LI Network
Published on: December 09, 2023 at 11:59 IST
The Supreme Court has unequivocally clarified that in cases involving bounced cheques under Section 138 of the Negotiable Instruments Act, the defense citing sufficient funds in other bank accounts is not tenable.
The bench comprising Justices Hrishikesh Roy and Sanjay Karol ruled, “In a proceeding under Section 138 of the Negotiable Instruments Act, the accused cannot rely upon other bank accounts for the dishonoured cheque which relates to the specific bank account of the accused.”
The case in question involved complaints filed by the respondent, Dharam Singh, against the accused, Harpal Singh, for the dishonor of multiple cheques issued by the latter. Dharam Singh contended that he invested funds in the accused’s company based on assurances, and in return, received cheques to cover the owed amounts. However, one of the cheques bounced due to insufficient funds.
Despite the appellant’s argument that the relevant bank account was frozen in 2015, the Court rejected this claim, emphasizing that at the time of issuing the cheques, the appellant lacked sufficient funds in the specific account associated with the dishonored cheque.
The Court dismissed the appellant’s reliance on funds in other bank accounts, stating, “Accordingly, the argument advanced by Mr. Maninder Singh, learned Senior Counsel of having adequate funds by reference to the other bank accounts of the company, cannot be of any assistance to the accused.”
As a result, the Supreme Court upheld the trial court’s conviction and directions for compensation, dismissing the appeal in the case titled HARPAL SINGH vs. THE STATE OF HARYANA.
