Smt. Bhadramma Vs State of Karnataka and Another (Karnataka High Court)
Bank Merged, Liability Not Erased: Karnataka HC Refuses to Quash Cheque-Bounce Case
Merger alone does not invalidate a cheque
Can a drawer escape cheque-bounce proceedings merely because the bank named on the cheque has merged with another bank? The Karnataka High Court answered this question in the negative in Smt. Bhadramma v. State of Karnataka and Another.
Justice Suraj Govindaraj held that a bank merger does not, by itself, invalidate a cheque drawn on an account maintained with the erstwhile bank. The successor bank takes over the assets, liabilities and accounts of the merged bank. Consequently, the account cannot be treated as having disappeared merely because the original bank has ceased to operate under its earlier identity.
The Court dismissed the petition seeking quashing of proceedings under Section 138 of the Negotiable Instruments Act, while reserving the petitioner’s right to raise her defences at trial.
The facts: A Vijaya Bank cheque returned as “no such bank”
The dispute arose from a cheque relating to the petitioner’s account with Vijaya Bank, which had merged with Bank of Baroda in 2019. The cheque was presented on 7 November 2024 and returned with the endorsement “no such bank”.
