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Dishonour Of Cheque Issued For Discharge Of Later Liability Clearly Covered By Negotiable Instrument Act

In CRR No. 56 of 2010, Madan Tiwari vs Yashwant Kumar Sahu, respondent filed a complaint alleging that applicant, who was running an institution (Pleasant Health Welfare Foundation) at Dongargaon had appointed the complainant and 21 other persons on agreement basis. Complainant and other persons deposited some amount as per the agreement, with the institution. In the agreement it was mentioned that the amount so deposited would be refunded after completion of probation period of one year. It is the case of the complainant and other persons that after completion of probation period, they have not been regularized therefore, the complainant and others demanded for refund of the amount of Rs. 3,16,000/- from the applicant/institution.The applicant issued a cheque bearing for Rs. 3,16,000/- in favour of the complainant. The Respondent filed complaint and the trial court ordered conviction of the appellant who appealed against the said order and the said appeal was dismissed. Finally the appellant approached the High Court.

The High Court said that from the close scrutiny of witnesses' in the present case it is clear that the applicant had signed and given cheque to the complainant and he has not rebutted the presumption of Section 139 Negotiable Instrument Act, therefore not only debt, but the liability also calls for criminal proceedings under the act. The Court observed that in Indus Airways (P) Ltd. V. Magnum Aviation (P) Ltd., it has been clearly held that dishonour of cheque issued for discharge of later lilability is clearly covered by the NI Act. That the purport of the special law under the Negotiable Instruments Act is to ensure that the promise to pay is abided by the person so promising. The provision under Section 139 of the NI Act is that it shall be presumed that the holder of a cheque received the cheque of the nature referred to in Section 138 of NI Act for the discharge, in whole or in part, of any debt or other liability.


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