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Legal Regime of Negotiable Instruments

Introduction

Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), ascribes criminal liability for dishonour of a cheque. The purpose of the provision has been held by the Hon’ble Supreme Court to be the promotion of efficacy of banking operations and to ensure credibility in transacting business through cheques.[i] Since a large number of such transactions and cheque payments are done by companies, the very same intent appears to be captured in Section 141 of the NI Act, which extends vicarious criminal liability on officers associated with the company or firm. The law on Section 141 of the NI Act has been clarified and elaborated upon from time to time. However, the broad principle guiding the extent of liability remains the involvement of the director concerned in the day-to-day business affairs of the company. This is, however, not a straight-jacket formula, and the nuances determining the extent of liability need to be examined closely.Continue Reading Directors’ Vicarious Liability under Current Legal Regime of Negotiable Instruments Act: An Analysis of Evolving Judicial Precedents

The “Security” Defence in Cases relating to Dishonour of Cheques – Not a Get-Out-Of-Jail-Free Card

INTRODUCTION

The Supreme Court, in the case of Sripati Singh vs. The State of Jharkhand & Anr[i], has provided much needed clarity on the often-used defence of a cheque having been issued as ‘security’ in proceedings under the Negotiable Instruments Act, 1881 (the Act). The Court held that a cheque issued by way of security, if dishonoured, would attract the provisions of the Act, if the same is issued in consequence of a legally enforceable debt, which has become recoverable at the time of its presentation.Continue Reading The “Security” Defence in Cases Relating to Dishonour of Cheques – Not a Get-Out-Of-Jail-Free Card

SUPREME COURT’S CONTINUOUS BATTLE WITH COVID-19

I. Introduction

The last few months have been extremely unpredictable and extraordinary for the world as it continuously battles against the novel Corona virus (“Covid-19”) in all its spheres. In India, the economy has suffered a severe blow and the legal fraternity and judicial system seems to be no different due to a lack of digital infrastructure.

Recently, by an order dated May 6, 2020 (“May 06 Order”)[1], the Hon’ble Supreme Court extended all periods of limitation prescribed under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) w.e.f. March 15, 2020 until further orders. This order has a tremendous implication for strict timelines prescribed under these statutes. In this article, we will analyse whether the May 06 Order was necessary in light of the order dated March 23, 2020 (“March 23 Order”) passed by the Hon’ble Supreme Court in the same proceedings[2] and thereafter, explore the implication of the same.
Continue Reading Supreme Court’s Continuous Battle with Covid-19