Cheque if not honoured by bank attracts offence under NI Act: HC

Excelsior Correspondent

Srinagar, Mar 23 : High Court in a significant decision has held that if a cheque issued as security is dishonoured by the banker cannot be stated that no offence is made out under Negotiable Instrument Act (NI Act) and directed the trial court to proceed ahead against the accused in accordance with law.
Justice Sanjay Dhar has kept in force the order of trial court whereby cognizance was taken in a complaint filed against the person issuing the cheque which was dishonoured by the bank.
Justice Dhar has held the petition of the accused as devoid of merit and dismissed the same accordingly. “The trial Magistrate is directed to proceed further in the matter in accordance with law,” Court directed.
Court said that even if it is assumed that the petitioner-accused had issued the cheque in favour of respondent-complainant as a security, still then it cannot be stated that no offence is made out, once the cheque issued has been dishonoured by the banker.
Petitioner-accused has challenged the complaint filed by the respondent against him for offence under Section 138 of Negotiable Instruments Act  pending before the Court of Judicial Magistrate, 1st Additional Munsiff, Srinagar and order dated 26.07.2019, whereby the trial Magistrate has, after taking cognizance of the offence, issued process against the petitioner-accused.
A complaint was filed by one Noor Mohammad Khan against the accused-Mohammad Shafi Wani alleging that a cheque bearing No.406696 dated 01.03.2019 for an amount of Rs.5.00 lacs, issued in his favour which was drawn on J&K Bank Branch unit Habbak Crossing, Srinagar, was returned unpaid by the concerned bank with the remarks “funds insufficient and drawer’s signature differs”.
Court said that an offence under Section 138 of the NI Act is constituted when a cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge of any debt, is returned by the bank unpaid either because the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.