Indian Legal Cases Updates: HC Stays Cheque Bounce Case Against Deceased Payee
CHANDIGARH – A peculiar legal case has prompted the Punjab and Haryana High Court to intervene, leading to the stay of proceedings concerning a cheque bounce case against the estate of a deceased payee. The petitioner, who claimed to be the drawer of the cheque, argued before the court arguing against being prosecuted for issuing a cheque to someone who has passed away.
According to the details presented, the cheque was dated April 15, 2023, but the payee reportedly died on September 10, 2022. This situation raised eyebrows as the cheque’s legitimacy was questioned due to the death of the payee long before the cheque’s date.
Justice Mahabir Singh Sindhu of the Punjab and Haryana High Court took up the matter and granted the stay against the Dera Bassi court’s proceedings after hearing the arguments presented by the petitioner’s advocates, Pankaj Chandgothia and Mahi Sindhu.
The legal framework surrounding cheque dishonor is governed by the Negotiable Instruments Act, which stipulates the necessary procedural steps following such incidents. According to Section 138, proceedings can only be initiated after the payee is officially notified by the bank about the dishonor of the cheque, followed by sending of a legal notice to the drawer, allowing time for payment.
Chandgothia and Sindhu argued before the court, highlighting how this cheque could not be considered valid. They contended the bank should have rejected the cheque presented under the rationale of the payee being deceased. Instead of noting on the cheque’s clearance attempt the reason as "payee/account holder expired" or "payee account not existing," the bank incorrectly labeled it with "payment stopped by drawer."
The defense lawyer stated, "The bank should have returned the cheque as it is as the payee was dead. But it gave the reason of payment stopped by drawer. The reason should have been 'payee/account holder expired' or 'payee account not existing.'" They emphasized the absurdity of the matter, where the bank continued processing instruments linked to the account of someone who had passed away nearly nine months prior.
Further complicity emerged when the bench learned the drawn complaint was executed shortly after August 31, 2023, almost one year post the death of the payee. The petitioner’s legal team accused the payee's daughter of malevolence, highlighting she had presented the cheque for clearance through their joint account without notifying the bank about her father’s death. This, they argued, constituted deceit aimed at exploiting the situation for unjust gain.
"The daughter maliciously presented the said cheque for clearance, obligated by law to inform the bank about the death on September 10, 2022. Yet, she deliberately failed to do so, with the intent to gain undue advantage," the counsel asserted before the bench.
The advocates made clear their position, stating the legal complaint against the petitioner under Section 138 was baseless. They pointed out how the necessary ingredients for actions under the Act were absent, rendering the complaint insupportable. They argued the Judicial Magistrate First Class at Dera Bassi had issued summons and arrest warrants against the accused without adequately evaluating the complaint against itself.
“The complaint is not maintainable on the face of it as the ingredients of Section 138 of the Negotiable Instruments Act are not fulfilled. Without due application of mind and in mechanical fashion, the Judicial Magistrate issued notice/summons to the accused and produced warrants of arrest,” they added, as they urged for the immediate quashing of the complaint and provisions therein.
This case shines a spotlight on how legal interactions of negotiable instruments intertwine with issues of death and inheritance. It raises pivotal questions about the responsibilities banks have after the passing of individuals holding accounts and the subsequent legal repercussions faced by those involved.
The court’s decision to stay the proceedings brings temporary relief to the accused, highlighting the necessity for careful scrutiny of claims and instruments post-mortem. While the matter awaits resolution, it paves the way for discussions surrounding legal frameworks governing the issuance and dishonor of cheques, particularly those involving deceased parties.