The Rajasthan High Court held that the date of maturity of a cheque is the relevant date for determining the existence of legally enforceable debt under the Negotiable Instruments Act, 1881 (NI Act).

The Court held thus in a batch of miscellaneous petitions filed for quashing the entire criminal proceedings of the complaint cases for the offence under Sections 138 of the NI Act.

A Single Bench of Justice Anil Kumar Upman observed, “… I am of the considered opinion that the petitioners cannot shirk their liability to pay the cheque amount to the complainant by taking plea that there was no legally enforceable debt or liability subsisting on the date of issuance/drawl. The relevant date for determining the existence of a legally enforceable debt or liability under the N.I. Act would be the date of presentation/maturity of the cheque in question. If there subsists any legally enforceable debt or liability on the date of presentation of cheque; the cheque gets dishonoured and the drawer fails to make payment of the cheque amount within the stipulated time period, after serving legal notice, the drawer of the cheque in question has to face trial under the N.I. Act.”

Advocate Dushyant Singh Naruka appeared for the petitioner while PP M.K. Sheoran appeared for the respondents.

Factual Background -

The complainant-respondent M/s Vibrant Academy (I) Pvt. Ltd. was running a IIT JEE Coaching Institute. The respondent-company invited petitioners to enter into contract for their employment as faculty upon certain terms and conditions. The company obtained cheques from the respective petitioners in order to indemnify itself for any future losses which could have incurred to it by violation of any condition of the contract by the petitioners. The cheques in questions were issued by the respective petitioners to the company as security and dates were not mentioned therein at that time. It was agreed between the parties that the company would be free to present the cheques for encashment in case of breach of any of the terms of the agreement and the petitioners would be bound to honour the cheques on presentation.

Thereafter, the petitioners resigned their jobs and for breach of condition of the contract, the company issued multiple legal notices (both civil and criminal) to the petitioners for breach of the conditions of the contract. The petitioners filed separate reply to the notices mentioning therein their grievances/defence, and when the cheques in question could not be honoured, the company filed separate cases under Section 138 of the NI Act against the petitioners before the Special Judicial Magistrate. Cognizance was taken by the Trial Court against the petitioners for offence under Section 138 of the NI Act and proceedings were going on there. Hence, the petitioners filed miscellaneous petitions seeking quashing of the entire criminal proceedings of the complaint cases, pending against them before the Trial Court.

The High Court in the above context of the case noted, “A cheque is a monetary instrument. In several cases, it gets dishonoured or bounced. This happens when the amount mentioned in the cheque is greater than the amount available in the account from which the cheque has been drawn of. Section-138 of the Negotiable Instruments Act aims to lay down legal consequences of a case where a cheque gets dishonoured. It essentially provides a shield to the payees and protects their rights. Section-138 not only imposes criminal liability against the payee but also provides for a civil suit which the payee can initiate against the drawer.”

The Court further noted that a post-dated cheque is an instrument in which a future date is written implying that the cheque could only be encashed on or beyond that future date and the two important dates in cases of dishonoured cheques are the date of issuance of cheque and the date of maturity of cheque.

“Usually the debt or the liability existing on both the dates is of the same amount. But in some instances a part payment is made between the two date, which in turn reduces the amount liable on the date of maturity. Regarding this, the issue whether the offence of section-138 of Negotiable Instruments Act is made out from liability/debt existing on date of issuance of cheque or date of maturity comes up”, it added.

The Court said that the liability arising on the date of maturity will be covered under Section-138. It also said that the accused petitioners would be at liberty to cross-examine the complainant and adduce other evidence during trial to rebut the presumption of legally enforceable debt or liability subsisting on the date of presentation of cheques in question for encashment; disprove the validity of the contract and produce any other material, favouring their cases.

“Further, looking to the fact that the aforementioned cases were filed before the learned trial in the year 2017 and till date, nearly seven years have been passed, the trial court is directed to expedite the proceedings”, it ordered.

Accordingly, the High Court dismissed the miscellaneous petitions.

Cause Title- Shaliwahan Singh Rathore v. State of Rajasthan & Anr. (Neutral Citation: 2024:RJ-JP:19168)


Petitioner: Advocate Dushyant Singh Naruka

Respondents: PP M.K. Sheoran, Advocates Harshita Sharma, and Vibhu Sakshi Sharma.

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