Mismatch between Figures and Words of Cheque Amount Would Not Invalidate Cheque; Merits Trial: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court highlighted a specific instance wherein a mismatch between the figures and words in a cheque does not automatically invalidate it, holding that such disputes must be resolved through a trial. The Complainant Nitesh Yadav moved against the State of NCT of Delhi & Anr. seeking quashal of an order passed by the Additional Sessions Judge discharging the Respondent No.2 Accused in a complaint under Section 138 of the Negotiable Instruments Act, 1881. Read More: Madras HC issues Directions to Streamline Cheque Bounce cases under Negotiable Instruments Act The complainant, Nitesh Yadav had moved against Respondent No.2 Sonu Rana after receiving a cheque for bearing the figure ₹4,65,000 that was issued in discharge of a loan liability of ₹5,00,000. TDS Mistakes Cost You More Than You Think – Stay Compliant with This Handbook!, Click Here Upon presentation, the cheque was dishonored with the remark “payment stopped by the drawer”. The complainant issued a statutory demand notice on 27.01.2018, seeking ₹4,65,000, but the accused contested the validity, arguing that the cheque amount was inconsistent, as it was written as ₹4,65,000 (Four Lakh Sixty-Five Thousand) in figures but "Rupees Four Lac Sixty-Five only" in words. Citing Section 18 of the NI Act, the accused argued that in case of a mismatch between the specifics of a cheque, the amount in words shall prevail, and that the cheque should be considered for ₹4,00,065 instead of ₹4,65,000. Read More: Cheques proven for Debt Repayment: Accused Convicted u/s 138 of NI Act for Cheque Dishonor Citing Failure to Rebut Presumption of Debt The accused argued that the demand notice served by the Complainant was defective under Sections 138 and 142 of the NI Act since the demand notice sought an amount of ₹4,65,000, which did not match with the “legally valid cheque” amount of ₹4,00,065. The case was taken up by the Metropolitan Magistrate (MM) who ruled that the discrepancy was not grounds for dismissal and required trial. The accused then approached the Additional Sessions Judge (ASJ) who set aside the Metropolitan Magistrate order and discharged the accused, holding that the complainant had failed to establish the exact amount payable, creating ambiguity. TDS Mistakes Cost You More Than You Think – Stay Compliant with This Handbook!, Click Here In the present matter, Advocate Shafiq Khan, representing the Petitioner argued that the NI Act presumes that a cheque is issued for the discharge of a legal liability unless the accused successfully rebuts this presumption. He submitted that a signed cheque remains valid even if filled in by another party, and any discrepancies between words and figures should be resolved at trial rather than at the initial stage. Read More: Delay in Finalizing Gold Jewellery Import Assessment: Delhi HC Directs Release of Bank Guarantee with Interest Reference was made to the Supreme Court decision in Rangappa vs. Sri Mohan (2010), which held that Section 139 of the NI Act is an example of a reverse onus clause where it creates a rebuttable presumption that a cheque is issued for the discharge of a debt or liability, unless proven otherwise by the accused. Meanwhile Additional Public Prosecutor Ajay Vikram Singh appeared for the State while Rajpal Singh and Rohit Kumar appeared for the Respondent No.2. The counsel contended that the Petitioner had tampered with the date on the cheque and reiterated their submissions that such a cheque would be defective, having been presented only on 29.12.2017, three months after the cheque date of 28.09.2017. A Single-Judge Bench of Justice Neena Bansal Krishna observed that the bank return memo explicitly stated the cheque amount as ₹4,65,000 and that it was dishonored due to “payment stopped by the drawer,” not because of any discrepancy in the amount. Read More: Punjab & Haryana HC Orders Departmental Action against Income Tax Dept for Bouncing of Cheque for Refund Issued The court also noted that while Section 18 of the NI Act gives precedence to the amount in words over figures, in this case, the omission of "thousand" appeared inadvertent rather than intentional. In conclusion, the High Court ruled that technical defects should not defeat the object of the NI Act, which is to uphold the credibility of negotiable instruments. It held that the complaint under Section 138 of the NI Act was maintainable and directed the Metropolitan Magistrate, Rohini District Court, to proceed with the trial. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Mismatch between Figures and Words of Cheque Amount Would Not Invalidate Cheque; Merits Trial: Delhi HC [Read Order]

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Mismatch between Figures and Words of Cheque Amount Would Not Invalidate Cheque; Merits Trial: Delhi HC [Read Order]

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