The Negotiable Instruments Act, 1881 (“Act”) deals with negotiable instruments, such as promissory notes, bills of exchange, cheques, etc. Chapter XVII of the Act containing sections 138 to 142 was introduced with the aim of inculcating confidence in the efficacy of banking operations and giving credibility to negotiable instruments employed in business transactions. A cheque is a widely used method of payment and post-dated cheques are frequently used in various transactions in business life. Post-dated cheques are given to provide a certain accommodation to the drawer of the cheque. Therefore, it becomes necessary to ensure that the drawer of the cheque does not abuse the accommodation given to him
If a party issues a cheque as a mode of deferred payment and the payee of the cheque accepts the same on the faith that he will get his payment on the due date, then he should not suffer on account of non-payment. Section 138 of the Act provides for circumstances under which a case for the dishonour of cheques is filed. The ingredients required for complying with Section 138 are as follows:
- a person must have drawn a cheque for payment of money to another for the discharge of any debt or other liability;
- that cheque has been presented to the bank within a period of three months;
- that cheque is returned by the bank unpaid, either because insufficient of funds or that it exceeds the amount arranged to be paid from that account by an agreement made with the bank;
- the payee makes a demand for the payment of the money by giving a notice in writing to the drawer within 15 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid;
- The drawer fails to make payment to the payee within 15 days of the receipt of the notice.
Section 138 of the Negotiable Instruments Act, 1881, provides for an offence that is not based on mens rea. The Bombay High Court in the case of Mayuri Pulse Mills v. Union of India remarked that Section 138 of the Negotiable Instruments Act, 1881, provides for an offence that is not based on mens rea. Normally, in criminal law, the existence of guilty intent is an essential ingredient of a crime and the principle is expressed in the maxim ‘actus non facit reum nisi mens sit rea’. This is a general principle. However, the Legislature can always create an offence of absolute liability or strict liability where mens rea is not at all necessary. Such a measure is resorted to in public interest and such laws of strict liability are justified and cannot be said to be unreasonable.
Thus, mere dishonour of a cheque for the reasons stated in Section 138 of the Negotiable Instruments Act, 1881, is sufficient for the commission of a crime under Section 138 of the Act, and it is not material whether he had reason to believe when he issued the cheque that the cheque may not be dishonoured on presentment. For an offence under Section 138 of the Negotiable Instruments Act, 1881, mens rea is not essential, which is clearly spelt out from a reading of section 138. The said provision clearly rules out mens rea as a constituent part of the crime.