KING STUBB & KASIVA

ADVOCATES & ATTORNEYS LEXZONE YOUR LEGAL THOUGHT

BANKING AND FINANCE NEWSLETTER AUGUST 2019 | Series 26.2

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Banking and Finance Bytes

Complaint is not maintainable if partnership firm has

not been made as accused in respect of dishonour of Cheque cases.

Acceptance of corrected cheque by an educated person cannot be taken as defence under Section 138 of the Negotiable Instruments Act, 1881.

Applicability of Section – 143A of the Negotiable Instruments Act, 1881.

Amendment in the ECB policy to rationalise the end-use provision.

NCDRC directs MakeMyTrip to pay compensation to its customer as the act of MakeMyTrip amounts to Unfair restrictive trade practice.

Complaint is not maintainable if partnership firm has

not been made as accused in respect of dishonour of

Cheque cases: High Court of Madras

-Sudhaman, Associate

The High Court of Madras quashed the proceedings

section 138 of Negotiable Instruments Act as the

complainant failed to make the partnership firm as

accused in respect of dishonour of cheque and

further held that the said complaint is not

maintainable.

The Complainant filed a complaint against the

partners of a partnership firm before a Judicial

Magistrate for dishonour of cheque amounting to

Rs.3,00,000/-. Subsequently, the partners filed a

petition before the High Court to quash the

proceedings before the Judicial Magistrate on the

ground that the cheque has been drawn on behalf of

the Partnership Firm.

And further, the petitioners contended that the

complaint should not be maintainable as the

respondent failed to issue statutory notice to the

1 2012(5) SCC 661 2 http://highcourtofkerala.nic.in/): (CRL.A.No.2535 of 2008 AGAINST THE

JUDGMENT IN CC 1065/2004 of JUDICIAL MAGISTRATE OF FIRST CLASS -II(MOBILE), KOTTAYAM DATED 25-10-2006 LEAVE GRANTED AS PER ORDER IN

partnership firm and making the partnership firm as

accused in the complaint. The contention of the

petitioner is that non registration of partnership firm

should not lead to exclusion of partnership firm from

the complaint. They relied upon section 141 and

69(2) of the Act that barring of an unregistered

partnership firm is not applicable since the word

“Suit” envisaged under section 69 (2) of the Act

should not be extended to criminal prosecutions.

In Aneeta Hada v. Godfather Travels and Tours

Private Limited1 , the Supreme court held that

partnership firm should be brought under the

purview of Section 141 of the Act and in those

situations the complainant should make the

partnership firm as accused along with partners in

the complaint in order to maintain the same for an

offence under section 138 of the Act

The court agreed for the contentions of the

petitioners in respect of section 69(2) of the Act and

accordingly quashed the Criminal Original Petition in

exercise of its powers under section 482 of the Code

of Criminal Procedure, 1973.

Acceptance of corrected cheque by an educated

person cannot be taken as defence under Section

138 of the Negotiable Instruments Act, 1881- High

Court of Kerala. 2

-Dhivya U.T.,Associate.

The Hon’ble High Court of Kerala, while hearing

criminal appeal no. 2535 of 2008 directed against the

judgment of the trial court acquitting the first

respondent/accused of the offence punishable under

Section 138 of the Negotiable Instruments Act, 1881

and holding the observation of lower court's opinion

correct that when the cheque contained action with

regard to the name of the payee, which was not even

attested by the signature of the accused, it is highly

improbable that the complainant would have

accepted it and that she is not a rustic and illiterate

lady as she is the director of a book publishing

company. In such a situation, the plea of the

complainant that she accepted the cheque given by

Crl.L.P. 1255/2008 DATED 26-08-2008 GEEMOL JOSEPH VS. KOUSTHABHAN & STATE OF KERALA) Judgment passed on 29.07.2019

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the accused which contained a correction of the

name of the payee, cannot be believed. While

dismissing the appeal, the court held that the

material alteration of the cheque, non-acceptance of

the plea of the accused, does not inure to the

advantage of the complainant. Further, also held that

the weakness of the plea of the accused does not

come to the rescue of the complainant and that the

material alteration of the cheque, without the

consent of the drawer, makes the instrument void

and no criminal action would lie on the basis of such

an instrument.

Applicability of Section – 143A of the Negotiable

Instruments Act, 1881. 3

- Dhivya U.T., Associate.

The Supreme Court of India while deciding Criminal

Appeal No. 1160 of 2019 in SLP(Crl.)No.3342 of 2019

challenges the Final Order dated 08.02.2019 passed

by the High Court of Judicature at Madras in Criminal

O.P.No.3406 of 2019, held that the Section 143A of

the of the Negotiable Instruments Act, 1881, is

prospective in operation and that the provisions of

the said section can be applied or invoked only in

cases where the offence under Section 138 of the Act

was committed after the introduction of said Section

143A in the statute book. Consequently, the orders

passed by the Trial Court as well as the High Court

were set aside.

Amendment in the ECB policy to rationalise the end-

use provision.

- Shreya Dasgupta, Senior Associate.

The Reserve Bank of India (“RBI”) on July 30, 2019 by

its notification bearing no. RBI/2019-20/20 [A.P. (DIR

Series) Circular No. 04] amended the 2.1.(viii) of

Master Direction No.5 dated March 26, 2019 which

states that the ECB proceeds cannot be used for

working capital purposes, general corporate

purposes and repayment of Rupee loans except when

the ECB is availed from foreign equity holder for a

minimum average maturity period of 5 years,

3 Kuldeep Kaur and 7 others as per order dated 09.05.2019

however, cannot be utilised for further lending to

third party.

The notification has further permitted raising ECB for

the following purposes from recognised lenders,

except foreign branches/ overseas subsidiaries of

Indian banks:

(i) ECBs with a minimum average maturity

period of 10 years for working capital

purposes and general corporate purposes.

Borrowing by NBFCs for the above maturity

for on-lending for the above purposes is also

permitted.

(ii) ECBs with a minimum average maturity

period of 7 years can be availed by eligible

borrowers for repayment of Rupee loans

availed domestically for capital expenditure

as also by NBFCs for on-lending for the same

purpose. For repayment of Rupee loans

availed domestically for purposes other than

capital expenditure and for on-lending by

NBFCs for the same, the minimum average

maturity period of the ECB is required to be

10 years.

(iii) Eligible corporate borrowers will be permitted

to avail ECB for repayment of Rupee loans

availed domestically for capital expenditure in

manufacturing and infrastructure sector if

classified as SMA-2 or NPA, under any one-

time settlement with lenders. Lender banks

are also permitted to sell, through

assignment, such loans to eligible ECB lenders,

except foreign branches/ overseas

subsidiaries of Indian banks, provided, the

resultant external commercial borrowing

complies with all-in-cost, minimum average

maturity period and other relevant norms of

the ECB framework.

(iv) The prescribed minimum average maturity

provision, as above, for the aforesaid end-

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uses will have to be strictly complied with

under all circumstances.

Foreign banks cannot engage recovery agents in

India – High Court of Kerala4 - Akshay Ramesh, Associate.

It was held by the Hon’ble Kerala High Court that any

attempt to recover money from an Indian citizen,

residing in India, can only be in accordance with the

Indian laws, lest it would amount to a challenge to the

administration of justice in our country and would

violate the constitutional guarantee of equal

protection of laws to every citizen of the country.

It was open for the foreign banks or financial

institutions to initiate legal action for recovery, which

can even be in pursuance of a judgment which the

bank has obtained from the foreign country. If failure

on the part of the borrower to pay back the amount

which amounts to a criminal offence in the foreign

country, the foreign bank can initiate criminal

proceedings against the borrower through the

diplomatic channel.

The engagement of recovery agents by foreign banks

and financial institutions for realising the defaulted

amount through threat and coercion or any other

unlawful method cannot, under any circumstance, be

permitted.

The ruling came in a writ petition filed by Kollam

resident Mrs. Susheela who had returned after

working as nurse in Saudi Arabia. She sought police

protection against attempts by the recovery agent of

Al-Rajhi Bank, Saudi Arabia, to intimidate her and

compel her to pay the defaulted amount.

NCDRC directs MakeMyTrip to pay compensation to its

customer as the act of MakeMyTrip amounts to Unfair

restrictive trade practice. -Sudhaman, Associate

4 WP(C).No.4715 of 2017

The National Consumer Disputes Redressal

Commission (“NCDRC”) dismissed the revision petition

filed by the travel website against the order of State

Commission, West Bengal and directed to pay

compensation to the customer.

The Respondent/Customer booked a tour package

with Makemytrip.com worth Rs. 2,06,959/- based on

the itinerary sent by the Respondent and the

respondent mentioned the said itinerary is tentative.

Subsequently, the respondent changed the itinerary

of the tour package without giving any due notice to

the respondent.

It was only three days before the actual travel, the

respondent visited the petitioner’s office to collect the

air tickets and he came to know that itinerary has been

changed and the same was quite different from the

earlier itinerary.

The petitioner contended that as per the cancellation

policy, the tour package should be cancelled ten days

prior to the scheduled date of departure and any

cancellations made after will lead to forfeiture of

deposited amount. But in this case, the respondent

came to know about the change in itinerary only three

days prior to scheduled departure, he has no other

option to accept the changes which amounts to

restrictive, deceptive and unfair trade practice by the

petitioner.

The petitioner further contended that no relief should

be granted to the respondent, as the respondent

undertook the tour after seeing the final itinerary. And

further, the earlier itinerary was tentative in nature

subject to changes.

The NCDRC held in its judgement that the respondent

has been forced to accept the so- called final itinerary

which was given to him prior to three days of actual

journey and after collecting entire amount and leaving

no option to the respondent which amounts to

restrictive, deceptive and unfair trade practice by the

petitioner. And further the Commission held that the

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word ‘tentative’ could not be misused and the same

can be applied only when there is certain uncontrolled

situation, the itinerary can be changed. Further, the

petitioner threatened the respondent that they will

forfeit the deposited amount if the respondent

cancels the package which amounts to restrictive,

deceptive and unfair trade practice and upheld the

order passed by the state commission and directed

the petitioner to pay Rs.1,10,000/- to the respondent

for mental pain and agony.

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