DRAWER OF CHEQUE NOT TO BE LIABLE

The Supreme Court has set aside the Delhi high court judgment and ruled that the drawer of a cheque would not be liable under Section 138 of the Negotiable Instruments Act if he had reported to the police that his cheques have been lost. Under the law, a person who issues a cheque which is dishonored by the bank for want of sufficient funds would be criminally prosecuted. In this case, Raj Kumar Khurana vs. State of Delhi, Khurana filed a first information report before the police that two cheque leaves have been stolen from his office. However, the cheques were filled up and presented at
the bank. It rejected them stating that the cheques were reported stolen by the drawee.