Home Forums Cheque Bounce what is legal action for Cheque Bounce matters?

2 replies, 3 voices Last updated by KISHAN RETIRED JUDGE 4 months, 2 weeks ago
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  • #4438

    charu arora
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    @@rora123

    what is legal action for Cheque Bounce matters?

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    #4470

    Adv. Priya Lohakare
    Participant
    @priyalohakare

    The Negotiable Instruments Act, 1881 is applicable for the cases of dishonour of cheque. This Act has been amended many times since 1881.

    According to Section 138 of the Act, the dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both.

    If payee decides to proceed legally, then the drawer should be given a chance of repaying the cheque amount immediately. Such a chance has to be given only in the form of notice in writing.

    The payee has to sent the notice to the drawer with 30 days from the date of receiving “Cheque Return Memo” from the bank. The notice should mention that the cheque amount has to be paid to the payee within 15 days from the date of receipt of the notice by the drawer. If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act.

    However, the complaint should be registered in a magistrate’s court within a month of the expiry of the notice period. It is essential in this case to consult an advocate who is well versed and experienced in this area of practice to proceed further in the matter.

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    #39851

    KISHAN RETIRED JUDGE
    Participant
    @KishanRetiredJudge

    Cheque bounce FAQs Negotiable Instruments Act
    1A. Amended Cheque Bounce Provisions- 143A & 148…what is it?
    Ans: Section 143A- It empowers the Court to order the drawer of the cheque to pay Interim Compensation – 20% – Without depositing this amount the accused cannot defend the case.
    Section 148 – It empowers the Appellate Court to order payment pending the appeal against conviction
    The Appellate Court may order the appellant to deposit an amount which shall be a minimum of 20% of the fine or compensation awarded by the trial Court.
    This amount shall be in addition to the amount already paid by the appellant under Section 143A.
    It received the assent of the President and was notified in the Official Gazette on 02.08.2018
    1. In which court do I need to file the complaint case under Section 138 N.I. Act in case drawer did not pay after receiving notice?

    A complaint case under Section 138 N.I. Act can be filed in any competent court in whose jurisdiction any of the following acts have occurred:
    a) Place of drawing of the cheque,
    b) Address of bank where cheque was presented (holders bank address),
    c) Address of bank where cheque is payable (drawers bank address)
    d) Place from where notice was received by drawer of cheque

    a. It is possible that each of these four acts could have occurred at different localities. The complainant can choose any one the above places to determine jurisdiction of court where they wish to file complaint.

    2. What can I do if it has been more than 30 days since I received information of dishonour of cheque?

    If the cheque is still valid i.e. 3 months (currently) have not passed from the date of its issue, you can represent the cheque again to your banker as there is no restriction regarding the number of times a cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing complaint. It may be noted that once a notice for payment is given then the holder must file a complaint under Section 138 N.I. Act within 30 days from expiry of notice period as a fresh cause of action will not arise if the cheque is presented again and it is dishonoured and failure to file complaint will lead to loss of remedy available under Section 138 N.I. Act.

    3. How long after notice has been served can I file a case against the drawer?

    After giving notice you need to file a complaint case against drawer under Section 138 N.I. Act within 30 days from the expiry of notice period i.e. 15 days. In other words you need to file complaint case against drawer within 45 days (15+30) from the date of issue of notice. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque.

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