Top 5 Judgments on Negotiable Instrument Act

Top 5 Judgments on Negotiable Instrument Act

 

Canara Bank vs. Canara Sales Corporation & others

Sections 6, 31, 77, 85 and  117 in the Negotiable Instruments Act,  1881 were discussed. The relationship between  Bank and customer of the  Bank are conferred. That of a creditor and debtor-Cheque duly signed by a customer presented-Mandate to Bank to pay the amount. The element of trust between Bank and its customer Exists.  Banking Law: Bank and Customer entries in passbook and statement of accounts furnished by the bank. Customer whether duty bound to intimate discrepancies.  The court held that the when customer’s signature is fake, there is no decree to the bank to pay it.

Harman  Electronics  Pvt.Ltd. v. National Panasonic India Pvt. Ltd

It is one thing to say that sending of a notice is one of the ingredients for maintaining the complaint but it is another thing to say that dishonor of a cheque by itself constitutes an offense. For the purpose of proving its case that the accused had committed an offense under Section 138 of the Negotiable Instruments Act, the ingredients thereof are required to be proved. The proviso appended thereto, however, imposes certain further conditions which are required to be fulfilled before cognizance of the offense can be taken. If the ingredients for constitution of the offence laid down in the provisos (a), (b) and (c) appended to Section 138 of the Negotiable Instruments Act intended to be applied in favour of the accused, there cannot be any doubt that receipt of a notice would ultimately give rise to the cause of action for filing a complaint.
 

Bhutoria Trading Co. v. Allahabad Bank

Messrs. W. F. Ducat & Co.. Ltd. drew an uncrossed cheque on their bankers, the respondent Allahabad Bank Ltd. for the said sum payable to the plaintiff or order in payment of the said price and made over the same to the defendant No. 2 Jeth-mall Chandalia, an employee of the plaintiff. In the plaint, the plaintiff claimed that the defendant No. 2 had no authority to operate on the plaintiff's banking account or to endorse any cheque payable to the plaintiff's order. The court held out that there are no circumstances which afforded a reasonable ground for believing that payee was not permitted to receive payment of cheques, the bank is considered to had made payment in due course.

Prem Chand Vijay Kumar v. Yashpal Singh

Challenge in this appeal is to the legality of the judgment rendered by a learned Single Judge of the Punjab and Haryana High Court holding that the proceedings initiated on the basis of a complaint alleging infraction of Section 138 of the Negotiable Instrument Act, 1881 (in short the 'Act') was not maintainable. Therefore, the proceedings were quashed, allowing the petition filed under Section 482 of the Code of Criminal Procedure, 1973 (in short 'the Code').The court held that upon a notice under Section 138 of the NI Act being issued, a subsequent presentation of a cheque and its dishonor would not create another ‘cause of action’ which could set the Section 138 machinery in motion. 

Rangachari(N.) v.Bharat Sanchar Nigam Ltd.

 

On behalf of the Data Access (India) Limited, two cheques were issued to the respondent  "B.S.N.L. The cheques were duly presented by the B.S.N.L. but were dishonoured for insufficiency of funds. B.S.N.L. thereupon issued requisite notices calling upon the Data Access (India) Limited to pay the amounts due under the cheques. The payments not having been made, B.S.N.L. filed a complaint under Section 138 of the Negotiable Instruments Act. The Court case held that the Law merchant should be treated as negotiable instruments. The also observed that negotiable instruments are only instruments of credit which are readily exchangeable into money & easily drivable from one hand to another hand.