The Negotiable Instruments Act, 1881 (XXVI of 1881); sections 123A & 138 (1)

The legislative mandate as used in clause (a) of sub-section (2) of section 123 A of the Act, 1881 that when a cheque is crossed "account payee" shall cease to be negotiable means it cannot be negotiated or encashed with any other person except the person in whose favour the same was issued. To make it clearer, a crossed cheque "account payee" must be enchased through the account of the holder in whose favour it was issued. So, by no means, a crossed cheque "account payee" loses its character as a negotiable one within the meaning of section 138 of the Act, 1881. Moreover, sec­tion 13 of the Act, 1881 which has defined "Negotiable instrument" has not made any distinction between crossed cheque "account payee" or cheque of other kind such as bearer cheque we ordinarily mean. Thus, we find that section 123A of the Act, in no way, creates any bar in proceeding with a case under section 138 of the Act, 1881. In other words, there is no nexus of section 123A with the proceedings to be initiated under section 138 of the Act." vide Arif-uz-Zaman (Md.) Vs. State, 17 BLC (AD) 176=21 BLT (AD) 234 .................................(7)

So far as the pen­dency of the criminal case filed by the accused against the complainant about the cheques in question is concerned, the operation of section 138 of Act cannot be obstructed or, in any way, circumvented by the mere fact of filing of a criminal case by the drawer of the dishonoured cheque whatever may be the allegations, because such a device shall totally make the section itself nugatory. However, if a holder or the payee gets hold of a dishonoured cheque by any illegal means as alleged in the instant case, the drawer of the cheque shall have the liberty to take such defence during the trial...........................(8)