RAJNEESH AGGARWAL versus AMIT J. BHALLA

Citation: [2001] 1 S.C.R. 54 · Decided: 04-01-2001 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Appeal(s) allowed

Cited by 4 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
RAJNEESH AGGARWAL 
1~ 
AMIT J. BHALLA 
JANUARY 4, 2001 
B 
[G.B. PATTANAIK AND U.C. BANERJEE, JJ.] 
Negotiable Instruments Act, 1881: Sections 138 and 141. 
Dishonour of cheque-Notice-Issuance of-Cheque issued by company 
C and signed by its Direclor-Notice issued to Director in his individual capacif)' 
and no! to !he compan)~l'a/idi!y of-Held: No/ice cannot be construed in 
a narrow and Jee/mica/ way wilhoul examining the maller-11 is sufficienl 
if pa)·ee se/'Ves due no/ice Jo !he person who has signed !he cheque-Hence, 
High Court erred in quashing the complaint for want of notice to the 
D company: Dishonour of cheque-Cause of action-Arising of-Held: Mere 
dishonour of cheque does not raise a cause of action-Cause of action 
arises when payee makes a demand for payment and the dra11'er fails to 
make it. 
Dishonour of cheque-Criminal complainl-Pendency of-Deposit of 
-*. _ 
E entire money represenling the cheque in courl-Effecl of-Held: Once lhe 
offence is commil!ed subsequenl deposil of amounl is of no consequence-
Such deposil does not absolve the accl/sed of criminal liability-However, 
such deposit may have some effect in the maller of awarding of sentence. 
The respondent issued three cheques to the appellant, which were 
F dishonoured. The appellant, therefore, served a notice on the respondents 
~ 
-
calling upon him to pay the amount of cheques within 15 days of the 
receipt of the notice. Since the respondent failed to pay the amount, the 
appellant filed a complaint under Section 138 of the Negotiable Instruments 
Act, 1881. But the High Court quashed the complaint on the ground that the 
appellant issued the notice to the respondent in his individual capacity and 
G not to the drawer of the cheque i.e. the company of which the respondent was 
the Director. Hence this appeal. 
On behalf of the respondent it was contended that the entire amount 
involved in their three cheques having been deposited in this Court, the 
H criminal proceeding should not be allowed to continue. 
54 
RAJNEESH AGGARWAL v. A.J. BHALLA 
55 
Allowing the appeal, the Court 
A 
\ 
HELD : l. l. Mere dishonour of a cheque would not raise a cause of 
action unless the payee makes a demand in writing to the drawer of the 
cheque for the payment and the drawer fails to make the payment of the said 
amount of money to the payee. The object of issuing notice indicating the 
factum of dishonour of the cheques is to give an opportunity to the drawer B 
to make the payment within 15 days, so that it will not be necessary for the 
x 
payee to proceed against the drawer in any criminal action, even though the 
bank dishonoured the cheques. Bearing in mind the object of issuance of 
such notice, it most be held that the notices cannot be construed in a narrow 
---· 
technical way without examining the substance of the matter. 
C 
159-H; 60-B-DI 
1.2. After the cheques were dishonoured by the bank the payee had 
served due notice and yet there was failure on the part of the accused to pay 
the money, who had signed the cheques, as the Director of the company. The 
impugned order of the High Court, therefore, is liable to be quashed;(60-Fl D 
Bilakchand Gyanchand Co. v. A. Chinaswami, (1999( SCALE 250, 
relied on. 
Modi Cements ltd v. Kuchi/ Kumar Nandi, JT 119981 2 SC 198, 
referred to. 
2. So far as the criminal complaint is concerned, once the offence is 
committed, any payment made subsequent thereto will not absolve the accused 
E 
of the liability of criminal offence, though in the matter of awarding of 
sentence, it may have some effect on the Court trying the offence. But by no 
stretch of imagination, a criminal proceeding could be quashed on account F 
of deposit of money in the Court or that an order of quashing of criminal 
proceeding, which is otherwise unsustainable in law, could be sustained 
because of the deposit of money in this Court. Therefore, the so-called 
deposit of money by the respondent in this Court is of no consequence. 
(60-H; 61-AJ G 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal 
Nos. 10-12 of2001. 
From the Judgment and Order dated 13.8.99 of the Himachal Pradesh 
High Court in Crl. M.P. (M) Nos. 55, 57 and 58 of 1999. 
H 
56 
SUPREME COURT REPORTS 
[2001) I S.C.R. 
A 
D.A. Dave, Gourab Banerjee, R.N. Karanjawala, Arunabh Choudhary 
B 
and Mrs. Manik Karanjawala for the Appellant. 
G.L. Sanghi, R.K. Sanghi, N.M. Sharma and Rajesh Prasad Singh for the 
Respondent. 
The Judgment of the Court was delivered b

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