Effect of Incomplete signature in 138 NI Act Cheque Bouncing case

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What happens when there is a mismatch of the signature or incomplete signature in the cheque? Can a Cheque dishonor case under Section 138 of the Negotiable Instruments Act, 1881 can be made out in a case where the signature was not matched and was incomplete?

The Supreme Court has answered the above question in the case of Vinod Tanna and Anr. v. Zaher Siddiqui and Ors., (2002) 7 SCC 541 wherein the accused/petitioner had issued various cheques to the complainant/respondent and there was incomplete signature on the said cheques. The bank did not specify whether there were insufficient funds in the account or whether the amount in the cheque exceeded the amount which the account holder had at his credit. Furthermore, there is no direction for stop payment also from the drawer/accused. The only ground on which the cheque was dishonored was that the drawer’s signature was incomplete.

The petitioner first approached the Bombay High Court which had refused to quash the said case against the accused/petitioner and thus they had approached the Supreme Court by way of an SLP. The Supreme Court observed that in the instant case, the High Court has wrongly relied upon the judgment of the Supreme Court in the case of Modi Cements v. Kuchil Kumar Nandi, (1998) 3 SCC 249, in which the issue was that the cheque had been dishonored due to the direction from the accused/drawer to stop the payment of the said cheque and the court had in the said case held that even a direction for stopping the payment of the cheque will be considered to be a ground for dishonor of cheque under Section 138 of the Negotiable Instruments Act, 1881.

Thus, looking into the facts and circumstances of the case wherein it was not declared whether there was insufficient funds in the account of the drawer or there was a different with the banker and further whether the accused had directed the bank to stop the payment, the Supreme Court directed the said complaints to be quashed and held that merely because the signature of the drawer was incomplete and other thing remaining silent, a case under Section 138 NI Act cannot be made out as the ingredients of the said section are not being made out.

About Alabhya Dhamija

Alabhya is an Advocate practicing at Delhi High Court and other courts in Delhi. Contact: alabhya@dhamija.com

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