Allahabad Bank Cheque Presented After 30 September 2021 Invalid; Dishonour Will Not Attract Section 138 NI Act: Allahabad HC
The Allahabad High Court ruled that the Allahabad Bank Cheques presented after September 30, 2021(after its merger with Indian Bank in 2020) are invalid and would not attract Section 138 of the Negotiable Instruments Act, 1881.
The Court perused Section 138 NI Act and noted that the cheque must be presented to the Bank during its validity.
The Court was hearing an application for quashing the entire criminal proceeding, including the impugned summoning order passed by the Judge under Section 138 N.I. Act, 1881.
Advocate Diwakar Tiwari appeared for the Appellant and Government Advocate Ashish Pandey appeared for the Respondent.
The bench of Justice Arun Kumar Singh Deshwal observed, “…if any invalid cheque is presented before the Bank and the same was dishonoured, then there is no liability under Section 138 N.I. Act would be attracted, and the cheque of Allahabad Bank is invalid after 30.09.2021 after merging the Allahabad Bank into the Indian Bank on 01.04.2020. Therefore, dishonouring such cheques after 30.09.2021 will not attract liability u/s 138 N.I. Act.”
The Court noted that the Allahabad Bank was merged into the Indian Bank in 2020 after which a wide circular was made by the Indian Bank in newspapers mentioning the fact that all the cheques issued by Allahabad Bank can be exchanged with the cheques of Indian Bank, and the cheque from Allahabad Bank will be honoured by September 30, 2021.
According to the Court, therefore, the cheque issued by the Allahabad Bank was valid till September 30, 2021, and all the cheques of Allahabad Bank which were presented before the Indian Bank till September 30, 2021, were honoured by the Indian Bank, and after September 30, 2021, cheques issued from the account maintained by the erstwhile Allahabad Bank were declared invalid for honouring.
The Court mentioned that as per Section 118 (b) of N.I. Act a cheque shall be deemed to be drawn on the date which is mentioned in the cheque even if the same may be post-dated.
While rejecting the decision relied upon by the Opposite Party in NEPC Micon Ltd. V. Magma Leasing Ltd ( 1999) 4 SCC 253 the Court said that the judgment relates to the different kinds of reasons for dishonouring the cheque that would come under the category of insufficient funds, but in the present case, the question is not simply the reason for dishonouring the cheque, but the question is validity of the cheque as mentioned in proviso (a) of Section 138 of N.I. Act because if the cheque itself is invalid, then the Bank is bound to dishonour the same.
Accordingly, the Court quashed the criminal proceedings along with the summoning order.
Finally, the Court allowed the application.
Cause Title: Archana Singh Gautam v. State of U.P. (Neutral Citation: 2024:AHC:102434)
Appearance:
Appellant: Adv. Diwakar Tiwari and Adv. Gyanendra Singh
Respondent: G.A. Ashish Pandey and Adv. Vivek Kumar Singh