Madras High Court

M.T.Selvaraj vs The Branch Manager on 3 January, 2023

                                                                                      W.P.No.24544 of 2017

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                    DATED: 03.01.2023

                                                          CORAM

                                  THE HONOURABLE DR. JUSTICE ANITA SUMANTH

                                                   W.P.No.24544 of 2017



                     M.T.Selvaraj                                                        ...Petitioner

                                                            Vs.

                     1.The Branch Manager,
                       Indian Overseas Bank,
                       4th Main Road,
                       Branch Code 2075,
                       Anna Nagar,
                       Chennai – 600 040.
                     2.The Branch Manager,
                       Oriental Bank of Commerce,
                       2nd Avenue,
                       Anna Nagar,
                       Chennai – 600 040.
                     3.The Banking Ombudsman,
                       Office of the Banking Ombudsman,
                       Reserve Bank of India Building,
                       IInd Floor, No.16, Rajaji Salai,
                       Chennai – 600 001.                                          ...Respondents

                     Prayer: Writ Petition filed under Article 226 of the Constitution of India, to
                     issue a Writ of Certiorarified Mandamus, calling for the entire records in
                     pursuant        to   the   order   passed    by   the   3rd    respondent       vide


                     1
https://www.mhc.tn.gov.in/judis
                                                                                        W.P.No.24544 of 2017

                     Ref.No.BO(Che)/0001/C-201617006007177/2016-17 dated 21.06.2017 and
                     quash the same and consequently direct the respondents 1 and 2 to realise
                     the cheque dated 08.08.2016 bearing No.126604 drawn on the 2nd
                     respondent's bank within a stipulated time.

                                        For Petitioner     : Mr.T.P.Prabakaran

                                        For Respondents : Mr.F.B.Benjamin George [For R1]
                                                          Mr.A.S.Balaji [For R2 ]
                                                          No appearance [For R3]



                                                            ORDER

The petitioner challenges the order passed by the Banking

Ombudsman, Reserve Bank of India/R3, which rejects his complaint on the

ground that it does not make out any of the grounds of complaint set out in

clause 8 of the Banking Ombudsman Scheme 2006.

2. The petitioner states that he had entered into a loan agreement with

another individual, in terms of which the petitioner had advanced a loan of

sum of Rs.10,00,000/- to him. The amount was to be repaid within 11

months from date of the agreement or whenever the demand for repayment

is made. The petitioner had made a demand for repayment of the amount

along with interest on 08.08.2016 and the individual had handed over a

https://www.mhc.tn.gov.in/judis W.P.No.24544 of 2017

crossed bank cheque for an amount of Rs.10,00,000/- drawn on the 2 nd

respondent bank i.e., Oriental Bank of Commerce, Chennai – 600040

(herein after referred as 'drawee bank').

3. The petitioner did nothing further till the fag end of the 90 day

period provided for validity of the cheque and lodged it on 07.11.2016

before the 1st respondent Bank ie., Indian Overseas Bank. The 1st

respondent Bank had passed the cheque to 2nd respondent bank the next

day, the 91st day as a result that, R2 dishonored the cheque by way of slip

dated 08.11.2016 on the ground 'Stale/outdated cheque'.

4. It is the petitioner's case that the cheque had been presented by him

on the last day of validity, being 07.11.2016 and hence it was incumbent

upon R2 bank to have honoured the same. He alleges deficiency of services

and states that if at all there was any error, it was on the part of the 1 st

respondent Bank in failing to have forwarded the cheque for payment before

the 2nd respondent bank on the same date that he had presented it, being

07.11.2016.

5. A complaint had been preferred to 3rd respondent i.e., Banking

Ombudsman, Reserve Bank of India, praying for the realization of the

cheque along with costs, which has came to be rejected by way of impugned

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order dated 21.06.2017.

6. The issue that arises for resolution is as to whether the period of 90

days that is provided for validity of the cheque would end as on the date

when the instrument was presented before any bank or when presented

before the drawee bank which has to honour the same.

7. I had, on 22.12.2022 directed the parties to circulate relevant

Instructions/Circulars issued by the Reserve Bank of India that would throw

light on this issue. A Circular bearing No.RBI/2011-12/251 dated

04.11.2011 has been placed before me providing a clarification in regard to

the payment of cheques/drafts/pay orders/banker's cheques. The Reserve

Bank of India has clarified that with effect from 01.04.2012, banks should

not make payment of cheques/drafts/pay orders/banker's cheques bearing

that date or any subsequent date, if they are presented beyond the period of

three months from date of such instrument. This Circular provides no clarity

on the actual question that has been crystallized for resolution.

8. Useful reference may be made to judgment of the Hon'ble Apex

court in Shri Ishar Alloy Steels Ltd. Vs. Jayaswals Neco Ltd., ((2001) 3

SCC 609) wherein the question that arises was as to the import of the words

'the bank' as set out in clause (a) of the proviso to Section 138 of the

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Negotiable Instruments Act, 1881, that reads as follows:-

“2.(a) What is meant by, “the bank” as mentioned in clause (a) of the proviso to Section 138 of the Negotiable Instruments Act, 1881?

(b) Does such bank mean the bank of the drawer of the cheque or covers within its ambit any bank including the collecting bank of the payee of the cheque?

(c) To which bank the cheque is to be presented for the purposes of attracting the penal provisions of Section 138 of the Act?” Clause (a) as above, uses the phrase 'the Bank' and, the question that arose

before the Hon'ble Supreme Court was whether such phrase connoted the

drawee bank upon which the cheque was drawn or all banks where the

cheque was presented for collection including the bank of the payee, in

whose favour the cheque was issued.

9. The Hon'ble Apex Court considered the views of the Punjab and

Haryana, Gujarat and Madras High Courts in the cases of Om Parkash Vs.

Gurcharan Singh ((1997) 3 Crimes 433 (P&H)), Arunbhai Nilkanthrai

Nanavati Vs. Jayaben Prahladbhai ((1999) 3 Crimes 252(Guj)) and A.B.K.

Publications Ltd. Vs. T.N. Newsprint & Papers Ltd.((1999) 3 Crimes

97(Mad)) respectively, endorsing the view that the reference to 'the Bank'

would only be to the payee bank and none other. In conclusion and at

paragraph 9, the Court states as follows:-

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“The use of the words “a bank” and “the bank” in the section is an indicator of the intention of the legislature. The former is an indirect (sic indefinite) article and the latter is prefixed by a direct (sic definite) article. If the legislature intended to have the same meanings for “a bank” and “the bank”, there was no cause or occasion for mentioning it distinctly and differently by using two different articles. It is worth noticing that the word “banker” in Section 3 of the Act is prefixed by the indefinite article “a” and the word “bank' where the cheque is intended to be presented under Section 138 is prefixed by the definite article “the”. The same section permits a person to issue a cheque on an account maintained by him with “a bank” and makes him liable for criminal prosecution if it is returned by “the bank” unpaid. The payment of the cheque is contemplated by “the bank” meaning thereby where the person issuing the cheque has an account. “The” is the word used before nouns, with a specifying or particularising effect as opposed to the indefinite or generalising force of “a” or “an”. It determines what particular thing is meant; that is, what particular thing we are to assume to be meant. “The” is always mentioned to denote a particular thing or a person. “The” would, therefore, refer implicitly to a specified bank and not any bank. “The bank” referred to in clause (a) to the proviso to Section 138 of the Act would mean the drawee bank on which the cheque is drawn and not all banks where the cheque is presented for collection including the bank of the payee, in whose favour the cheque is issued.”

10. The opinions expressed by the Punjab and Haryana and Gujarat

High Courts was upheld and that of the Madras High Court, was held to be

incorrect. This judgment has been followed by a learned single judge of the

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Bombay High Court in Structures Steel (H.U.F) Vs. R.S.Lath Education

Trust & others (2007 SCC Online Bom 929).

11. The question would thus have an answered in favour of the

respondents holding that it is the bounden duty of the holder of the

instrument to ensure that the same is presented before the payee bank prior

to the expiry of the validity period of 90 days. If at all the instrument has to

travel through several banks to reach the payee bank, the holder must ensure

that the instrument is presented well in time.