Karnataka High Court: Bank Seal Not Essential on Cheque Dishonor Memo
The Karnataka High Court has ruled that a bank's seal or signature is not mandatory on a cheque return memo in cases of cheque dishonor filed under Section 138 of the Negotiable Instruments Act, 1881. A bench led by Justice V. Srishananda clarified that with the advent of the Electronic Clearance System (ECS), the need for manual verification or intervention has diminished. Consequently, a bank's endorsement indicating cheque dishonor is legally valid even without the seal or signature of a bank branch official. The court emphasized that a case cannot be dismissed merely for the absence of these markings on the electronic clearance document.
This significant verdict emerged from a revision petition filed by Jagadish R., who was convicted in a cheque bounce case. The case stemmed from a private complaint by B.S. Ravi, who had lent Rs. 3 lakhs to Jagadish. A post-dated cheque issued by Jagadish subsequently bounced due to insufficient funds. After a legal notice went unheeded, the trial court and appellate court found Jagadish guilty, directing him to pay a fine and compensation. Jagadish appealed to the High Court, arguing that the cheque dishonor endorsement was unreliable because it lacked the bank's seal or signature.
However, the High Court dismissed this argument, noting that the endorsement contained all necessary details such as the cheque number, bank particulars, presentation date, amount, and the reason for dishonor. The court reiterated the established legal position that once the issuance and signature on a cheque are admitted by the accused, it is presumed to have been issued for a legally enforceable debt, unless credibly proven otherwise. Finding no error in the lower courts' decisions, the High Court upheld the conviction, stating that the complainant had successfully discharged the initial burden under Section 139 of the Negotiable Instruments Act.
Source: CourtBeat News (Kannada)
