliabilityunder
Section138oftheNIAct,whootherwisemaybeliabletopaythecheque
Page88amounttothepayeeinacivilactioninitiatedunderthelaw.This
decision clarifies that the place where a complainant may present the
chequeforencashmentwouldnotconferorcreateterritorialjurisdiction

PremChandVijayKumarv.YashpalSingh(PremChandVijayKumar
v. Yashpal Singh (2005) 4 SCC 417)
HeldthatuponanoticeunderSection138oftheNIActbeingissued,a
subsequentpresentationofachequeanditsdishonourwouldnotcreate
another'causeofaction'whichcouldsettheSection138machineryin
motion.InsteadofthefiveBhaskaranconcomitants,onlyfourhavebeen
speltoutinthesubsequentjudgmentinPremChand.

4. PositionAfterK.Bhaskarancase
Itwasheldinparagraph12ofthejudgmentofK.Bhaskarancasethat"Under
 13

Section177oftheCode"everyoffenceshallordinarilybeinquiredintoand
triedinacourtwithinwhosejurisdictionitwascommitted.Thelocalitywhere
thebank(whichdishonoredthecheque)issituatedcannotberegardedasthe
solecriteriatodeterminetheplaceofoffence......Aplace,forthatpurpose,
woulddependuponavarietyoffactors.Itcaneitherbeattheplacewherethe
drawerresidesorattheplacewherehepayeeresidesorattheplacewhere
eitherofthemcarriesonbusiness.Hence,thedifficulttofixupanyparticular
localityastheplaceofoccurrenceforheoffenceunderSection138oftheAct.
Consideringandreproducingtheconstituentsofsection138of
NIActandsection178(d)oftheCode,held:"(1)Drawingofthecheque,(2)
Presentationofthechequetothebank,(3)Returningthechequeunpaidby
thedraweebank,(4)Givingnoticeinwritingtothedrawerofthecheque
demandingpaymentofthechequeamount,(5)failureofthedrawertomake
paymentwithin15daysofthereceiptofthenotice...Itisnotnecessarythatall
the abovefiveactsshouldhavebeenperpetrated atthesame locality. Itis
possiblethateachofthosefiveactscouldbedoneat5differentlocalities.But
concatenationofalltheabovefiveisasinequanonforthecompletionofthe
offenceunderSection138oftheCode.InthiscontextareferencetoSection
178(d)oftheCodeisuseful......Thusitisclear,ifthefivedifferentactswere
doneinfivedifferentlocalities,anyoneofthecourtsexercisingjurisdictionin
oneofthefivelocalareascanbecometheplaceoftrialfortheoffenceunder
Section138oftheAct.Inotherwords,thecomplainantcanchooseanyoneof
those courts having jurisdiction over any one of the local areas within the
territoriallimitsofwhichanyoneofthosefiveactswasdone".

AslightlynewfacetolawexistingpostK.Bhaskarancasewasgiven
inHarman Electronics Pvt. Ltd. V/s. National Panasonic India Pvt. Ltd.
(Cri.AppealNo.2021 of 2008 arising outof SLP(Criminal)No.1712 of
2004 Decision Dated 12/12/2008 Supreme Court of India)

In this case Hon'ble Supreme Court examined the question of

jurisdictionyetagainunderSection138oftheAct.Appellant,wasfrom
 14

Chandigarhandhadissuedachequewhichwasreturneddishonored,the
cheque was issued in Chandigarh to the complainant where he had a
branchandwasactuallypresent.Noticeofpaymentforthedishonored
chequewasissuedfromtheheadofficeofthecomplainantinDelhitothe
accusedofficeinChandigarh.Duetofailureonthepartofthedrawera
complaintwasfiledinDelhi.Whenthecasecamebeforethelowercourts
as well as high court, emphasis and reliance was laid down on 'K.
BhaskaranCase'andfinallycomingtoaconclusionsoastothatDelhi
Court also have the 'jurisdiction'. The appellant/respondent contended
that Chandigarh court had the jurisdiction to try the case but his
contentionwasdismissed,finally,leadingtoanappealtoSupremeCourt.
Courtheldthatthecourtderivesitsjurisdictionwhenacauseofaction
arisesandjurisdictioncan'tbeconferredonorforanyactofomissionon
thepartoftheaccused.Also,held,issuancewontbutcommunicationwill
giverisetocauseofaction.Hence,DelhiCourtwillnothavejurisdictionto
trythecase.Thecourtadjudgedon'whetheraDelhicourtwouldhave
jurisdictionmerelyonthegroundthatthestatutorynoticeundersection
138wasissuedfromDelhi'.TheHon'bleSupremeCourtheldthat:

Acauseofactionwillnotbetriggeredbyissueofstatutorynotice,
butonlyreceipt/acceptanceofnoticedoes.
Solely,thespecificprovisionsofSection138willmakeorbuildan
offenceandtheprovisoismerelyaconditionrequiredfortaking
cognizance.
A sole issue of notice or presentation of cheque can't give or
providethecourtwithterritorialjurisdictiontotryoffencesunder
section138oritwillunreasonablyharassthedrawer.

5. DistinctionbetweenK.Bhaskaran'scaseandHarman's
caseASlightDilution
There exists conflict between the two decisions inasmuch as in
Bhaskaran'scase(supra)itwasheldthattheexpression"givingofnotice"
 15

occurringinproviso(b)toSection138oftheNIActmeans"sendingof
notice" whereas in Harman's case (supra) it was held that the said
expression means "receipt of notice". The Harman case has adopted a
strictapproachtowardsterritorialjurisdictionsofcourt.Itthuscorrectly
addressedtherampantmisuseoftheliberalinterpretationinBhaskaran's
case.

Nishant Aggarwal v. Kailash Kumar Sharma ((2013) 10 SCC 72)

Courtwasonceagaindealingwithacasewherethecomplainthadbeen
filedinCourtatBhiwaniinHaryanawithinwhoseterritorialjurisdiction
thecomplainanthadpresentedthechequeforencashment,althoughthe
chequewasdrawnonabankatGauhatiinAssam.Relyingupontheview
takeninBhaskaranthisCourtheldthattheBhiwaniCourthadjurisdiction
todealwiththematter.Whilesayingso,theCourttriedtodistinguishthe
threeJudge Bench decision in Ishar Alloy Steels (supra) and that
rendered in Harman Electronics case (supra) to hold that the ratio of
thosedecisionsdidnotdilutetheprinciplestatedinBhaskarancase.

6. ImpactofK.BhaskaranCase

TheaforesaidBhaskarancasehadmanyunintendedconsequences.Asper
thecase,thechequebouncingcasecanberegisteredeitheratlocations,at
theconvenienceofthepayeeasthechequemaybedrawnatLocationA,
presentedforpaymentandconsequentlydishonouredatLocationB,and
legalnoticemaybeissuedtothedrawerofthechequeforpaymentofthe
chequeamountfromhisbranchofficelocatedinLocationC,ashemay
haveseveralbankaccountsinvariousplaces.Thiscausessufferingtothe
drawerofthecheque,althoughgivesflexibilitytothepayeeofthecheque
to choose the place where he was to file the cheque bouncing case.
Sometimes,severalchequesareissuedatthesametimebyapersontothe
samepayee,whicharedeliberatelypresentedindifferentbankslocatedat
different places, and thereafter, cheque bouncing cases are filed at
differentplacesagainstthedrawerofthosecheques.
 16

7. NewDimensionsToLawDashrathRupsinghRathodv.

StateofMaharashtra&Anr.(AIR2014SC3519)
AftertheK.Bhaskaranjudgement,itwasfeltatlargethatthelawinits
wideexpansiveamplitudeallowedthecomplainanttoratherrampantlyabuse
and misuse the law to result in hardship and adversity to the drawer, with
relativeease.Itgaveunrestrictedpowertothepayeetosinglehandedlyconfer
jurisdictiononaplaceofhisconvenience,consequently,leadingtoharassmentas
thepayerhad,attimes,noconcernorrelationwiththedistantplaceswherethe
cheque was issued or which had no link to the transaction or drawer. The
alterationinthelawwasthuswelcomedasamuchrequiredchangeinprevalent
lawsaslaiddownbyK.Bhaskaran.Theleniencythus,wasthecauseofmuch
upheaval. Thus,thenew judgement bymeansof astrict approach soughtto
discouragethepayerfrommisusingorcarelesslyissuingcheques.Duesympathy
wasthusshownorgiventothedrawer.

In fact the Hon. Supreme Court in Dashrat Rathod case has

observed that "Courts are enjoined to interpret the law so as to eradicate
ambiguityornebulousness,andtoensurethatlegalproceedingsarenotusedas
a device for harassment, even of an apparent transgressor of the law. Law's
endeavour is to bring the culprit to book and to provide succour for the
aggrievedpartybutnottoharasstheformerthroughvexatiousproceedings.The
courtheldthat,theterritorialjurisdictionaccordingtosection138orunderthe
actshouldexclusivelybedeterminedandconsideredbyplace/locationofthe
offence. The return of the cheque by the drawer bank only constitutes
commissionofoffenceundersection138.Hence,thecourtswithinwhichdrawer
bankislocatedwillonlyhavethejurisdictiontotrythecase.

1. Anoffenceundersection138oftheAct,willbeconsideredcommittedas
soonasthechequedrawnbytheaccusedonanaccountmaintainedby
him for the discharge of debt or liability is returned without honored,
eitherduetoinsufficiencyoffundsofthesaiddrawer'saccountorthe
amount exceeds the drawer's arrangement with the bank. But, the the
causeofactioncouldbederivedortriggeredonlywhen:
 17

2. ThegeneralrulestipulatedunderSection177ofCr.P.Cappliestocases
underSection138oftheNegotiableInstrumentsAct.Prosecutioninsuch
casescan,therefore,belaunchedagainstthedrawerofthechequeonly
before the Court within whose jurisdiction the dishonour takes place
except in situations where the offence of dishonour of the cheque
punishableunderSection138iscommittedalongwithotheroffencesina
singletransactionwithinthemeaningofSection220(1)readwithSection
184oftheCodeofCriminalProcedureoriscoveredbytheprovisionsof
Section182(1)readwithSections184and220thereof.

3. Thecourtclearlyaddressedtheterm'causeofaction'andheldthatthe
factsconstitutingcauseofactiondonotconstitutetheingredientsofthe
offenceunderSection138oftheAct.And,oncethecauseofactionis
triggeredinfavorofthecomplainant,thejurisdictionofthecourttotry
thecasewillbedeterminedbytheplacewherethechequewasreturned
dishonored.

4. Inrespectofpendingcasesitdistinguishedthemintofollowingcategories
andsuggestedactionsasfollows:a.Casesinwhichtrialhascommenced:
Cases in which summoning and appearance of the accused has taken
placeandrecordingofevidencehascommencedwillcontinueatthesame
court.Thesecaseswillbedeemedtohavebeentransferredfromthecourt
which had jurisdiction to the court where they are tried, as per the
relaxation provided in public interest. b. Cases pending at the pre
summoning stage: All other complaints including those where the
accused/respondent has not been properly served, cases in which
summons have not been issued will be maintainable only at the place
wherethechequestandsdishonored.

PositionafterDasrathRathodCase

VinayKumarShailendravDelhiHighCourtLegalServicesCommittee
&Anr.
SupremeCourtobserved"TheissueofanoticefromDelhiordepositof
thechequeinaDelhibankbythepayeeorreceiptofthenoticebythe
 18

accuseddemandingpaymentinDelhiwouldnotconferjurisdictionupon
the Courts in Delhi. What is important is whether the drawee bank
whodishonouredthechequeissituatewithinthejurisdictionoftheCourt
takingcognizance."
RamanbhaiMathurbhai Patel v.State ofMaharashtra(20144(4) Boc
Cr(Cri)126(2014)10SCC708)
InacasebeforetheBombayHighCourt,twochequeswereissued,one
beforetheGandhinagarbranchoftheStateBankofIndiaandonebefore
the Bank of Maharashtra. The cheques being 'At par',i.e. multicity
chequespayableatparinallbranchesofthebank,werepayableatall
branchestheabovementionedbanks.Factually,thechequedepositedby
the complainant in the branches of the banks at Kurla, Mumbai, the
nearestavailablebranchofthebanksandweredishonored.So,theisse
raised was that whether the complaint should be filed at Kurla or at
Gandhinagar,asthechequeswerepayableatparacrossallthebranches.
Itwasheldthatbyissuingchequespayableatallbranches,thedraweris
giving anoptionto getthechequesclearedfromthenearestavailable
branchofthebankandthereforethecauseofactionhasariseninthe
jurisdiction of the Metropolitan Magistrate, Kurla Court. The courts in
Mumbaiwillhavethejurisdictiontotrytheoffenceasthechequeswere
dishonouredinMumbai.However,theabovedecisionoftheBombayHigh
CourtwaschallengedintheSupremeCourtvideSLP(Criminal)No.7251
of2014.ThisSLPwasdismissedbytheSupremeCourtaswithdrawnon
20March2015.

8.
NegotiableInstruments(Amendment)Act,2015.

InaBill,2015,ithasbeenopined,inviewoftherationaleforchanging
the law with respect to jurisdiction under section 138 of the negotiable
instrumentsact,1881that:

"The proposed amendments to the Negotiable Instruments Act, 1881

("TheNIAct")arefocusedonclarifyingthejurisdictionrelatedissuesfor
filingcasesforoffencecommittedundersection138oftheNIAct.The
 19

clarificationofjurisdictionalissuesmaybedesirablefromtheequitypoint
ofviewasthiswouldbeintheinterestsofthecomplainantandwould
alsoensureafairtrial.Theclarityonjurisdictionalissuefortryingthe
casesofchequebouncingwouldincreasethecredibilityofthechequeasa
financialinstrument.Thiswouldhelpthetradeandcommerceingeneral
andallowthelendinginstitution,includingbanks,tocontinuetoextend
financingtotheeconomy,withouttheapprehensionoftheloandefaulton
account of bouncing of a cheque.Concerns had been raised by various
stakeholders(creditors, industry associations, financial institutions,etc)
expressing apprehensions that the DasrathRathod decision will offer
undue protection to defaulters at the expense of the aggrieved
complainant;andwouldignorethecurrentrealitiesofchequeclearing
withtheintroductionofCTS(ChequeTruncationSystem).InCTScheque
clearance happens only through scanned image in electronic form and
chequesarenotphysicallyrequiredtobepresentedtotheissuingbranch
(draweebankbranch)butaresettledbetweentheservicebranchesofthe
draweeandpayeebanks.

A) TheAmendmentActinsertedSection142(2)inthePrincipal

Act.Itreadsasfollows:

(2)Theoffenceundersection138shallbeinquiredintoandtriedonly
byacourtwithinwhoselocaljurisdiction,

(a) if the cheque is delivered for collection through an account, the

branchofthebankwherethepayeeorholderinduecourse,asthecase
maybe,maintainstheaccount,issituated;or

(b)ifthechequeispresentedforpaymentbythepayeeorholderindue
course, otherwise through an account, the branch of the drawee bank
wherethedrawermaintainstheaccount,issituated.

Explanation.Forthepurposesofclause(a),whereachequeisdelivered
forcollectionatanybranchofthebankofthepayeeorholderindue
course,then,thechequeshallbedeemedtohavebeendeliveredtothe
branchofthebankinwhichthepayeeorholderinduecourse,asthecase
 20

maybe,maintainstheaccount.

B) ItalsoinsertsanewClause142A,asfollows:

142A.Validationfortransferofpendingcases.

(1)NotwithstandinganythingcontainedintheCodeofCriminal
Procedure,1973(2of1974)oranyjudgment,decree,orderordirection
ofanycourt,allcasestransferredtothecourthavingjurisdictionunder
subsection(2)ofsection142,asamendedbytheNegotiableInstruments
(Amendment)Ordinance,2015,shallbedeemedtohavebeentransferred
under this Act, asif that subsection had been in force at all material
times.

(2) Notwithstanding anything contained in subsection (2) of

section 142 or subsection (1), where the payee or the holder in due
course,asthecasemaybe,hasfiledacomplaintagainstthedrawerofa
chequeinthecourthavingjurisdictionundersubsection(2)ofsection
142orthecasehasbeentransferredtothatcourtundersubsection(1)
andsuchcomplaintispendinginthatcourt,allsubsequentcomplaints
arisingoutofsection138againstthesamedrawershallbefiledbefore
thesamecourtirrespectiveofwhetherthosechequesweredeliveredfor
collectionorpresentedforpaymentwithintheterritorialjurisdictionof
thatcourt.

(3) If, on the date of the commencement of the Negotiable

Instruments(Amendment)Act,2015,morethanoneprosecutionfiledby
thesamepayeeorholderinduecourse,asthecasemaybe,againstthe
samedrawerofchequesispendingbeforedifferentcourts,uponthesaid
fact having been brought to the notice of the court, such court shall
transferthecasetothecourthavingjurisdictionundersubsection(2)of
section 142, as amended by the Negotiable Instruments (Amendment)
Ordinance,2015,beforewhichthefirstcasewasfiledandispending,as
ifthatsubsectionhadbeeninforceatallmaterialtimes.]

Thelatestchangeandthepresentprevailentlawbeingthe
 21

2015AmendmentAct,hastheeffectofnullifyingthelawaslaiddownby
theHon.SupremeCourtin2014,DasratRathodcase.Thelegaleffectof
theAmendmentisthat,soastoinstituteacomplaintunderSection138,
the same must be instituted as per : If the cheque is delivered for
collectionthroughanaccount,thebranchofthebankwherethepayeeor
holder,maintainstheaccount,issituated;orIfthechequeispresentedfor
payment by the payee or holder otherwise through his account, the
branchofthedraweebankwherethedrawermaintainstheaccount,is
situated.Thislawcomeswithapromisetosolveandaidinnotonlythe
speedydisposalofthependingcasespertainingtocomplaintsunder138,
butalsotobringasanctitytothesystembyseekingtoclampdownon
defaultsinpayments.Itclarifiesthelegalpositionastojurisdictionand
alsoseekstokeepupwiththemodernbankingsystem.

9. PRESUMPTIONSUNDERNEGOTIABLEINSTRUMENTSACT.
Section 118 of the N. I. Act speaks about certain presumptions. Sub
Section (a) under said section speaks about the presumption in concern of
consideration.Itisas:
ofconsiderationthateverynegotiableinstrumentwas
made or drawn for consideration, and that every such
instrument, when it has been accepted, indorsed,
negotiated or transferred, was accepted, indorsed,
negotiatedortransferredforconsideration;
underclause(b)thereispresumptionaboutdate;
under Clause (c ) there is presumption about time of
acceptance;
clause (d) speaks about presumption about time of
transfer;
clause(e)speaksaboutthepresumption astoorderof
endorsements;
clause(f)speaksaboutpresumptionaboutstamps;and
clause(g) speaksaboutthepresumptionthat holderof
theNegotiableinstrumentisaholderinduecourse.
 22

Section 139 of the N. I. Act which is part of the Chapter XVII

inserted by amendment in the year 1988 to provide penalties in the case of
dishonour certain of certain cheques, strengthens the presumption of
considerationunderSection118(a)oftheN.I.Act. Itspeaksthatitshallbe
presumeduntilthecontraryisproved, thattheholderofachequereceived
cheque ofthenaturereferredtoinSection138forthedischarge whileorin
partofanydebtorotherliability.
The Hon'ble Apex Court in the case Hiten P. Dalal Vs.
BratindranathBanerjee,[(2001)6S.C.C.16]:{2001ALLMR(Cri)1497},laid
downthatitisobligatoryupontheCourtintermsofSections118and139ofthe
N.I.Act,toraisethepresumptionineverycasewherethefactualbasisofthe
raisingofpresumptionhasbeenestablished.
PriortothattheHon'bleApexCourtinthecaseK.BhaskaranVs.
SankaramBalan,(AIR1999S.C.3762) heldthatoncethesignatureonthe
cheque is admitted to be that of the accused, the presumption envisaged in
Section118and139oftheN.I.Act,canlegallybeinferredthatthechequewas
drawnforconsiderationonthedate,whichthechequebears. Thesameview
was reiterated by the Hon'ble Apex Court in the case of K. N. Beena Vs.
MuniyappanandAnr.,{2002(1)ALLMR277(S.C.).
In the case Krishna Janardhan Bhat Vs. Dattatraya Hegade
(2008 ALL MR (Cri) 1164 (S.C.) the Hon'ble Supreme Court held that the
presumption underSection118(a)and139oftheN.I.Act,doesnotcover
presumptionaboutthelegallyenforceabledebt. Thisfacthastobeprovedby
thecomplainant.ButthereaftertheHon'blethreeJudgesBenchoftheHon'ble
SupremeCourt inthecaseof Rangappa Vs. ShriMohan (2010ALLSCR
1349) though did not overrule, whole judgment in the case of Krishna
JanardhanBhatsetasidetheprinciplelaiddownthereininconcernoflegally
enforceabledebt.ItwouldbepropertolookparaNo.14ofthesaidjudgment
whichistakenasitis:
In light of these extracts, we are in agreement with the
respondentclaimantthatthepresumptionmandatedbySection139
oftheActdoesindeedincludetheexistenceofalegallyenforceable
 23

debt or liability. To that extent, the impugned observations in

KrishnaJanardhanBhat(supra)20maynotbecorrect.However,
this does not in any way cast doubt on the correctness of the
decision in that case since it was based on the specific facts and
circumstancestherein.Asnotedinthecitations,thisisofcoursein
thenatureofarebuttablepresumptionanditisopentotheaccused
toraiseadefencewhereintheexistenceofalegallyenforceabledebt
orliabilitycanbecontested.However,therecanbenodoubtthat
there is an initial presumption which favours the complainant.
Section139oftheActisanexampleofareverseonusclausethat
has been included in furtherance of the legislative objective of
improving thecredibilityof negotiable instruments. WhileSection
138oftheActspecifiesastrongcriminalremedyinrelationtothe
dishonourofcheques,therebuttablepresumptionunderSection139
is a device to prevent undue delay in the course of litigation.
However,itmustberememberedthattheoffencemadepunishable
bySection138canbebetterdescribedasaregulatoryoffencesince
thebouncingofachequeislargelyinthenatureofacivilwrong
whoseimpactisusuallyconfinedtotheprivatepartiesinvolvedin
commercial transactions. In such a scenario, the 21 test of
proportionalityshouldguidetheconstructionandinterpretationof
reverseonusclausesandtheaccused/defendantcannotbeexpected
todischargeanunduly high standard or proof.Inthe absenceof
compelling justifications, reverse onus clauses usually impose an
evidentiary burden and not a persuasive burden. Keeping this in
view,itisasettledpositionthatwhenanaccusedhastorebutthe
presumptionunderSection139,thestandardofprooffordoingsois
thatof`preponderanceofprobabilities'.Therefore,iftheaccusedis
able to raise a probable defence which creates doubts about the
existenceofalegallyenforceabledebtorliability,theprosecution
can fail. Asclarified inthecitations, theaccused canrelyon the
materials submitted by the complainant in order to raise such a
 24

defenceanditisconceivablethatinsomecasestheaccusedmaynot
needtoadduceevidenceofhis/herown.
Throughtheabovecitedjudgmentstheprinciplelaiddownbythe
Hon'bleApexCourtisthatoncetheaccusedhasadmittedthepresenceofhis
signatureonthechequewhichisdrawnonhisaccountthatthechequewas
issued by the accused to discharge the legally enforceable debt. This
presumptionisthepresumptionoflaw.
Naturally the burden rests on the accused to rebut the
presumptionbyleadingcogentandclinchingevidence. Theburden torebut
thispresumptionisnotsoonerousasoftheprosecutionwhohastoprovethe
guilt of the accused beyond reasonable doubt. The para No. 14 which is
referredtoabovetakenthroughthejudgmentoftheHon'bleApexCourtinthe
caseofRangappa(citedsupra)makesitclearthatthestandardofproofforthe
accusedisnotundulyhard.Hehastoprobabilisehisdefenceonly.Oncehehas
probabilisedhisdefence,thentheonusshiftstothecomplainanttoprovethat
therewasdebtanditwaslegallyenforceable.Itisundoubtedlyclearthatmere
suggestions of denial of debtwould not work. Theaccused hastobring on
recordeitherthroughcrossexaminationofthecomplainantorhiswitnessesor
by way of documentary evidence, the cogent and clinching evidence
circumstanceswhichwouldprobabilisehisstand.Heneednotforthatpurpose
toenterintowitnessbox.
UnderSection146 of theN.I. Act which is inserted by way of
amendmentintheyear2002whereinthepresumptioninconcernofbank'sslip
isavailablewhichisas:
146.Bank'sslipprimafacieevidenceofcertainfacts.
TheCourtshall,inrespect ofevery proceedingunder
this Chapter, on production of bank's slip or memo
having thereon the official mark denoting that the
cheque has been dishonoured, presume the fact of
dishonourofsuchcheque,unlessanduntil suchfactis
disproved.
 25

10. Thepromisemadeinthechequeisanenforceable
agreementasisdirectedinSection25(3)oftheIndian
ContractAct.

UnderSection25(3)oftheIndianContractAct,apromisecanbe
madeeveninacasewherethelimitationforrecoveryoftheamounthasalready
expired.Suchpromisehastobeinwriting.Itcanbeintheformofacheque.

InviewofSection25(3)oftheIndianContractAct,whenadebt
has become barred by limitation, a written promise to pay, furnishes a fresh
causeofaction.

It is observed and held by Hon'ble Delhi High Court in Suresh

Kumar Joon Vs. Moolchand Motors & others' case (supra), decided on 22 nd
August,2012asfollows:

It is true that the cheque does not contain an express promise in

writing,topaytheamountofthechequetothepayeeorthecheque.
However,section9oftheIndianContractActmakesitveryclearthat
thepromisecanbeexpressaswellasimplied.Inmyview,whena
debtorissuesachequetohiscreditor,hemakesanimpliedpromiseto
himtopaytheamountofthechequebeingissuedbyhim.Itisonly
towardsfulfillmentofthatsuchpromisethatachequeisissuedbythe
debtortothecreditor.Onceitisallegedthattherelationshipbetween
thepartieswasthatofdebtorandacreditoranditisfurtheralleged
thatthechequewasissuedbythedebtortothecreditor,itwouldbe
difficult to dispute that a cheque contains an implied promise, in
writing,topaytheamountofthecheque.Since,evenatimebarred
debtissavedbysection25(3)oftheIndianContractAct,1872,the
issuance of a cheque toward repayment of a time barred debt
constitutes a contract within the meaning of section 25 (3) of the
IndianContractAct,1872.

Similar view was taken by the Kerala High Court in Gopinathan Vs.
Sivadasan[2006(4)KLT779],whereintheCourt,interalia,heldasunder:
 26

"8.Evenassumingittobetimebarred,whenthechequeiswrittenandsigned,
thereisapromisetopaytheamounttothepayee,throughthedraweeofcourse.
Suchpromise,eveniftheliabilityisbarred,isvalidandenforceableunderlawin
viewofsection25(3)oftheContractAct.Thereafter,whenthedeliverytakes
place,thedrawaliscompleted.Suchchequedrawnisissuedforthedischargeof
aliability,whichispromisedunderthechequeitself.Thatbeingso,Idonotfind
anyreasontoreferthemattertoaDivisionBenchforfurtherconsideration.The
argument of thelearned Counsel for thepetitionthat theremustbe another
agreementotherthanthechequeinordertoreckonthepromiseinthecheque
tobeavalidagreementforthepurposeofsection25(3)cannotobviouslybe
accepted.Thepromisemadeinthechequeisanenforceableagreementasis
directedinsection25(3)oftheContractAct...."

:CONCLUSION:

AswetracethehistoryandevolutionoftheNegotiableInstruments

Act,1881andfocusonthejurisdictionaldebateunderSection138,whichdeals

withdishonorofcheques,weanalysethenecessitieswhichforcedtheCourtsand

theGovernmenttoadoptlandmarkchangesinthelaw.Thelegaleffectofthe

Ordinanceisthat,soastoinstituteacomplaintunderSection138,thesame

mustbeinstitutedasper:Ifthechequeisdeliveredforcollectionthroughan

account, the branch of the bank where the payee or holder, maintains the

account,issituated;orIfthechequeispresentedforpaymentbythepayeeor

holderotherwisethroughhisaccount,thebranchofthedraweebankwherethe

drawermaintainstheaccount,issituated.Thislawcomeswithapromiseto

solveandaidinnotonlythespeedydisposalofthependingcasespertainingto

complaintsunder138,butalsotobringasanctitytothesystembyseekingto

clamp down on defaults in payments. It clarifies the legal position as to

 27

jurisdictionandalsoseekstokeepupwiththemodernbankingsystem.

Submittedwithrespect:

(Smt.S.M.Shinde) (Shri.M.S.Kulkarni)

DistrictJudge2,Latur DistrictJudge4,Latur

(Shri.H.A.Mulla) (Shri.S.C.Pathare)

ChiefJudicialMagistrate,Latur 3rdJt.CivilJudgeS.D.Latur

(Smt.A.A.Godse)

5 thJt.CivilJudgeJ.D.,Latur