Apex Court Promissory Notes& ChequesVol.2

 

Apex Court

Promissory Notes & Cheques 

Vol.2

 

advocatemmmohan

Apex Court

Promissory Notes & Cheques 

Vol.2

Mode of citation : 

2016 [6] APEX COURT Civil Appeal  No(s).  3345-3346/2008-BALRAM ETC.-vs-LAXMI NARAYAN 

Murali Mohan. M.

advocatemmmohan

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Atmakur , kurnool dist. AP-518422

CONTACT

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                                   HEAD NOTES

  1. whether A Deputy General Manger is not a person who is responsible to the company for the conduct of the business of the company as he does not fall under any of the categories (a) to (g) listed in section 5 of the Companies Act  the Deputy General Manger, could  be prosecuted either under sub-section (1) or under sub-section (2) of Section 141 of the Act ? – No
  2. Mere proof of  Exhibit P.1disputed cheque was one of cheque leaf in Exhibit D.2, and all the leaves in Exhibit D.2 [check book  ] was seen used in the year 1987 itself did not empower the accused to ask for acquittal, in the absence of definite stand in the cross examination of the complainant – in the absence of proof of   material alteration of the cheque from 15000/- to 45,000/- and in the absence of challenge of date and year of the cheque 1989 – Once the execution was admitted and once the signature was admitted – the burden lies on the accused of which  the accused failed to discharge  Apex court held that the trial court recorded hasty acquittal which was correctly set aside by the High court. 
  3. in order to draw the presumption under Section 118 read along with 139 of the Negotiable Instruments Act, the burden was heavily upon the complainant to have shown that he had required funds for having advanced the money to the accused; that the issuance of the cheque in support of the said payment advanced was true and that the accused was bound to make the payment as had been agreed while issuing the cheque in favour of the complainant. – MERE ABSENCE OF SAYING WHETHER IT IS BLANK CHEQUE –  can not empower the complainant to rest his HEAD ON THE WINGS OF presumptions when he failed to prove his capacity to pay and when he failed to prove when exactly he paid the amount and who wrote the cheque.WHEN THE ACCUSED DENIEDTHE  CREDITOR AND DEBTOR RELATIONSHIP
  4. when the trial is a regular trial  – even though successive magistrate delivered judgment – it should not be remanded for denovo trial as no summary trial was conducted – in addition to it ,their Lordship held that unless and until there is grave miscarriage of justice in the light of illegality, irregularity, incompetence or any other defect which cannot be cured at an appellate stage
  5. In the absence of debtor and creditor relationship – issuing pay order at the instance of first party infavour of second party and stopped payment at the instance of first party – cheque bounce case is not maintainable
  6. whether the complaint without signature of the complainant under Section 138 of the Act is maintainable when such complaint is verified by the complainant and the process is issued by the Magistrate after verification.-YES
  7. APEX COURT DIRECTIONS: (1) Metropolitan Magistrate/Judicial Magistrate (MM/JM), on the day when the complaint under Section 138 of the Act is presented, shall scrutinize the complaint and, if the complaint is accompanied by the affidavit, and the affidavit and the documents, if any, are found to be in order, take cognizance and direct issuance of summons. (2) MM/JM should adopt a pragmatic and realistic approach while issuing summons. Summons must be properly addressed and sent by post as well as by e-mail address got from the complainant. Court, in appropriate cases, may take the assistance of the police or the nearby Court to serve notice to the accused. For notice of appearance, a short date be fixed. If the summons is received back un-served, immediate follow up action be taken. (3) Court may indicate in the summon that if the accused makes an application for compounding of offences at the first hearing of the case and, if such an application is made, Court may pass appropriate orders at the earliest. 16 of 19 (4) Court should direct the accused, when he appears to furnish a bail bond, to ensure his appearance during trial and ask him to take notice under Section 251Cr.P.C. to enable him to enter his plea of defence and fix the case for defence evidence, unless an application is made by the accused under Section 145(2) for re-calling a witness for cross-examination. (5) The Court concerned must ensure that examination-in-chief, cross- examination and re-examination of the complainant must be conducted within three months of assigning the case. The Court has option of accepting affidavits of the witnesses, instead of examining them in Court. Witnesses to the complaint and accused must be available for cross- examination as and when there is direction to this effect by the Court. 
  8. When the stamps which were affixed on the pronote were removed from another document and affixed on the said pronote.-such a pronote cannot be taken into consideration.
  9. Sending the promissory note and admitted signautres for expert opinion-during the tria ,lif necess ary, at any time , may summon the said Expert to court or send the documents to the Expert for examining the admi tted signatures of the petitioner and the disputed suit pronote and the other public documents for his opinion which will be subject to further scrutiny by the court-as it is not a substantive piece of evidence  and the court may come to a different conclusion altogether on its own upon appreciation of the evidence, both oral and documentary, made available on record. 
  10. Whether  the promissory note for Rs.1,00,000/- was void for want of consideration to the extent of loans of Rs.71,000 advanced to 37 persons and is valid for only the balance amount taken by the defendants for their personal is correct or not as held by the High Court  ? No- Once the promissory note was executed with consciousness and knowledge for their loan and also for loans of 37 others in total for one lakh, it is deemed that they have received the entire amount[ past debt of 37 and present of 3 defendants – valid considerations]  as Sec.118 of NI Act presumptions came in to operation and the defendants are liable to pay the debt .
  11. Whether defendant No. 3 is discharged of his liability as a surety by reason of the alleged conduct of the plaintiff-bank in violating the terms of the agreement–Ex. G or by the alleged fraudulent or negligent conduct of the plaintiff-bank in other ways.? 
  12. Scaling down of interest on renewal promissory note -The benefit of the Act would be available to a debtor if the renewal was in favour of: (a) the same creditor; or (b) any other person acting in his behalf; or (c) any other person acting in his interest. Since the Bank has an independent existence, even though the controlling interest herein was with N, it would not be correct to say that there was identity between him and the Bank. Neither was there any material to show that the Bank acted on N’s behalf when the appellant executed the promissory notes in favour of the Bank; and, even if the words “in the interest of” mean “for the benefit of” it cannot be said that the Bank, in obtaining the promissory notes in renewal of the original debt was acting in N’s interest. Therefore, the Explanation was not available to the appellant. 
  13. Once the plaintiff pleads consideration different from the one found in negotiable instrument, the statutory presumptions does not arise. Under Section 118(a) of the Act. until the contrary is proved, presumption shall be made that every negotiable instrument was made for consideration. In this case the finding of the trial Court as well as the appellate Court is that valid consideration was passed under Ex.A1 for a sum of Rs.1.50 lakhs. Since the respondents had delivered possession of 3 acres 44 cents of land and the building to the appellant which is in addition to the lands covered under Ex.B1, the possession of land having been passed into the hands of the appellant and since in consideration thereof he had executed Ex.A1 promissory note, it is supported by legally enforceable consideration- So consideration may be kind or cash is a valid one as proved.
  14. Whether the presumption mentioned in cl. (a) of s. 118, Negotiable Instruments Act, 1881 can be  invoked in insolvency proceedings where an alleged debt against the insolvent is called in question by the official receiver or by a creditor or by the insolvent ? No -as the question being not one between the insolvent and the proving creditor alone, and since the rights of other creditors of the insolvent have of necessity to be considered