TOP 10 JUDGEMENTS ON NEGOTIABLE INSTRUMENTS

Negotiable Instruments cases

TOP 10 JUDGEMENTS ON NEGOTIABLE INSTRUMENTS

 

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

The Apex Court in this case held that the Law merchant must be treated as negotiable instruments as instruments. The court further has observed that negotiable instruments are merely instruments of credit that are readily convertible into money and easily passable from one hand to another.

 

  1. Dalmia Cement (Bharat) Ltd. v. Galaxy Traders and Agencies Ltd

The Supreme Court referred to the object of Section 138 of the Act in present case. The court observed that the Act was enacted and section 138 thereof incorporated with a specified object of making a special provision by incorporating a strict liability so far as the cheque as a negotiable instrument is concerned.

 

  1. Brahma Shumshere Jung Bahadur v. Chartered Bank of India, Australia & China

The Court in this case held that the bank is liable on payment being made on cheques on which alterations were authenticated by some of the drawers.

 

  1. Canara Bank vs. Canara Sales Corporation & others

The court observed that the when customer’s signature is forged, there is no mandate to the bank to pay. And hence, as such the bank is not entitled to debit customers account on such forged note cheque.

 

  1. K.BhaskaranVs.SankaranVaidhyanBalan and Anr

The Court in paragraph 12 of the judgment presented that “Under Section 177 of the Code “every offence shall ordinarily be inquired into and tried in a court within whose jurisdiction it was committed.

Considering and reproducing the constituents of section 138 of NI Act and section 178(d) of the Code, held:

  • Drawing of the cheque,
  • Presentation of the cheque to the bank,
  • Returning the cheque unpaid by the drawee bank,
  • Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount,
  • failure of the drawer to make payment within 15 days of the receipt of the notice.

It is to be noted that concatenation of all the above five constituents are a sine qua non for the completion of the offence under Section 138 of the Code. In this context a reference to Section 178(d) of the Code is useful.

 

  1. Prem Chand Vijay Kumar v. Yashpal Singh

In his case, the apex court held that upon a notice under Section 138 of the Negotiable Instrument Act being issued, a subsequent presentation of a cheque and its dishonour would not create another ’cause of action’ which could set the Section 138 machinery in motion. Instead of the five Bhaskaran concomitants, only four have been spelt out in this judgment.

A little diversion from K. Bhaskaran case was seen in Harman Electronics Pvt. Ltd. 

 

  1. Dashrath Rupsingh Rathod v. State of Maharashtra &Anr

The apex Court in its new judgement applied a strict approach which sought to discourage the payer from misusing or carelessly issuing cheques. Thus, due sympathy was shown or given to the drawer.

In fact the Supreme Court in present case has observe that Courts have been enjoined to interpret the law  to eradicate ambiguity or nebulousness, and to ensure that legal proceedings have not been used as a device for harassment, even of an apparent transgressor of the law.

 

  1. Chandabolu Bhaskara Rao’s case,

The Hon’ble High Court of Andhra Pradesh held that since promissory note is not a compulsorily attestable document, even if the signatures of the attesters are taken and after its execution it does not amount the material alteration. So it does not get vitiated. Therefore, whether there were attesters or not at the time of its execution is immaterial, more so when its execution is admitted.

 

  1. Haribhavandas Parasaran and Co. v. A.D. Thakur

The Court held that it is mandatory that the presumption under Section 118(a) of the negotiable instrument Act, 1881 should be made until the contrary is proved.

 

  1. Bhutoria Trading Co. v. Allahabad Bank

The court pointed out that where there are no circumstances that afforded any reasonable ground for believing that the payee was not entitled to receive payment of the cheques, the bank is deemed to have made payment in due course.

 

 

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