Court held that if the amount written in words is absurd, a person can not be held liable under Section 138 of NI Act [Read the Judgment]

A Delhi court in, M/s Shree Tyres & ors. Vs. State & ors., held that since the absurdity of the amount written in words does not constitute a valid ‘cheque’, the person can not be held liable for the same under section 138 of NI Act which talks about dishonour of cheque.

Facts

The accused approached the court to review the MM’s decision which dismissed the application for discharge of accused u/s 138 NI Act. The accused/revisionists were dealers of  complainant/respondent and in order to discharge their liability, the revisionists issued a cheque of Rs.44,18,896/- and the same got dishonoured with reason “cheque irregularly drawn/ amount in words and figures differ”. Also it is alleged that despite legal notice the revisionists failed to make the payment and a complaint was filed.

Revisionists’ Contention

The revisionists contended that the order by trial court was  wrong on facts and in law. They also contended that the court failed to appreciate the position of law as described under N.I Act that Chapter XVII deals with penalty in cases relating to dishonor of cheques for insufficient funds in the accounts. Further the court failed to appreciate the Section 5 and 6 of NI Act that defined Bill of Exchange  and Cheque. Court also failed to appreciate section 18 of the NI Act which defines the circumstances where the amount is stated differently in figures and words. In such a case, the amount written in words shall be the amount undertaken. The case thus can not fall u/s 138 of NI Act.

The respondent claimed that the intention behind writing an incoherent amount was mala fide. The accused also did not act after a legal notice was served.

Court’s Finding

The court held that in the present case all the ingredients of the cheque were met except the 4th provision that says ‘the certainty of the amount to be paid’ and hence the alleged cheque in question can not be called a ‘cheque’ as all the ingredients are not satisfied. The recourse to Section 18, which says that incase of difference between amount in words and figures the amount in word shall be the amount undertaken, would seem absurd as the amount in words is in itself farcical. Thus, this instrument was not a valid cheque when presented before the bank.

Upon the issue of being liable u/s 138 of NI Act, the court said, “In the present case, as instrument presented was not a cheque with the definition of section 6 of NI Act, a notice for subsequent dishonour of such instrument will not impose any liability upon the drawee either for non-compliance or for non issuance of a fresh cheque.” Thus with this, the revisionists were discharged.

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