The Bombay high court has ruled that if because of an attachment order the cheques could not be cleared, it cannot be said that they were returned for want of sufficient funds.
Upholding an order of acquittal in a cheque-bouncing case, the Bombay high court has ruled that if because of an attachment order the cheques could not be cleared, it cannot be said that they were returned for want of sufficient funds.
Justice JH Bhatia on March 22 passed his judgment on an appeal filed by Ashish Parikh challenging the order of acquittal passed by the special metropolitan magistrate, Mumbai. According to Parikh, Ashit Shah issued him two cheques of Rs9 lakh each towards part-payment of his outstanding dues for the purchases made by him.
On April 25, 2007, the cheques were deposited by Parikh and the bank returned them unpaid with endorsement “attachment received from Crime Branch”. Parikh said that Shah also failed to make payment within the statutory notice period. However, the magistrate acquitted Shah holding that there is no evidence on record to show that the cheque was dishonoured for want of funds or sufficient arrangement made with the bank.
Parikh’s advocate argued that presuming that funds were there and still the cheques were dishonoured because of the attachment of the account, the accused (Shah) should have made the payment, when the statutory notice was served to him. As he failed to make the payment within the period, he is liable to be held guilty under section 138 (cheque bouncing) of Negotiable Instruments Act.
Bhatia noted that there is no evidence to show that in the account of the accused sufficient funds were not available nor that the accused had closed the account or had given any stop payment notice.
“The crime branch, an authority under the state, had issued directions to the bank. Hence the bank refused to clear the cheque,” the judge wrote.
He added that the order of attachment of the account was not passed at Shah’s behest nor he was competent to pass it.
He added that “this very important ingredient of the offence under section 138 is missing” and the metropolitan magistrate was justified in passing the acquittal order.
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