The Jammu and Kashmir and Ladakh High Court in case of Parvaiz Ahmad Bhat Vs Fida Mohamamd Ayoub has ruled that Dishonor Of Cheque Due To Incomplete Signature Would Constitute An Offence U/S 138 Of Negotiable Instruments Act, 1881.
Jammu and Kashmir and Ladakh High Court also pointed out that 'The question whether stop payment instructions, which result in dishonor of a cheque, would amount to an offence under Section 138 of the NIA Act, was considered by the Supreme Court in M. M. T. C. Ltd. Vs. M/S Medchl Chemicals, (2001) 1 SCC 234, and it was held that same would come within the ambit of definition of offence under Section 138 of the NIA Act. Similar view was taken by the Supreme Court in the case of Goaplast (P) Ltd vs. Chico Ursula D'Souza, (2003) 3 SCC 232.
In Para 11 of Judgemennt Jammu and Kashmir and Ladakh High Court took a note of Vinod Tanna’s case
In Vinod Tanna’s case (supra), the Supreme Court, while dealing with a case where the cheque drawn by the accused was not been honoured by the bank on account of drawer’s signatures being incomplete, held that dishonour of cheque for the aforesaid reason would not constitute an offence under Section 138 of the NI Act and, accordingly, the criminal proceedings against the accused were quashed.
(Para 12)The aforesaid decision of the Supreme Court came up for consideration before the same Court in the case of Laxmi Dyechem vs. State of Gujarat and others, (2012) 13 SCC 375. The Court, after noticing its earlier decisions on interpretation of the provisions of Section 138 of the NI Act, made the following observations:
“15. A three-Judge Bench of this Court in Rangappa v. Sri Mohan [(2010) 11 SCC 441:
(2010) 4 SCC (Civ) 477 : (2011) 1 SCC (Cri) 184] has approved the above decision and held that failure of the drawer of the cheque to put up a probable defence for rebutting the presumption that arises under Section 139 would justify conviction even when the appellant drawer may have alleged that the cheque in question had been lost and was being misused by the complainant.
13) The Supreme Court in the aforesaid decision did not follow the ratio laid down in Vinod Tanna’s case and observed that the ratio laid down in the said case is based upon the ratio laid down by the Supreme Court in Electronics Trade & Technology Development Corpn. Ltd. v. Indian Technologists and Engineers (Electronics) (P) Ltd. (1996) 2 SCC 739, which has been overruled by the Supreme Court in Modi Cements Ltd (supra). Para 16 of the judgment is relevant to the context and the same is reproduced as under:
“16. In the case at hand, the High Court relied upon a decision of this Court in Vinod Tanna’s case (supra) in support of its view. We have carefully gone through the said decision which relies upon the decision of this Court in Electronics Trade & Technology Development Corporation Ltd. (supra). The view expressed by this Court in Electronics Trade & Technology Development Corporation Ltd. (supra) that a dishonour of the cheque by the drawer after issue of a notice to the holder asking him not to present a cheque would not attract Section 138 has been specifically overruled in Modi Cements Ltd. case (supra). The net effect is that dishonour on the ground that the payment has been stopped, regardless whether such stoppage is with or without notice to the drawer, and regardless whether the stoppage of payment is on the ground that the amount lying in the account was not sufficient to meet the requirement of the cheque, would attract
the provisions of Section 138.”
14) The Supreme Court on the basis of the aforesaid observations and the ratio, while dealing with a case in which the cheques were dishonoured by the bank on the ground that drawer’s signatures were incomplete and that no image was found or that the signatures did not match, came to the conclusion that criminal prosecution against the accused in such cases should be allowed to proceed and the judgment and orders passed by the High Court quashing the criminal proceedings were set aside
15) Both the judgments of the Supreme Court in Vinod Tanna’s case as well as in Laxmi Dyechem’s case (supra) have been rendered by the Benches of co-equivalent strength. The judgment rendered in Laxmi Dyechem’s case is latest in point of time, wherein the ratio laid down in Vinod Tanna’s case has been termed as per incuriam. Therefore, as per law of precedents, the ratio laid down in Laxmi Dyechem’s case has to be followed. Accordingly, as per the ratio laid down in Laxmi Dyechem’s case, the contention of the petitioners that in the instant case offence under Section 138 of the NI Act is not constituted because the cheques were dishonoured on account of incomplete signatures and not for the reason of insufficiency of funds or exceeding the arrangement, deserves to be rejected.
16) For the foregoing reasons, the petition is found to be devoid of merit and the same is dismissed. Interim order dated 19.02.2021 is vacated. The trial court is directed to proceed further in the matter in accordance with law.