NEPC MICON LTD. AND ORS. versus MAGMA LEASING LTD.

NEPC MICON LTD. AND ORS. versus MAGMA LEASING LTD.

The return of a cheque by the bank with an endorsement 'account closed' amounts to dishonour for the reason 'the amount of money standing to the credit of that account is insufficient to honour the cheque' as envisaged by Section 138 of the Negotiable Instruments Act, 1881, and thus attracts penal consequences under the section.

Parties
Applicant: NEPC MI CON LTD. AND ORS.; Respondent: MAGMA LEASING LTD.
Jurisdiction
India
Judgment Date
29 April 1999
Procedural Posture
Criminal Appeal / Final Appeal From High Court Judgment and Order Dated 15.6.98
Outcome
Appeal dismissed.
Legal Topics
Negotiable Instruments, Dishonour of Cheque, Interpretation of Penal Statutes
Criminal Law Banking Law Commercial Law Negotiable Instruments Dishonour of Cheque Interpretation of Penal Statutes

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Parties

NEPC MI CON LTD. AND ORS.

Applicant

MAGMA LEASING LTD.

Respondent

Procedural Posture

Criminal Appeal / Final Appeal From High Court Judgment and Order Dated 15.6.98

Legal Issues

  1. 1 Whether dishonour of a cheque on the ground 'account closed' falls within the purview of Section 138 of the Negotiable Instruments Act, 1881.
  2. 2 Whether Section 138 covers cases where the drawer closes the account after issuing the cheque.

Ratio Decidendi

The return of a cheque by the bank with an endorsement 'account closed' amounts to dishonour for the reason 'the amount of money standing to the credit of that account is insufficient to honour the cheque' as envisaged by Section 138 of the Negotiable Instruments Act, 1881, and thus attracts penal consequences under the section.

Court Disposition

Appeal dismissed.

Orders

  • No order as to costs.