Supreme Court: Negotiable Instrument Act, Principles to follow in interim relief under negotiable instrument cheque bouncing case

Two Supreme Court of India Cases on Interim Relief in Check Bounce Cases:

Case 1: Rakesh Ranjan Srivastava vs Jharkhand Rajya and Adarsh Kumar Srivastava

Citation: https://www.livelaw.in/supreme-court/supreme-court-interim-compensation-cheque-dishonor-case-accused-not-pleading-guilty-section-143a-ni-act-232956

Headnote: Interim relief under Section 143A of the Negotiable Instruments Act, 1881 should not be granted mechanically without considering the merits of the case and the financial capacity of the drawer of the cheque.

Issues:

• Whether the court should have granted interim relief of 20% of the cheque amount without considering the merits of the case?
• Whether the petitioner, who was a government official, had the financial capacity to pay the interim relief?

Facts:

• The respondent, a government company, filed a complaint against the petitioner, a government official, for dishonor of a cheque of Rs. 2.2 crore.
• The trial court granted interim relief of 20% of the cheque amount, i.e., Rs. 44 lakh, to the respondent.
• The petitioner challenged the order of the trial court in the High Court, which upheld the order.
• The petitioner then appealed to the Supreme Court.

Acts/Rules Applicable:

• Section 143A of the Negotiable Instruments Act, 1881

Principles Decided:

• Interim relief under Section 143A of the Negotiable Instruments Act, 1881 is not a matter of right but is a discretionary power of the court.
• The court should consider the merits of the case and the financial capacity of the drawer of the cheque before granting interim relief.

Legal Maxims:

• Audi alteram partem (Hear the other side)
• Nemo dat quod non habet (No one can give what he does not have)

Decision of Court:

• The Supreme Court set aside the orders of the trial court and the High Court and directed the respondent to file a fresh application for interim relief along with the evidence in support of its claim.
• The Supreme Court held that the trial court should have considered the petitioner's contention that he had not received any consideration for the cheque before granting interim relief.
• The Supreme Court also held that the trial court should have considered the petitioner's financial capacity to pay the interim relief.

Conclusion:

The Supreme Court's judgment in this case is a reminder that courts should not grant interim relief mechanically without considering the merits of the case and the financial capacity of the drawer of the cheque.

Case 2: Sushil Lal Padmavati Amma vs MS Bharati Airtel

Citation: https://www.livelaw.in/supreme-court/supreme-court-interim-compensation-cheque-dishonor-case-accused-not-pleading-guilty-section-143a-ni-act-232956

Headnote: A government official who is a director of a company but does not participate in the day-to-day affairs of the company and does not have any knowledge of the transaction in question cannot be held liable for dishonor of a cheque drawn by the company.

Issues:

• Whether the petitioner, a government official who was a director of a company, could be held liable for dishonor of a cheque drawn by the company?
• Whether the petitioner had any knowledge of the transaction in question?

Facts:

• The respondent, a telecommunications company, filed a complaint against the petitioner, a government official who was a director of a company, for dishonor of a cheque of Rs. 10 lakh.
• The trial court held the petitioner liable for the dishonor of the cheque.
• The High Court upheld the order of the trial court.
• The petitioner appealed to the Supreme Court.

Acts/Rules Applicable:

• Section 143A of the Negotiable Instruments Act, 1881

Principles Decided:

• A government official who is a director of a company but does not participate in the day-to-day affairs of the company and does not have any knowledge of the transaction in question cannot be held liable for dishonor of a cheque drawn by the company.
• The mere fact that a government official is a director of a company does not make him/her liable for the acts of the company.

Legal Maxims:

• Qui facit per alium facit per se (He who does something through another does it through himself)
• Respondeat superior (Let the master answer)

Decision of Court:

• The Supreme Court allowed the petitioner's appeal and set aside the orders of the trial court and the High Court.
• The Supreme Court held that the petitioner was not liable for the dishonor of the cheque as he had no knowledge of the transaction in question.
• The Supreme Court also held that the respondent had failed to prove that the petitioner had participated