Monthly Archives: October 2013

Supreme Court’s interpretation of Section 138 of the Negotiable Instrument Act, 1881 – Case highlights

The Negotiable Instruments Act, 1881, (herein after “Act”) is of great importance in mercantile laws and banking laws in India. The offence of dishonour of cheque is grafted under Section 138 of the Act. Most of the subordinate courts in the country are overburdened with criminal cases pertaining to Section 138. It is to be noted that although the language of Section 138 is simple yet it has become extremely controversial due to differences in its interpretation. The phrase ‘dishonour of cheque’ has been interpreted in different manners.

This article addresses the issues faced by the Apex Court of the country relating to the dishonour of cheques due to stop payment by drawer, difference in signatures, closure of account and liability of the drawer of a post-dated cheque.

In NEPC Micon Ltd. v. Magma Leasing Ltd. (AIR 1999 SC 1952), the question was ‘whether the dishonour of cheque on the ground of ‘account closed’ was culpable under Section 138 of the Act’. Relying on the decision rendered in Kanwar Singh v. Delhi Administration, (AIR 1965 SC 871), and Swantraj & Ors v. State of Maharashtra, ((1975) 3 SCC 322), the Supreme Court held that the same comes within the purview of the offence under Section 138.

In Modi Cements Ltd. V. Kuchil Kumar Nandi ((1998) 3 SCC 249), the Supreme Court held that the expression ‘the amount of money …….. is insufficient to honour the cheque’ is genus of which the expression ‘account being closed’ is a specie. In this case, the question ‘whether the dishonour of cheque on the ground of ‘stop payment by drawer’ was punishable under Section 138’ had arisen for the consideration of the court. The three-judge bench after evaluating the earlier two decisions of the Supreme Court in Electronics Trade & Technology Development Corporation Ltd. V. Indian Technologists and Engineers (Electronics)(P) Ltd. (AIR 1996 SC 2339) and K.K. Sidharthan v. T.P. Praveena Chandran ((1996) 6 SCC 389) overruled the said judgments and opined that ‘stop payment’ also comes within the purview of offences under Section 138.

The Supreme Court in the case of Goaplast (P) Ltd. V. Chico Ursula D’souza and Anr. ((2003) 3 SCC 232) held that ‘stop payment’ and ‘dishonour of post dated cheque’ attract provisions of Section 138. The court observed that the purpose of a post-dated cheque is to provide some accommodation to the drawer of the cheque. Therefore, it is all the more necessary that a drawer of a post-dated cheque should not be allowed to abuse the accommodation given to him by a creditor by way of acceptance of the cheque.

Deficiencies in the service of railways and remedies thereto

The Railway Department is the largest public sector undertaking in India, which has been regulated by different parliamentary statutes. The Railways, in order to be regulated, come within the purview of states, as provided in Article 12 of the Constitution of India. Being representative of the Union of India, it is expected from railways that it and its employees are to work with extreme sincerity and utmost cautious. Since the enactment of the Railway Claims Tribunal Act, 1987, as a general belief, all claim cases pertaining to the death and injury of the passengers due to railway accidents can be filed and decided by the Railway Claims Tribunals set up under the said Act of 1987. In 1990, the Central Government formulated the Railway Accidents (compensation) Rules, 1990, which prescribes the maximum limit of compensation payable under Section 124 and Section 124-A of the Railway Act, 1989. As per the amended provisions, the maximum compensation of Rs. Four Lakh and interest thereupon can be availed by exercising the aforesaid remedy under the said Act of 1987.

The Consumer Protection Act, 1986, provides remedies in cases of deficiencies in the service provided to consumers. Section 3 of the Consumer Protection Act, 1986, directs that the provisions thereof shall be in addition to and not in derogation of the provisions of other laws for the time being in force. Obviously, in a case of deficiency in services provided by Railways, a complaint can be filed before District Consumer Forum or other authorities under the aforementioned Act of 1986.

In this regard, Section 128 of the Railways Act, 1989, provides for an alternative remedy option to the claimant and says that the right of any person to claim compensation under Section 124 shall not affect the rights of any such person to recover compensation payable under the Workmen’s Compensation Act, 1923, or any other law for time being in force; but no person shall be entitled to claim compensation more than once in respect of the same accident.

Recently, In the case of Smt. Nirmal Devi Chopra vs. Union of India through the Secretary, Railway Board, and Others (Original Petition No. 72 of 2001, decided on 16.09.2013), the National Consumer Dispute Commission (“NCDC”) awarded the claimant the sum of Rs. 10,00,000/- (in words, ten lakhs) and directed that the amount be paid within 90 days, otherwise it will carry [email protected]% p.a. till its realization.

The brief facts of the case: one Mr. R. C. Chopra died while he was travelling in Lucknow Mail, in the night falling between 21st -22nd December, 1998, due to deficiency in the services and for non-compliance of the rules on the part of the administration and employees of the Northern Railways as well as the doctors and staff of Sucheta Kriplani Hospital, New Delhi. On 23.12.1998, it was found that Mr. Chopra was admitted as unidentified and unconscious patient in the above-said hospital at 11.25 am by Delhi Railway Police on 22.12.1998. He was identified by his son-in-law later. Mr. Chopra passed away on 24.12.1998 without re-gaining his consciousness. The cause of his death was shown as unknown poisoning and pontine haemorrhage. The autopsy report mentioned the cause of death due to Nitrazepam and acute adverse effects thereof. Subsequently, it also came to the light that Mr. Chopra was robbed in the train; his cash and demand-drafts looted away from him. His luggage was delivered in an open condition to his family by the Delhi Railway Police. Only few documents were found in his brief-case.

The main grouse of the complainant was that no medical aid was given to the patient on his way to the hospital. The train halted at Ghaziabad Station for over an hour for this purpose and no steps were taken to prevent his death. A memo was also given but the Railway DMO or any other doctor did not attend the patient. Improper and inadequate medical aid was given at the aforesaid hospital in New Delhi.

During the prosecution of the complaint, it was also found that one Mr. H. M. Behal, along-with his wife and son, was to travel from Lucknow to Delhi. He held reserved accommodation for three persons. However, due to thick and foggy weather, he abandoned his plan to travel by this train and got refund for his tickets. Their tickets were treated as ‘non-issued’ by the Reservation Office at Lucknow and were re-sold in an unauthorized manner to certain unidentified individuals. It is anticipated that such unidentified individuals were travelling in the train while working in cahootswith the reservation staff and the TTE and they only robbed off Mr. Chopra of his cash and demand-drafts. These miscreants gave tea containing Nitrazepam to Mr. Chopra, which induced him to deep sleep. After their arrival, in New Delhi, the TTE and the Coach Attendant left the patient in lurch. They did not swing into action. No medical assistance was given to Mr. Chopra. No ambulance or doctors were arranged by the railway authorities at the Delhi Railway Station. The empty rack of the train was shunted into the railway yard and washing lines, from where Mr. Chopra was carried in a luggage trolley to the Hospital by the GRP, New Delhi at 11.30 hrs. The railway authorities did not make any attempt to identify those three miscreants. Their identity was never established.

The case facts show how irresponsible and inhuman treatment can be faced during train journeys. The pronouncement of such a huge amount of compensation by the NCDC is a landmark against cases of gross negligence and irresponsible behaviours of government authorities.