Holding

For criminal liability under Section 138, the cheque must be presented to the drawer's bank (the bank on which it is drawn) within six months, either directly or through a collecting bank; presentation only to the payee's bank does not satisfy the statutory requirement.

Summary

The appellant issued a cheque drawn on State Bank of Indore which was presented by the respondent to its own bank and later to a collecting bank, but the cheque reached the drawer's bank after the six‑month period prescribed under the proviso to Section 138 of the Negotiable Instruments Act, 1881. A criminal complaint was filed under Section 138. The Sessions Court held no offence as the cheque was presented beyond six months, but the High Court reversed, holding that presentation to the payee's bank within six months sufficed. The Supreme Court examined the meaning of "the bank" in the proviso and held that it refers specifically to the drawer's (drawee) bank, and that the cheque must be presented to that bank within six months, either directly or via a collecting bank. Since the cheque was not presented to the drawer's bank within the statutory period, the appellant could not be held criminally liable. Consequently, the appeal was allowed and the High Court judgment set aside.

Issues considered

What is the meaning of "the bank" in clause (a) of the proviso to Section 138 of the Negotiable Instruments Act?
Does "the bank" denote only the drawer's bank or any bank, including the payee's collecting bank?
To which bank must a cheque be presented to attract criminal liability under Section 138?
Is presentation of a cheque to the payee's bank within six months sufficient for criminal prosecution under Section 138?

Legislation cited

Negotiable Instruments Act, 1881s. 138, s. 3, s. 72

Subjects

Section 138Negotiable Instruments Actcheque dishonourpresentation perioddrawer’s bankcriminal liabilityinterpretation of "the bank"statutory period

Judgment

A SHRI ISHAR ALLOY STEELS LID.
v.
JAYASWALS NECO LTD.

FEBRUARY22, 2001

B [K.T. THOMAS, RP. SETHI AND B.N. AGRAWAL, JJ.]

Negotiable Instruments Act, 1881 : Section 138

Cheque-Dishonour of-Presentation-Within period ofvalidity-At pay-
ee's or drawer's bank-Criminal liability-Cheque presented to payee's bank
c returned unpaid-Cheque again presented to same bank within 6 months but
reached drawer's bank after 6 months from the date it was drawn-Complaint
filed before magistrate-Notice issued-On Revision application, Sessions
court held no offence made out as the cheque was presented after 6 months-
However, High Court held that offence was made out as the cheque was
D presented to payee's bank within 6 months-Correctness of-Held: To attract
criminal liability cheque has to be presented to drawer's bank within 6 months
from the date it is drawn either personally or through collecting bank-As the
cheque was not presented to drawer's bank within statutory period of6 months
criminal court has no jurisdiction to issue process against accused.
E "A bank" and "the bank"-Distinction between-Explained

Word, and Phrases :

"A banker" and "the bank"-Meaning of-In the context ofS. 138 ofthe
Negotiable Instruments Act, 1881.
F
The respondent presented a cheque issued by the appellant to the
respondent's bank, which was returned unpaid. The respondent again
presented the cheque to its bank within six months from the date it was
drawn. But the cheque reached the drawer's bank after six months from
the date it was drawn. The cheque was again returned unpaid.
G
Thereafter, the respondent filed a complaint before the Judicial Mag-
istrate under Section 138 of the Negotiable Instruments Act, 1881. The
appellant filed a revision before the Sessions Court contending that no
offence was made out as the cheque was presented for payment beyond
H the period of six months as prescribed under proviso (a) to Section 138.
36
SHRI ISHAR ALLOY STEELS LTD. v. JAYASWALS NECO LTD. 37

r- The Sessions Court allowed the revision. The High Court allowed the A
~-
respondent's revision by holding that the cheque could be presented
either in the payee's bank or the drawer's bank within six months from
the date it was drawn. Hence this appeal.

Allowing the appeal, the Court
B
HELD : 1. The use of the words "a bank" and ''the bank'' in Section
138 of the Negotiable Instruments Act, 1881 is an indicator of the intention
"' of the Legislature. The former is an indirect article and the latter is pre·
fixed by a direct article. If the Legislature intended to have the same mean·
ing for "a bank" and "the bank'', there was no cause or occasion for men-
tioning it distinctly and differently by using two different articles. It is
c
worth noticing that the word ''banker" in Section 3 of the Actis pre-fixed by
the indefinite article "a" and the word ''bank'' where the cheque is intended
to be presented under Section 138 is pre-fixed by the definite article "the".
. The same Section permits a person to issue a cheque on an account main·
tained by him with "a bank" and makes him liable for criminal prosecution D
ifitis returned by "the bank" meaning thereby where the person issuing the
cheque has an account. "The" is the word used before nouns, with a specify-
ing 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 one has to assume to be meant. "The" is always E
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
drawer's 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. (41-D-H] F

> 2.1. It, however, does not mean that the cheque is always to be
presented to the drawer's bank on which the cheque is issued. The payee of
... the cheque has the option to present the cheque in any bank including the
collecting bank where he bas his account but to attract the criminal liabil· G
ity of the drawer of the cheque such collecting bank is obliged to present
the cheque in the drawer's or payee's bank on which the cheque is drawn

-· within the period of six months from the date on which it is shown to have
been issued. [42-A-B]

2.2. The non-presentation of the cheque to the drawer's bank within H
38 SUPREME COURT REPORTS [2001] 2 S.C.R.

A the period specified in Section 138 of the Act would absolve the person
issuing the cheque of his criminal liability under Section 138, who shall
otherwise may be liable to pay the cheque amount to the payee in a civil
action initiated under the law. A combined reading of Sections 3, 72 and
138 of the Act leaves no doubt that the law mandates the cheque to be
presented at the bank on which it is drawn if the drawer is to be held
B
criminally liable. Such presentation is necessarily to be made within six
months at the bank on which the cheque is drawn, whether presented
personally or through another bank, namely, the collecting bank of the
payee. (42-C·D]

c Om Prakash v. Gurcharan Sing/~ (1997) 3 Crimes 433 (P & H) and
Arunbhai Nilkantharai Nanavati v. Jayaben Prahladbhai through her Power
of Attorney, (1999) 3 Crimes 252 (Guj.), approved.

A.B.K. Publications IJd. v. Tamil Nadu Newsprint & Papers IJd., (1999)
3 Crimes 97 (Mad.), overruled.
D
3. Admittedly, as the cheque was not presented before the drawer's
bank within the statutory period of six months, criminal court had no
jurisdiction to issue the process against the appellant.

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 219
E. of 2001.

From the Judgment and Order dated 6. 7.2000 of the Madhya Pradesh
High Court in Crl.R. No. 1486 of 1999.

A.K. Chitale, Niraj Sharma and Ms. Shilpa Chitale for the Appellant.
F Rana Mukherjee, N. Dubey and Ms. Indra Sawhney for the
Respondent.

The Judgment of the Court was delivered by

SEIBI, J. Leave granted.
G
(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 snch 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
H cheque?
SHR! !SHAR ALLOY STEELS LTD. v. JAYASWALS NECO LTD. [SETHI, J.] 39
(c) To which bank the cheque is to be presented for the purposes of A
attracting the penal provisions of Section 138 of the Act?,
+
are the questions to be determined by this Conrt in this appeal.

Punjab and Haryana High Court in the case of Om Prakash v. Gurcharan
Singh, [1997] 3 Crimes 433 and Gujarat High Court inArunbhai Nilkantharai B
Nanavati v. Jayaben Prahladbhai through Her Power of Attorney & Anr.,
(1999) 3 Crimes 252, have held that a cheque must be presented to the bank
on which it is drawn within six months!from the date of issue of the cheque.
However, Madras High Court in A.B.K Publications l.Jd. & Ors. v. Tamil
Nadu Newsprint & Papers l.Jd., (1999) 3 Crimes 97, has taken the view that
cheque can be presented either in the payee's bank or in the drawer's bank
c
and the date of presentation in respective banks will be reckoned for calcu-
Iating period of six months from the date it was dra.,,n.

Jn the present case the High Court of Madhya Pradesh has endorsed the
view of Madras High Court and disagreed with the views of Punjab and D
Haryana and Gujarat High Courts.

The admitted facts of the case are that the appellant issued Cheque
·• No.2477086 dated 21st July, 1997 for Rs.IO lakhs drawn on the State Bank
of Indore, Induslfial Estate Branch, Indore in favour of the respondent. The
~- respondent presented the cheque for payment on 26th September, 1997 which E
was returned unpaid. Again on 20th January, 1998, the respondent presented
the cheque to its bank i.e. State Bank of India at Raipnr. The cheque reached
the drawer bank on 24th January, 1998, admittedly after six months from the
date it became payable. The cheuqe was returned unpaid by the bank of the
respondent on 3.2.1998. A notice as required under proviso (b) of Section 138
F
of the Negotiable Instruments Act was issued on 10.2.1998 which was re-
)>. ceived by the appellant on 16.2.1998. A criminal complaint under Section I 38
of the Negotiable Instruments Act was filed in the Court of Judicial Magis-
trate, First Class, Raipnr against the appellant in which notice was issued for
appearing in the court on 23rd September, 1998. The appellant filed Criminal
Revision No.190 of 1998 in the Court of Sessions Judge, Raipur contending G
that as the cheque was presented for payment beyond the period of six months
as prescribed under Proviso (a) to Section 138 of the Negotiable Instruments
Act, 1881 (hereinafter referred to as "the Act"), no offence was made out, to
be taken cognizance of. The revision was allowed by tl1e Sessions Court on
3rd July, 1999. The respondent filed a further revision in the High Court H
40 SUPREME COURT REPORTS [2001] 2 S.C.R.
A which was allowed vide the order impugned holding, as noticed earlier, that
the cheque can be presented within the six months before the drawer's 1-
(payer's) bank or it c~·be presented before the drawer's as well as the payee's
bank.

Before adverting to the various provisions of law as applicable in the
B case, it has to be kept in mind that the law relating to Negotiable Instruments
is the law of the commercial world which was enacted to facilitate the
activities in trade and commerce malting provision of giving sanctity to the
instruments of credit which could be deemed to be convertible into money
and easily passable from one person to another. In the absence of such
c instruments, the trnde and commerce activities were likely to be adversely
affected as it was not practicable for the trading community to carry on with
it the bulk of the currency in force. The introduction of negotiable instruments
owes it.s origin to the bartering system prevalent in the primitive society. The
negotiable instruments are, in fact, the instruments of credit being convertible
on account of the legality of being negotiated and thus easily passable from
D one hand to another. The source of Indian law relating. to such instruments
is admittedly the English Common Law. The main object of the Act is to
legalise the system by which instruments contemplated by it could pass from
hand to hand by negotiation like any other goods. The purpose of the Act was
to present an orderly and authoritative statement of the leading rules of law
E relating to the negotiable instruments. The Act intends to legalise the system ~
under which claims upon mercantile instruments could be equated with
ordinary goods passing from hand to hand. To achieve the objective of the
Act, the Legislature in its wisdom thought it proper to make provision in the
Act for conferring such privileges to the mercantile instruments contemplated
under it and provide special procedure in case the obligation under the
F instrument was not discharged. It has, always to be kept in mind that Section
138 of the Act creates an offence and the Jaw relating to the penal provisions ·"'-
has to be interpreted strictly so that no-one can ingeniously or insidiously or
guilefully or strategically be prosecuted.
It has further to be noticed that to make an offence under Section 138
G
of the Act, it is mandatory that the cheque is presented to "the bank" within
a period of six months from the date on which it is drawn or within the period
of its validity, whichever is earlier. It is the cheque drawn which has to be
presented to "the bank" within the period specified therein. When a post-dated
cheque is written or drawn, it is only a bill of exchange. The post-dated
H cheque become a cheque under the Act on the date which is written on the
SHRI ISHAR ALLOY STEELS LTD. v. JAYASWALS NECO LTD. [SETHI, J,] 41

said cheque and the six months period has to be reckoned, for the pmposes A
of Section 138 of the Act, from the said date.

Section 138 provides that where any cheque drawn by a person on an
account maintained by him with a 'banker' for payment of any amount of
money to another person from out of that account for the discharge, in whole
or in part, of any debt or other liability, is returned by "the bank" unpaid, B
either because of the amount of money standing to the credit of that account
is insufficient to honour the cheque or that it exceeds the amount arranged
to be paid from that account by an agreement made with that bank, such
person shall be deemed to have committed an offence punishable with im-
prisonment as prescribed therein subject to the conditions mentioned in c
clauses (a), (b) and (c) of tl1e proviso. Section 3 of 1he Act defines the
"banker" to include any person acting as a banker and any post office saving
bank. Section 72 of the Act provides that a cheque must, in order to charge
the drawer, be presented at the bank upon which it is drawn before the
relations between the drawer and his banker has been altered to the prejudice
D
of the drawer. The use of the words "a bank" and "the bank" in the Section
is indicator of the intention of the Legislature. The former is indirect article
and the latter is pre-fixed by direct article. If the Legislature intended to have
the same meanings for "a bank.' and "the bank", there was no cause or
1

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 E
is pre-fixed by the indefinite article "a" and the word "bank" where the
cheque is intended to be presented under Section 138 is pre-fixed by the
definite article "the". The same Section permits a person to issue a cheque
ou 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 F
the cheque is contemplated by "the bank" meaning tl1ereby 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 general-
ising 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 particular thing or a person. "The" would, therefore, G
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. H
42 SUPREME COURT REPORTS [2001] 2 S.C.R.
A It, however, does not mean that the cheque is always to be presented
to the drawer's bank on which the cheque is issued. The payee of the cheque
has the option to present the cheque in any bank including the collecting bank
where he has his account but to attract the criminal liability of the drawer of
the cheque such collecting bank is obliged to present the cheque in the drawee
B or payee bank on which the cheque is drawn within the period of six months
· from the date on which it is shown to have been issued. In other words a
cheque issued by (A) in favour of (B) drawn in a bank named (C) where the
drawer has an account can be presented by the payee to the bank upon which
it is drawn Le. (C) bank within a period of six months or present it to any
other bank for collection of the cheque amount provided such other bank
c including the collecting bank presents the cheque for collection to the (C)
bank. The non presentation of the cheque to the drawee-bank within the
period specified in the Section would absolve the person issuing the cheque
of his criminal liability under Section 138 of the Act, who shall otherwise may
be liable to pay the cheque amount to the payee in a civil action initiated
D under the Jaw. A combined reading of Sections 3, 72 and 13 8 of the Act would
leave no doubt in our mind that the law mandates the cheque to be presented
at the bank on which it is drawn if the drawer is to be held criminally liable.
Such presentation is necessarily to be made within six.months at the bank on
which the cheque is drawn, whether presented personally or through another
bank, namely, the collecting bank of the payee.
E
We have perused the judgments of the Punjab & Haryana, Gujarat and
Madras High Courts and their conflicting views and are of the opinion that
the Madras High Court has not correctly interpreted the provisions of law in
this behalf.
F As, admittedly, in this case the cheque was not presented before the
drawer's bank within the starutory period of six months, the criminal court
had no jurisdiction to issue the process against the appellant. The impugned
judgment of the High Court being contrary to law is thus not sustainable. The
appeal is accordingly allowed and the impugned judgment is set side.
G v.s.s. Appeal allowed.