J.P. TIWARI Vs. UNION OF INDIA

JUDGEMENT

(1.) The petition seeks a declaration that Sections 138 and 142 of the Negotiable Instruments Act, 1881 (NIA) are ultra vires the Constitution of India.

(2.) The petitioner claims to be an exporter of readymade garments who had purchased material therefor viz. cloth, thread, buttons etc. on credit ranging from 60 to 90 days and had issued cheques with the understanding that the same will be presented as and when export sale proceeds are received. It is further the case of the petitioner, that owing to a fire in his factory premises, the finished goods and material of the value of over '2/- crores were destroyed; that the insurers of the said goods have failed to compensate the said loss and which has led the petitioner to file a complaint before the Consumer Fora; that owing to his business having come to a standstill, his bankers also declared his account as an Non-Performing Asset (NPA) and have initiated proceedings before the Debt Recovery Tribunal against him; on the other hand suppliers aforesaid of material, to whom undated cheques aforesaid had been given by the petitioner, filled up the dates thereon and presented the cheques for payment and which were dishonoured; that now several complaints of offence under Section 138 supra have been filed against him.

(3.) The petitioner contends that though Section 138 supra was enacted to punish unscrupulous persons who purported to discharge their liability by issuing cheques without really intending to do so, the provisions thereof are being used against an honest person like the petitioner who owing to the circumstances beyond his control is unable to pay. The counsel for the petitioner has argued that the suppliers of material refuse to deliver goods on credit without such undated cheques by way of security being given; that though the petitioner at the time of issuance of the said cheques intended the same to be honoured, as had been happening in the past, but was unable to do so owing to the unforeseen fire in his factory.