Complaint under S.138 not maintainable if cheque not presented before the Drawee Bank : Calcutta HC

Without producing the cheque before the drawer bank, a complaint under Section 138 of Negotiable Instruments Act is not maintainable said the Calcutta High Court.
In the present matter before the court, the cheque was returned by the Bank of the complaint/payee without forwarding it to the drawer bank for enhancement. The payee bank endorsed in the return slip that, “account name and cheque name differs/ no funds.”

This is quite unusual for the payee bank to endorse in the return memo that funds are insufficient. The complaint lodged a complaint after receiving the return memo from the payee bank. Before filing the complaint the payee of the cheque also served the statutory notice. The case of the complaint was that the name was not written in full by drawer deliberately to harass them.

In response to the complaint, the respondent/drawer approached the High Court for quashing the proceedings before the magistrate.

In this case, the High Court of Calcutta quashed the proceedings on the ground that the cheque was not produced at all before the bank of the drawer. The court observed, “Section 138 of the N.I. Act, inter alia, makes the dishonour of a cheque punishable in law provided the cheque upon presentation for encashment before the bank on which it is drawn is returned unpaid due to insufficiency of funds and the drawer of the cheque upon receipt of notice of dishonour does not pay the value of the dishonoured cheque within the stipulated time. Hence, the condition precedent for attracting penal liability under the aforesaid provision is that the cheque must be presented for encashment to the drawer bank. It was also held that if a cheque is returned by the banker of the opposite party without presenting the same before the bank on  which it is drawn for encashment, the question of dishonour of the cheque due to the insufficiency of funds in the drawee’s account shall not rise at all.”


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.