Case: Nepc Micon Ltd.  Vs. Magma Leasing Ltd

of all the Judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro private commode, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico. Even with regard to the penal provision which is also remedial one in the case of State of Tamil Nadu v. M.K. Kandaswami and others, 1974(4) S.C.C. 745, the Court observed that in interpreting such a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book should be eschewed; if more than one construction is possible that which preserves its workability, and efficacy is to be preferred to the one which would render it otiose or sterile." 11. In the case of M/s International Ore and Fertilizers (India) Pvt. Ltd. v. Employees State Insurance Corporation AIR, 1988 S.C. 79, this Court referred to often quoted passage from the decision in the case of Seaford Court Estates Ltd. v. Asher, 1949(2) All ER 155 wherein Lord Denning, L.J. observed : "The English language is not an instrument of mathematical precision. Our literature would be much poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticized. A Judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the judges trouble if the Acts of Parliament were drafted with divine pre-science and perfect clarity. In the absence of it, when a defect appears, a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give force and life to the intention of legislature.A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out ? He must then do so as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the creases" (Emphasis supplied). 12. Lastly, we would refer to the decision by a Three-Judge Bench of this Court in the case of Modi Cements Ltd. v. Kuchil Kumar Nandi, 1998(2) RCR (Crl.) 77 : 1998(3) S.C.C. 249 dealing with a similar contention and interpreting Section 138 of the Act. In that case, the Court referred to the earlier decisions in the case of Electronics Trade and Technology Development Corporation, 1996(1) RCR (Crl.) 593 : 1996(2) SCC 739 and K.K. Siddharthan v. T.P. Praveena Chandran, 1997(1) RCR (Crl.) 158 : 1996(6) S.C.C. 369 and agreed that the legal proposition enunciated in the aforesaid decisions to effect that if the cheque is dishonoured, because of "stop payment" instruction to the bank, Section 138 would get attracted. It also amounts to dishonour of the cheque within the meaning of Section 138 when it is returned by the bank with the endorsement like (i) in this case, "referred to the drawer" (ii) instructions for stoppage of payment and stamped (iii) exceeds agreement. The Court observed that the object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and to ensure credibility in transacting business through cheques. Thereafter, the Court disagreed with other views expressed in aforesaid two cases and held that once the cheque is issued by the drawer a presumption under section 139 must follow and merely because the drawer issues a notice to the drawer or to the bank for stoppage of the payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of a cheque in due course. The Court further held that it will make section 138 a dead letter if the contention that by giving instruction to the Bank to stop payment immediately after issuing a cheque against the debtor or liability the drawer can easily get rid of the penal consequences notwithstanding the fact that deemed offence was committed. Finally, the Court held that Section 138 of the Act gets attracted only when the cheque is dishonoured.13. In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the Court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above brush away the cobweb varnish, and show the transactions in their true light (Wilmot C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circuitous manner that it has prohibited". Hence, when the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid because "the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Section 138 of the Act.In

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]The Court observed that the object of bringing Section 138 on statute appears to be to inculcate faith in the efficacy of banking operations and to ensure credibility in transacting business through cheques. Thereafter, the Court disagreed with other views expressed in aforesaid two cases and held that once the cheque is issued by the drawer a presumption under section 139 must follow and merely because the drawer issues a notice to the drawer or to the bank for stoppage of the payment it will not preclude an action under Section 138 of the Act by the drawee or the holder of a cheque in due course. The Court further held that it will make section 138 a dead letter if the contention that by giving instruction to the Bank to stop payment immediately after issuing a cheque against the debtor or liability the drawer can easily get rid of the penal consequences notwithstanding the fact that deemed offence was committed. Finally, the Court held that Section 138 of the Act gets attracted only when the cheque is dishonoured.13. In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the Court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above brush away the cobweb varnish, and show the transactions in their true light (Wilmot C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circuitous manner that it has prohibited". Hence, when the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid because "the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Section 138 of the Act.Inour view, the answer would obviously be in the affirmative because cheque is dishonoured as the amount of money standing to the credit of that account was nil at the relevant time apart from it being closed. Closure of the account would be an eventuality after the entire amount in the account is withdrawn. It means that there was no amount in the credit of "that account" on the relevant date when the cheque was presented for honouring the same. The expression "the amount of money standing to the credit of that account is insufficient to honour the cheque" is a genus of which the expression "that account being closed" is specie. After issuing the cheque drawn on an account maintained, a person, if he closes that account apart from the fact that it may amount to another offence, it would certainly be an offence under Section 138 as there was insufficient or no fund to honour the cheque in that account. Further, cheque is to be drawn by a person for payment of any amount of money due to him on an account maintained by him with a banker and only on "that account" cheque should be drawn. This would be clear by reading the Section along with proviso (a), (b)r view, the answer would obviously be in the affirmative because cheque is dishonoured as the amount of money standing to the credit of that account was nil at the relevant time apart from it being closed. Closure of the account would be an eventuality after the entire amount in the account is withdrawn. It means that there was no amount in the credit of "that account" on the relevant date when the cheque was presented for honouring the same. The expression "the amount of money standing to the credit of that account is insufficient to honour the cheque" is a genus of which the expression "that account being closed" is specie. After issuing the cheque drawn on an account maintained, a person, if he closes that account apart from the fact that it may amount to another offence, it would certainly be an offence under Section 138 as there was insufficient or no fund to honour the cheque in that account. Further, cheque is to be drawn by a person for payment of any amount of money due to him on an account maintained by him with a banker and only on "that account" cheque should be drawn. This would be clear by reading the Section along with proviso (a), (b)n our view even with regard to penal provision, any interpretation, which withdraws life and blood of the provision and makes it ineffective and a dead letter should be averted. If the interpretation, which is sought for, were given, then it would only encourage dishonest persons to issue cheques and before presentation of the cheque close that account and thereby escape from the penal consequences of Section 138.In view of the aforesaid discussion we are of the opinion that even though Section 138 is a penal statute, it is the duty of the Court to interpret it consistent with the legislative intent and purpose so as to suppress the mischief and advance the remedy. As stated above, section 138 of the Act has created a contractual breach as an offence and the legislative purpose is to promote efficacy of banking and of ensuring that in commercial or contractual transactions cheques are not dishonoured and credibility in transacting business through cheques is maintained. The above interpretation would be in accordance with the principle of interpretation quoted above brush away the cobweb varnish, and show the transactions in their true light (Wilmot C.J.) or (by Maxwell) "to carry out effectively the breach of the statute, it must be so construed as to defeat all attempts to do, or avoid doing, to an indirect or circuitous manner that it has prohibited". Hence, when the cheque is returned by a bank with an endorsement account closed, it would amount to returning the cheque unpaid because "the amount of money standing to the credit of that account is insufficient to honour the cheque" as envisaged in Section 138 of the Act.Inour view even with regard to penal provision, any interpretation, which withdraws life and blood of the provision and makes it ineffective and a dead letter should be averted. If the interpretation, which is sought for, were given, then it would only encourage dishonest persons to issue cheques and before presentation of the cheque close that account and thereby escape from the penal consequences of Section 138.