Excelsior Correspondent
Srinagar, Sept 14: High Court held that the complaint for cheque bounce is maintainable even if the cheque is dishonoured due reasons ‘Account Frozen’ by the bank.
The case involves a dispute from 2014 over a cheque meant to settle a debt of approximately ?8.6 lakhs and when the cheque was produced before the concerned it bounced.
Justice Rajnesh Oswal held that the complaint under Section 138 of the Act is maintainable even if the cheque is dishonoured due to reason “Account frozen.”
The NI Act provides two conditions under which a cheque bounce complaint can be filed. It is either the account lacks sufficient funds, or the amount exceeds what was arranged to be paid from the account by agreement with the bank.
Despite this, the Court noted that legal precedents have established that other scenarios-such as a closed account, stopped payment, or signature mismatches-can also fall under the first condition of “insufficient funds.”
The Court said that once the magistrate had taken cognizance of the case and issued proceedings against the accused, it was correct in rejecting the plea to dismiss the proceedings. The Court stated that there is no provision in the Criminal Procedure Code that allows a magistrate to recall an order of cognizance.
The Court held that a Section 138 complaint remains valid even if the cheque is dishonoured due to a frozen account and did not agree with the Session court’s order for halting the proceedings without a proper trial and stated that the accused should prove that he was unaware of the account freeze and that the account had sufficient funds when the cheque was issued.
“The Revisional Court has put the cart before the horse and has returned a finding which could have been returned only after the full-fledged trial. Rather, the onus would be on the respondent to prove that he was not aware about the freezing of the account when the cheque was drawn, the account was frozen due to reasons beyond his control and the account was having sufficient balance when the cheque was dishonoured”, Court recorded.
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