New Delhi, July 29, 2024– In a landmark ruling, the Supreme Court of India has clarified that the 20% deposit requirement under Section 138 of the Negotiable Instruments Act is not mandatory in all cases. The ruling came as the apex court overturned decisions by lower courts, asserting that appellate courts have the discretion to waive this requirement in exceptional circumstances, provided the reasons for such a decision are explicitly recorded.
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The judgment arose from the case of Jamboo Bhandari vs M.P. State Industrial Development Corporation Ltd. & Ors., where the Supreme Court set aside the High Court’s decision, highlighting that the lower courts wrongly assumed the 20% deposit rule to be without exception.
In another significant decision, the Supreme Court upheld the conviction in Ajitsinh Chehuji Rathod vs. State of Gujarat & Anr., emphasizing the onus on the accused to rebut the presumption of genuineness of signatures on dishonoured cheques. The court stated that it cannot be expected to assist the accused in collecting evidence. This judgment reinforces that the accused must present appropriate defense evidence to challenge the presumption in favor of the complainant.
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These rulings are expected to have far-reaching implications for future cases under Section 138, providing clearer guidelines on the legal responsibilities of the accused and the discretionary powers of appellate courts. Legal experts believe these decisions will guide lower courts in interpreting the law more flexibly and justly, ensuring that individual circumstances are considered in each case. Furthermore, the clarification on the role of appellate courts in considering exceptions to the 20% deposit rule could lead to more nuanced and equitable outcomes in cheque bounce cases.
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