{"id":251535,"date":"2021-07-20T14:16:08","date_gmt":"2021-07-20T08:46:08","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=251535"},"modified":"2021-07-30T11:38:19","modified_gmt":"2021-07-30T06:08:19","slug":"section-141-ni-act","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/20\/section-141-ni-act\/","title":{"rendered":"Is it mandatory to arraign firm as accused to make partner liable for dishonor of cheque under Ss. 138\/141 of NI Act? HC explains"},"content":{"rendered":"<p style=\"text-align: justify;\"><strong>Uttaranchal High Court: <\/strong>Alok Kumar Verma, J., addressed a matter revolving around dishonour of cheque.<\/p>\n<p style=\"text-align: justify;\">Appellant-Complainant preferred an appeal against the decision of the trial court wherein the respondent accused was acquitted from the offence punishable under Section 138 of the Negotiable Instruments Act, 1881.<\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\"><em>Facts<\/em><\/span><\/p>\n<p style=\"text-align: justify;\">Accused had requested money for his business work from the complainant stating that he will return the same as early as possible. An amount of Rs 19,45,000 was deposited from time to time through NEFT\/RTGS and Rs 55,000 through cash payment on credit. Further, a sum of Rs 1,90,000 was deposited by the complainant through Gopal Singh (PW-2). In total, a sum of Rs 20,00,000 was given to the respondent on credit.<\/p>\n<p style=\"text-align: justify;\">On demanding the said amount, accused issued a cheque but the same was dishonoured by the bank with the note of \u201cexceed agreement\u201d.<\/p>\n<p style=\"text-align: justify;\">Legal notice was sent to the accused and served upon the accused on 17-11-2017. Further, since no payment was forthcoming pursuant to the said demand notice, a complaint case was filed against the accused under Section 138 of the NI Act, 1881.<\/p>\n<p style=\"text-align: justify;\">In the cross-examination before the trial court, defence denied accused\u2019s signature on the cheque. In the cross-examination of the complainant, the defence was that there was no transaction between the complainant and the accused and all the transactions of the complainant were with his brother Mohan Prasad Purohit and in the absence of his brother Mohan Prasad Purohit, the complainant had taken seven cheques from the shop of his brother. With respect to the cheque-in-question, which was dishonoured, the defence was that the said cheque was amongst the seven cheques, which was misused by the complainant.<\/p>\n<p style=\"text-align: justify;\">Under Section 139 NI Act, once a cheque has been signed and issued in favour of the holder, there is a statutory presumption that it is issued in discharge of a legally enforceable debt or liability. However, presumption is a rebuttable one.<\/p>\n<p style=\"text-align: justify;\">In <em>Rangappa v. Sri Mohan<\/em> <a href=\"http:\/\/www.scconline.com\/DocumentLink\/CqMNuDz5\">(2010) 11 SCC 441<\/a>, Supreme Court has held that in view of Section 139, it has to be presumed that a cheque is issued in discharge of any debt or other liability.<\/p>\n<p style=\"text-align: justify;\">Respondent-Accused denied signature on the said cheque and accused did not lead any evidence in support of his plea.<\/p>\n<blockquote>\n<p style=\"text-align: center;\"><em>Mere statement of the accused may not be sufficient to rebut the presumption. <\/em><\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Therefore, this Court does not see any basis in the contention of the counsel for the respondent that the respondent-accused has been successful in creating doubt in the mind of the Court with regard to the existence of the legally enforceable debt or liability.<\/p>\n<blockquote>\n<p style=\"text-align: justify;\"><span style=\"color: #008000;\">Section 141 of the Act, 1881 stipulates the liability for the offence punishable under Section 138 of the Act, 1881 when the person committing such an offence happens to be a company i.e. when the drawer of the cheque happens to be a company. For the purpose of Section 141 of the Act, 1881, a firm comes within the ambit of a company.<\/span><\/p>\n<\/blockquote>\n<p style=\"text-align: justify;\">Supreme Court in the case of <em>Aneeta Hada v. Godfather Travels and Tours (P) Ltd., <\/em><a href=\"http:\/\/www.scconline.com\/DocumentLink\/ub87NeoU\">(2012) 5 SCC 661<\/a> considered the question, <em>\u201cwhether an authorised signatory of a company would be liable for prosecution under Section 138 of the Negotiable Instruments Act, 1881 without the company being arraigned as an accused.\u201d<\/em><\/p>\n<p style=\"text-align: justify;\">In <em>Himanshu v. B. Shivamurthy<\/em>, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/665K53z6\">(2019) 3 SCC 797<\/a>, Supreme Court held that in absence of the company being arraigned as an accused, prosecution of the Director of the Company for the cheque bounce under Section 138 of the Act, 1881 was not maintainable.<\/p>\n<p style=\"text-align: justify;\">Hence, in view of the above decisions of the Supreme Court, Bench expressed that,<\/p>\n<p style=\"text-align: justify;\"><em>\u201c\u2026if the cheque had been issued by the firm which was subsequently dishonoured, a partner of the firm would not be liable for prosecution under Section 138 of the Act, 1881 without the firm being arraigned as an accused.\u201d<\/em><\/p>\n<p style=\"text-align: justify;\">In the present complainant, the firm was not arraigned as an accused. Therefore, the appeal was liable to be dismissed. \u00a0 \u00a0 \u00a0 \u00a0 [Ramesh Nagarkoti v. Kedar Datt Purohit, <a href=\"http:\/\/www.scconline.com\/DocumentLink\/70vNVJQt\"><b>2021 SCC OnLine Utt 745<\/b><\/a>, decided on 3-03-2021]<\/p>\n<hr \/>\n<p style=\"text-align: justify;\"><strong>Advocates before the Court:<\/strong><\/p>\n<p style=\"text-align: justify;\">Counsel for the appellant: Mr Sanjay Kumar.<\/p>\n<p style=\"text-align: justify;\">Counsel for the respondent: Mr Yogesh Kumar Pacholia<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Uttaranchal High Court: Alok Kumar Verma, J., addressed a matter revolving around dishonour of cheque. Appellant-Complainant preferred an appeal against the decision <\/p>\n","protected":false},"author":8808,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[],"class_list":["post-251535","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is it mandatory to arraign firm as accused to make partner liable for dishonor of cheque under Ss. 138\/141 of NI Act? HC explains | SCC Times<\/title>\n<meta name=\"description\" content=\"Section 141 NI Act\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/20\/section-141-ni-act\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is it mandatory to arraign firm as accused to make partner liable for dishonor of cheque under Ss. 138\/141 of NI Act? 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Del HC explains","author":"Bhumika Indulia","date":"March 3, 2022","format":false,"excerpt":"Delhi High Court: While addressing a matter revolving around Section 138 of the Negotiable Instruments Act, 1881, Subramonium Prasad, J., held that Courts should primarily proceed on the averments in the complaint, and the defence of the accused cannot be looked at the stage of issuing summons unless it can\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2022\/01\/Delhi_New-logo.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":316446,"url":"https:\/\/www.scconline.com\/blog\/post\/2024\/03\/08\/delhi-court-acquits-accused-under-section-138-negotiable-instruments-act-failure-establish-debt-adjustment-legal-news\/","url_meta":{"origin":251535,"position":1},"title":"Delhi Court acquits accused under Section 138 NI Act on failure to establish debt adjustment","author":"Arunima","date":"March 8, 2024","format":false,"excerpt":"The complainant woefully failed to account for the amount of Rs 6,11,071\/- which was due on him towards the accused. Therefore, it cannot be said that the amount represented on the cheque in question was a legally recoverable debt.","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"failure to establish debt adjustment","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/failure-to-establish-debt-adjustment.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/failure-to-establish-debt-adjustment.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/failure-to-establish-debt-adjustment.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2024\/03\/failure-to-establish-debt-adjustment.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":245382,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/03\/11\/section-138-ni-act-3\/","url_meta":{"origin":251535,"position":2},"title":"Del HC | Vicarious liability under S. 138 NI Act. What is proper stage of raising defence of absence of knowledge  by the accused being held vicariously liable for offence committed by company? Explained","author":"Bhumika Indulia","date":"March 11, 2021","format":false,"excerpt":"Delhi High Court: Rajnish Bhatnagar, J., held that: \u201cOnce a cheque is issued by a person, it must be honored and if it is not honoured, the person is given an opportunity to pay the cheque amount by issuance of a notice and if he still does not pay, he\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":255796,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/10\/18\/dishonour-of-cheque-3\/","url_meta":{"origin":251535,"position":3},"title":"Mere denial is useless, Presumption under S. 138 NI Act can be rebutted only by leading cogent evidence: Court holds accused guilty where &#8220;payment stopped by drawer&#8221;","author":"Bhumika Indulia","date":"October 18, 2021","format":false,"excerpt":"Saket Courts, New Delhi: Swati Gupta, Metropolitan Magistrate reiterated what is expected of an accused to rebut the statutory presumption against him in cases of cheque dishonour under Section 138 of the Negotiable Instruments Act, 1881. Brief facts Complainant and accused had entered into an agreement to sell the property\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"Saket Court","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2020\/08\/District-Court-Saket.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":245352,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/03\/11\/section-138-ni-act-2\/","url_meta":{"origin":251535,"position":4},"title":"Ker HC | Dishonour of cheque shall be proved to the hilt; Adverse inference cannot be drawn under S. 138 of NI Act merely because evidence is not adduced to prove a negative fact","author":"Editor","date":"March 11, 2021","format":false,"excerpt":"Kerala High Court: K. Haripal, J., addressed the instant complaint instituted by the appellant alleging offence punishable under Section 138 of the Negotiable Instruments Act, 1881. The Bench remarked, \u201cThe degree of proof expected from the accused is not as rigorous as that of the complainant. He can discharge his\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":250568,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/07\/01\/drawers-signature-differs\/","url_meta":{"origin":251535,"position":5},"title":"Madras HC | Cheque returned with endorsement &#8220;drawers signature differs&#8221;. If complainant fails to prove accused was not stranger, can he still be prosecuted under S. 138 NI Act? Court answers","author":"Bhumika Indulia","date":"July 1, 2021","format":false,"excerpt":"Madras High Court: P. Velmurugan, J., addressed a matter revolving around the offence under Section 138 of the Negotiable Instruments Act. A complaint was filed for an alleged offence under Section 138 of the Negotiable Instruments Act, 1881. Judicial Magistrate found the respondent guilty of offence under Section 138 NI\u2026","rel":"","context":"In &quot;Case Briefs&quot;","block_context":{"text":"Case Briefs","link":"https:\/\/www.scconline.com\/blog\/post\/category\/casebriefs\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/251535","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=251535"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/251535\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=251535"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=251535"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=251535"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}