Critical Analysis of the Liability of Drawer and Drawee of Cheque with respect to The Negotiable Instruments Act, 1881
Volume III, Issue II, 2020
Section Thirty of the Negotiable Instruments Act, 1881 defines the liability of the drawer wherein the drawer is required to compensate the holder of cheque in case of dishonour by the drawee. In this case, it is the drawer’s but not the drawee’s fault. Section Thirty-One of the Negotiable Instruments Act, 1881 defines the liability of the drawee wherein drawee is required to pay the obligated amount of money to the holder of cheque when there are sufficient funds in the drawer’s account applicable to the payment of the cheque. If the drawee fails to pay the requisite amount without any lawful justification, in this case, it is the drawee’s but not the drawer’s fault.
The Supreme Court of India held that:
“[I]n construing a statutory provision the first and foremost rule of construction is the literal construction. All that the Court has to see at the very outset is what does the provision say…The other rules of interpretation, for example, the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. ”
In other words, laws cannot be read literally because they are open to judicial interpretation due to the subjectivity of the cases that are brought before the Judiciary. Similarly, Section Thirty and Thirty-One of the Negotiable Instruments Act, 1881 is linked to various provisions majorly being Section Six, Seven, Eight, Thirty-Five, Eighty-Seven, Ninety-One, Ninety-Two, One Hundred Thirty-Eight and One Hundred Forty-One of the Negotiable Instruments Act, 1881. Liability of the drawer is subject to dishonor of cheque. Dishonor of cheques as mentioned in Section 138 of the Negotiable Instruments Act, 1881 is due to insufficient funds in the drawer’s account or due to the amount mentioned in the cheque exceeds the amount that can be paid by the bank under an arrangement between the bank and the drawer of the cheque. However, there are also other reasons for dishonor of cheques – Account Closed, Stop Payment Instructions, Refer to Drawer and Not A Clearing Member – that are not explicitly mentioned. The need for the present study is the fact that these intricacies of the Negotiable Instruments Act, 1881 are not widely available in academia, and the author aims to consolidate such interpretations clubbed along with his interpretation and make it available to the wider mass.