ADVANCED CERTIFICATE COURSE ON NEGOTIABLE

INSTRUMENTS ACT

ASSIGNMENT

Name : - Manik bansal

Email ID :-manikbansal820@gmail.com

Contact no. – 8288847934

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 1|Page
ANALYTICAL QUESTIONS [Within 200 Words]

10 Marks Each
1. What was the 2015 Amendment to the Negotiable Instruments Act 1881?
Explain.

Ans. 1 Amendments act 2015 it is for the changing in respect to jurisdiction under section
138 . the amendments are focused on clarifying the jurisdiction. the Hon'ble Supreme Court
in the case of Dasrath Rupsingh Rathod changed the concept of Territorial Jurisdiction for
dishonor of cheques and limited it only to those Courts, within whose local jurisdiction the
offence was committed, , where the cheque is dishonored by the bank on which it is drawns
covered u/s 138 of the NI Act, 1881.

The amendment of 2015 inserted Section 142(2) in the Principal Act, to summarise, firstly,
when the cheque is delivered for collection through an account the complaint is to be filed
before the Court where the branch of the bank is situated, where the payee or the holder in
due course maintains his account and secondly when the cheque is presented for payment
over the counter the complaint is to be filed before the Court where the drawer maintains his
account.

For example-

 A holds an account with Fort Branch, Mumbai of XYZ Bank, issues a cheque payable
at par in favour of B. B holds an account with M.G. Road Branch, Pune of PQR Bank,
deposits the said cheque at Nagpur Branch of PQR Bank and the cheque is
dishonoured. The Complaint will have be filed before the Court having local
jurisdiction where M.G. Road Branch, Pune of PQR Bank is situated.
 A holds an account with Fort Branch, Mumbai of XYZ Bank, issues a cheque
payable at par in favour of B. B presents the said cheque at Nagpur Branch of XYZ
Bank, (but B does not hold account in any branch of XYZ Bank) and the cheque is
dishonoured. The Complaint will have be filed before the Court having local
jurisdiction where Fort Branch, Mumbai of XYZ Bank is situated.

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 2|Page
 Therefore, to summarise, firstly, when the cheque is delivered for collection through an
account the complaint is to be filed before the Court where the branch of the bank is situated,
where the payee or the holder in due course maintains his account and secondly when the
cheque is presented for payment over the counter the complaint is to be filed before the Court
where the drawer maintains his account.

Under this amendment section 142A is also inserted in this act .

 All cases which were pending in any court, whether filed before it or transferred to it
shall go before the court having jurisdiction under the new procedure
 if a complaint is filed by the payee or the holder in due course against a drawer
before the Court having jurisdiction u/s 142(2), all further complaints against that
drawer shall be filed before the same Court where the first complaint is filed,
irrespective of whether the cheque is presented or delivered for collection to the
bank/ branch within the local limits of Court having jurisdiction where that
bank/branch is situated.

In view of this amendment, all cases transferred pursuant to the judgment in the matter of
Dashrath and all other pending cases would have to be transferred as per Sec. 142A

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 3|Page
2.What Amendments do you think shall be made to the Negotiable Instruments Act to
make it a better act?

Ans.2 According to me to make the negotiable instruments better act some more changes
should be made in this act :

 As the number of cases is increased with the passage of time there should be different
courts in different cities so the cases can be resolved and the people can get the
justice.
 In negotiable instrument act the maximum punishment for an offence is 2 years it
should be increased according to the offence . it should not be same for all the
offence . it should vary with the offence committed
 As under section 138 the Metropolitan Magistrate or a Judicial Magistrate of First
Class is empowered to try the offence so to resolve the cases more fastly the power of
NI cases should be given upper classes judges also
 There should be proper time limit to dispose of the case that it shouldnot be pending
for long term
 The act should be amended with day to day scenario .and according to people needs
 The word “etc’’ used in Section 138 of NI Act should be made clear. I mean it states
as dishonour of cheque due to insufficient balance “etc’’ and that etc should be made
clear.
 Under section 138 the territorial jurisdiction should be altered for the benefits of the
society

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 4|Page
3Explain the following :-

 Bearer Cheque
 Order Cheque
 Uncrossed Cheque
 Crossed Cheque
 Post Dated Cheque
 Stale Cheque

Ans. 3 cheque is defined under section 6 of negotiable instruments act 1881. They are
different types of cheque

1) bearer cheque-. The person who bears the cheque is authorised to collect the amount of
money .These cheques are also know as open cheque. these types of cheque are very risky
and once misplaced can lead to the loss of amount stated in the cheque

For example – drawer - sunil, payee - mohan

Mohan can endrose it to his friend riya , riya can collect the money from the bank. No
identification is required at the time of presenting the cheque to the bank

2 order cheque – in this type of cheque ,only that person whose name is written by the
issuer on the cheque is authorized to collect the amount .

In order cheque the identification is required at the time of presenting the cheque.

3)uncrossed cheque – it is also know as open cheque . when a cheque is not crossed with
two parallel lines and it is payable at the counter of the bank on presentation of the cheque

4) crossed cheque- when two parallel lines made on the front part of the cheques this type of
cheque is knowns as crossed cheques . in this types of cheque payee cannot withdraw the
money in cash but money can transfer to the payee account

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 5|Page
5) post dated cheque- if the cheque issued by the drawer to the payee for the upcoming
withdrawn date this type of cheque is knows as post dated cheques

For example – lets assume today date is 30 may 2020.and if I issue a check today and put
the date 29 june 2020 . this is knows as post dated cheque

6) stale cheque-if any cheque issued by the drawer doesnot get withdrawn from the bank
until three months then this types of cheque is knows as stale cheque.

For example – if the issued date of cheque is 1 march 2020 . and the cheque is presented to
the bank on 2 june 2020 then the cheque will be returned by the bank stating the cheque to be
stale cheque.

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 6|Page
4.What was the issue of Jurisdiction under Section 138 cases and how was it resolved?

Ans. 4 The Act is silent on the matter relating to the appropriate jurisdiction with respect to
filing of criminal complaint under Section 138. Since the Criminal courts are approached, the
issue needs to be examined from the point of view of the Criminal Procedure Code, 1973,
Section 177 and 178(d) of Code of Criminal Procedure

In Gautham T. V. Centre vs Apex Agencies held in the year 1993, the High Court of
Andhra Pradesh held that the Court within whose jurisdiction the cheque is given, or where
the information of dishonour is received or where the office of the payee is situating, will
have jurisdiction to try the offence.

After that, K.Bhaskaran v. Sankaran Vaidhyan Balan and Anotherheld in the year 1999,
the apex court was held that where to file a criminal complaint in case the offence of
Dishonor of the Cheque is committed under Section 138. The rule that every offence shall be
tried by a Court within whose jurisdiction it was committed is not an unexceptional

After this in 2014, various changes in the territorial jurisdiction by the Dashrath Roopsingh
Rathod Vs. State of Maharashtra & Another. The SC held that there is a discernibly
defined difference between the commission of an offence and cognizance of offence.
Cognizance leads to cause of action. For section 138 complaints, the cause of action arises
only when the drawer fails to pay the defaulted payment. The complaints can be filed only in
the courts within whose jurisdiction the cheque is presented for encashment.

In the amendment 2015, The Gujarat High Court in its judgment in Brijendra Enterprise v.
State of Gujarat and Another has explained the law relating to territorial jurisdiction for
filing a complaint for dishonor of cheques a complaint can be filed under Section 138 for
dishonor of cheque at a court within whose local jurisdiction:

 The branch of the bank is located.

 The payee or the holder maintains an account.
Negotiable Instruments Act (ASSIGNMENT)
The LAW Learners 7|Page
 This law comes with a promise to solve and aid in not only the speedy disposal of the
pending cases pertaining to complaints under 138, but also to bring a sanctity to the system
by seeking to clamp down on defaults in payments. It clarifies the legal position as to
jurisdiction.

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 8|Page
5.If a Company attracts the provisions of Section 138, who shall be liable? Explain with
reference to appropriate provisions and cases, if any?

Ans. 5 A juristic person like incorporated companies and partnership firms are also made
liable for the offence of dishonour of cheque described under section 138.

If the person committing an offence under section 138 is a company, every person who, at the
time the offence was committed, was in charge of, and was responsible to the company for
the conduct of the business of the company, as well as the company, shall be deemed to be
guilty of the offence and shall be liable to be proceeded against and punished accordingly

 where a person is nominated as a Director of a Company by virtue of his holding any

office or employment in the central Government or State Government or a financial
corporation owned or controlled by the Central Government as the case may be, he
shall not be liable for prosecution

Explanation– “Company” means anybody corporate and includes a firm or other association

of individuals; and “Director” in relation to a firm, means a partner in the firm.

Case laws-

 Anil Hada  v.  Indian Acrylic Ltd., (2000) 1 SCC 1.-Three categories of persons can
be discerned from Section 141 who are brought within the purview of the penal
liability through the legal fiction envisaged in the section.

(1) the company which committed the offence,

(2) everyone who was in charge of and was responsible for the business of the
company,

(3) any other person who is a director or a manager or a secretary or officer of the company,
with whose connivance or due to whose neglect the company has committed the offence

 SMS Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 .- The Supreme Court
has categorically held that there has to be specific averment in the complaint to the
effect that such a person was not only in charge of and responsible to the company for

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 9|Page
 the conduct of its business but it was also required to be stated as to how and in what
manner he was so responsible.
 P.J. Agro Tech Limited and Ors. v. Water Base Limited [(2010) 12 SCC 146 ]
wherein it was held that cheque drawn by an employee of a company on his personal
account even though he was doing it on behalf of the appellant company and its
Directors, the appellant company and its Directors cannot be held liable under Section
138.
 National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal, (2010) 3 SCC
330. A director of a company who was not in charge of and was not responsible for
the conduct of the business of the company at the relevant time, will not be liable for a
criminal offence under the provisions,

Negotiable Instruments Act (ASSIGNMENT)

The LAW Learners 10 |
Page