Background

Section 138 of the Negotiable Instruments Act, 1881 (‘NI Act’) deals with the offence relating to the dishonour of a cheque for insufficiency of funds or if it exceeds the amount arranged to be paid from that account. Section 138 of the NI Act specifies the consequences and procedure for the dishonour of a cheque due to insufficient funds or exceeding the arrangement with the bank:

·      Offence: If a person’s cheque is dishonoured because the funds in their account are insufficient or exceed the agreed amount, it is considered an offence.

·      Penalty: The offender may be punished with imprisonment for up to two years, or a fine up to twice the amount of the cheque, or both.

·      Conditions:

o   The cheque must be presented to the bank within six months from its date or its validity period, whichever is earlier.

o   The payee must demand payment in writing within thirty days of receiving notice of the dishonor from the bank.

o   The drawer of the cheque must fail to make payment within fifteen days of receiving the demand notice.

·      Explanation: “Debt or other liability” refers to a legally enforceable obligation.

In the case of Munish Kumar Gupta v. M/s Mittal Trading Company, dated April 30, 2024, the Supreme Court of India dealt with crucial issues pertaining to the application of Section 138 of the Negotiable Instruments Act (NI Act), specifically regarding the amendment of the cheque date mentioned in the complaint. The Supreme Court’s decision in this case has significant implications for the interpretation and application of Section 138 of the NI Act in such situations.

Factual Matrix

·      The Respondent filed a complaint under Section 138 of the NI Act, read with Section 420 of the Indian Penal Code, 1860 (‘IPC’).

·      The Respondent alleged that the Appellant had issued an account payee cheque dated 22.07.2010, bearing No. 732966, to discharge a financial liability.

·      The Complaint was filed on 02.01.2013.

·      However, during tendering of evidence before the Ld. Trial Court, the Respondent filed an amendment application dated 24.10.2017 to the Complaint, claiming a typographical error in mentioning the year of the cheque.

·      The Ld. Magistrate initially denied the amendment, but the High Court allowed it through a judgment and order dated 04.01.2023.

Core Legal Issue

·      Whether an amendment to the date of the cheque mentioned in the complaint can be allowed?

Supreme Court’s Decision

·      The Supreme Court reviewed the case where the date on the cheque was consistently recorded as 22.07.2010 from the notice demanding payment to the evidence stage.

·      The court found that amending the date of the cheque to 22.07.2012, as requested by the Respondent, was unjustified because existing evidence supported the original date.

·      The Supreme Court overturned the High Court’s decision that allowed the complainant to amend the cheque date in the complaint.

·      It was determined that the amendment request was made after the evidence stage had concluded, which the Supreme Court deemed unjustifiable.

·      It was held that in a matter of the present nature, where the date is a relevant aspect based on which the entire aspect relating to the issue of notice within the time frame as provided under the NI Act, and also as to whether as on the date there was sufficient balance in the account of the issuer of the cheque would be the question, the amendment, as sought for, in the present circumstance, was not justified.

·      As a result, the appeal was allowed, and all pending applications were resolved accordingly.

Outcome of the Case

·      The Supreme Court’s decision in the instant case highlights the importance of the date of the cheque in cheque dishonour cases and the limitations on amending such crucial details after the evidence stage.

·      This judgment provides clarity on the relevance of the date of the cheque in determining the validity of complaints under the Negotiable Instruments Act, 1881.

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