The Kerala High Court (Ernakulam Bench) has held that if the instrument operates as a mandate for payment drawn on an account maintained with an institution carrying on banking functions, it would fall within the ambit of the Negotiable Instruments Act, 1881 (N.I. Act). Hence, a withdrawal slip drawn on a co-operative society partakes the character of a ‘cheque’ and the society falls within the definition of a ‘banker’, rendering the complaint under Section 138 of the N.I. Act maintainable in law.
A Single Judge Bench of Justice C.S. Dias observed that the expression ‘banker’ under Section 3 of the N.I. Act is of wide amplitude, is inclusive in nature, and extends to any person or institution acting as a banker. Co-operative societies carrying on banking business, notwithstanding the absence of a profit motive or formal licensing under the Regulation Act, fall within the ambit of a ‘banker’ for the purposes of the N.I. Act.
Hence, instruments drawn on such institutions, including withdrawal slips operating as payment mandates, cannot be excluded from the sweep of the NI Act merely on technical nomenclature, added the Bench.
The Single Judge noted that the essence of ‘banking’ lies in the acceptance of deposits from the public repayable on demand or otherwise, coupled with the facility of withdrawal by instruments such as cheques, drafts, or orders. Thus, the mere absence of a licence under Section 22 of the Regulation Act does not detract from the character of the activity as banking business, nor can such absence be invoked as a defence to evade legal obligations arising therefrom. The Bench clarified that the substance of the transaction, and not its form or nomenclature, is determinative.
Briefly, the petitioner an accused before the Court of the Judicial First Class Magistrate, arising from a complaint filed by the 1st respondent alleging the commission of an offence punishable under Section 138 of the Negotiable Instruments Act, 1881, contended that the document produced along with the complaint is not a cheque, but a withdrawal slip of the Kanjirapally Central Service Co-operative Bank Ltd.
The petitioner alleges that the 1st respondent surreptitiously took possession of the withdrawal slip, manipulated it into a cheque, presented it for encashment, and upon its dishonour, filed the complaint. The petitioner further argues that the Society does not fall within the definition of a ‘banker’ under Section 3 of the N.I. Act, is not licensed by the Reserve Bank of India, and a withdrawal slip does not answer the description of a ‘cheque’ within the meaning of Section 6 of the N.I. Act.
Appearances:
Advocate C.S. Bissimon, for the Petitioner/ Accused
Advocates Jacob Sebastian, Shamseera. C. Ashraf, Winston K.V, Anu Jacob, Anjana Krishnan and Vincent C. J., for the Respondent/ Complainant
