Allow Cookies!
By using our website, you agree to the use of cookies
Cheque Not Valid If Amount Written Is Uncertain: Delhi Court
The Patiala House Court recently held that an instrument cannot be called a cheque if it does not specify a certain amount of money to be given to a certain person. The amount written on the instrument should not be inappropriate, only then it will be called as a cheque and therefore attract legal consequences under the Negotiable Instruments Act, 1881. (NI Act)
While hearing the revision petition in the proceedings under Section 138 of NI Act, Additional Sessions Judge, Praveen Singh gave this order. In this case, the cheque in issue was drawn for an amount of "Forty Four Lacs Eighteen Lacs Eight Hundred and Ninety Six only". Thus the bank dishonored the cheque saying that cheque irregularly was drawn or amount in words and figures differ.
The revisionist had asserted that the previously mentioned amount cannot be found and hence the document which was presented before the bank was neither a Bill nor a cheque under Sections 5 and 6 of the NI Act, respectively. Moreover, section 138 pf NI Act could not be attracted.
The respondent argued that the revisionist cannot take advantage of his wrong which he did with a malafide intention. It was also brought to the notice that a valid legal notice was presented to the Revisionist but neither it offered to issue a fresh cheque nor paid the amount. Considering the facts of this case, a 2012 SC judgment in M/s Laxmi Dyechem v. State of Gujarat directly covers this case.
The court observed that in the present case the instrument is ‘ambiguous’ because it does not fulfill the condition no.4, i.e, a certain sum of money to be called a valid cheque under section 6 of the NI Act, 1881.
The court further held that section 18 of the NI Act cannot be attracted in this present case. The section reads that in case the amount is stated differently in words and figures, only the amount stated in words has to be considered and in the present case the ambiguity is in the words therefore this section cannot be applied.
The respondent contended that the revisionist should be held accountable for non-compliance with the legal notice. The court held that,
"In the present case, as the instrument presented was not a cheque with the definition of section 6 of NI Act, a notice for subsequent dishonor of such instrument will not impose any liability upon the drawee either for non-compliance or for non-issuance of a fresh cheque."
The court also distinguished the present case with the case of Laxmi Dyechem and held that Laxmi Dyechem’s verdict is not applicable to this case.
The Court added, "the cheque was invalid on the face of it because of uncertainty as to the amount written in words. It is not the case that the receiver could not have known the defect of the cheque when he received it or, where due to some future act on the part of the drawee that the cheque was dishonored. Thus, the judgment of Laxmi Dyechem (supra) cannot come to the aid of the respondent in this case.”
86540
103860
630
114
59824