Case Note & Summary
The matter before the High Court of Karnataka arose out of a criminal petition filed under Section 482 of the Code of Criminal Procedure, 1973 and Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking to quash proceedings in C.C.No.40325 of 2025 pending before the XII Additional Chief Judicial Magistrate, Bengaluru. The proceedings originated from a private complaint filed by the respondent, a proprietorship concern, alleging offences punishable under Sections 138 and 142 of the Negotiable Instruments Act, 1881 against the petitioners, a partnership firm and its two partners. The complainant alleged that the accused had purchased groceries on credit and issued cheque bearing No.544041 dated 19-05-2025 for Rs.80,30,106 drawn on Syndicate Bank, Vijayanagar Branch, towards legally dischargeable debt. The cheque was presented through the complainant's banker, Union Bank of India, Yeshwanthpur Branch, and was returned unpaid on 12-06-2025 with endorsement Bank Merged with Canara Bank and returned unpaid. The complainant issued legal notice dated 19-06-2025, received reply dated 04-07-2025, and filed the private complaint on 19-07-2025, upon which the Magistrate took cognizance and registered PCR No.13298/2025. The petitioners contended that no transaction for the said amount occurred in 2025, that the cheque had been given as security long ago and was deliberately used, and that a cheque drawn on a bank already merged with Canara Bank could not create liability under Section 138 of the Act. They argued that the proceedings were a nullity. The respondent argued that whether the bank had merged and whether the cheque was valid were seriously disputed questions of fact; once signature was admitted, the accused must prove their defence at trial; the cheque was handed over in April 2025 knowing full well that Syndicate Bank had merged with Canara Bank; and therefore the petition should be dismissed. The Court observed that it was not in dispute that the cheque was drawn on Syndicate Bank and presented on 19-05-2025, later presented for encashment before Union Bank and returned unpaid due to merger. The Court noted that Syndicate Bank merged with Canara Bank on 01-04-2020 and that the merger document indicated the last date for presenting Syndicate Bank cheques for clearance was 30-06-2021. The Court framed the sole issue as whether an instrument issued on a bank merged with another bank, long after the merger, would be a valid instrument attracting liability under Section 138 of the Act. The available text ends without recording the final analysis or operative order.
Headnote
A) Criminal Procedure - Quashing of Proceedings - Inherent Powers - Code of Criminal Procedure, 1973, Section 482; Bharatiya Nagarik Suraksha Sanhita, 2023, Section 528 - Petitioners/accused sought quashing of private complaint proceedings in C.C.No.40325/2025 for offences punishable under Sections 138 and 142 of the Negotiable Instruments Act, 1881, contending that the cheque drawn on Syndicate Bank was invalid due to merger with Canara Bank and that proceedings were null and void. The respondent opposed, contending that whether bank had merged and whether cheque was valid were disputed questions of fact requiring trial. The High Court framed the issue whether an instrument issued on a bank merged with another bank long after the merger is a valid instrument attracting liability under Section 138 and noted the matter required determination. Held not finally determined in the available text (Paras 1-6). B) Negotiable Instruments - Dishonour of Cheque - Validity of Cheque Drawn on Merged Bank - Negotiable Instruments Act, 1881, Sections 138 and 142 - Cheque No.544041 dated 19-05-2025 for Rs.80,30,106 drawn on Syndicate Bank, Vijayanagar Branch was presented through Union Bank of India and returned unpaid on 12-06-2025 with endorsement Bank Merged with Canara Bank. Syndicate Bank merged with Canara Bank on 01-04-2020 and the merger document indicated last date for presenting Syndicate Bank cheques for clearance was 30-06-2021. Petitioners contended the instrument was a nullity; respondent contended accused issued cheque knowing merger. Held not finally decided in the available text (Paras 3-9).
Issue of Consideration
Whether an instrument issued on a bank which has merged with another bank, long after the merger, is a valid instrument in the eyes of law that could attract liability under Section 138 of the Negotiable Instruments Act, 1881.
Law Points
- Cheque drawn on a bank that has merged with another bank and returned unpaid on that ground raises question of validity under Section 138 Negotiable Instruments Act
- 1881
- once signature on cheque is admitted
- accused must rebut presumption
- disputed questions of fact cannot be resolved in quashing petition unless no offence made out
- inherent power under Section 482 CrPC and Section 528 BNSS to quash criminal proceedings
- return of cheque due to bank merger may not constitute dishonour under Section 138 NI Act if instrument is not valid when presented.
