#section 138

Himachal News: मंडी के एक न्यायालय ने भेड़ खरीदार नरोत्तम को परक्राम्य लिखत अधिनियम की धारा 138 के तहत दोषी करार दिया है। उसने गोविंद राम को 50,000 रुपये का चेक दिया था जो धनराशि न होने के कारण बाउंस हो गया। शिकायतकर्ता ने वैधानिक नोटिस भेजा लेकिन भुगतान नहीं मिला। आरोपी ने दावा किया कि पूरी राशि नकद दी गई थी और चेक सुरक्षा के लिए था। लेकिन वह इसका सबूत नहीं दे पाया। न्यायालय ने आठ दिसंबर 2023 को…

Himachal News: मंडी के एक न्यायालय ने भेड़ खरीदार नरोत्तम को परक्राम्य लिखत अधिनियम की धारा 138 के तहत दोषी करार दिया है। उसने गोविंद राम को 50,000 रुपये का चेक दिया था जो धनराशि न होने के कारण बाउंस हो गया। शिकायतकर्ता ने वैधानिक नोटिस भेजा लेकिन भुगतान नहीं मिला। आरोपी ने दावा किया कि पूरी राशि नकद दी गई थी और चेक सुरक्षा के लिए था। लेकिन वह इसका सबूत नहीं दे पाया। न्यायालय ने आठ दिसंबर 2023 को…

The cause of action for filing a complaint under Section 138 of the Negotiable Instrument Act arises only after the expiry of 15 days from the date of service of the demand notice. The complainant then has one month to file the complaint.

Dinesh Kumar v. The State of UP and another

WP 20471/2024

Before the Allahabad High Court

Heard by Hon'ble Mr. Anish Kumar Gupta J

In the present case, the Allahabad High Court dismissed the application filed by the petitioner Dinesh Kumar, holding that the complaint was filed within the statutory period, and no interference was warranted.

Background:

Petitioner-Dinesh Kumar issued two cheques on 18.10.2020 and 20.10.2020 to Rajveer Singh. The cheques were presented for encashment on 21.01.2021 but were dishonored on 22.01.2021 with the remark "payment stopped by the drawer."

As such a legal demand notice was issued by Rajveer Singh on 18.02.2021, which was served on Dinesh Kumar on 19.02.2021. Rajveer Singh filed a criminal complaint on 02.04.2021 under Section 138 of the Negotiable Instruments Act.

Legal Issue:

Whether the complaint filed by Rajveer Singh was time-barred?

Argument of the parties:

Petitioner's Argument

The complaint was filed beyond the one-month period prescribed under Section 142(1)(b) of the Negotiable Instruments Act, 1881.

The complaint is time-barred as it was filed on 02.04.2021, which was beyond one month from the date of service of the demand notice (19.02.2021).

Respondent's Argument:

The State, contended that the complaint was filed within the limitation period.

According to Section 142(1)(b) of the Negotiable Instruments Act, the complainant has one month to file the complaint from the date the cause of action arises, which is after the expiry of 15 days from the service of the demand notice.

In this case, the cause of action arose on 07.03.2021, giving the complainant time till 07.04.2021 to file the complaint, making the filing on 02.04.2021 timely.

Observation of the Court:

The Supreme Court was shocked to find that, despite its prior judgments deprecating practices, where criminal law was used as a tool for recovery of money, lower courts were still imposing conditions akin to recovery proceedings as part of bail orders.

The Supreme Court set aside the condition requiring the petitioner to pay 20% of the cheque amount, stating that it could not be sustained. However, it upheld the grant of bail with the other conditions imposed by the trial court, except for the one set aside. The special leave petition was disposed of in these terms, and all pending applications were also disposed of.

Anjali Kumari v. The State of Bihar and Another

SLP(Crl)6298/2024

Before the Supreme Court of India

Heard by Hon'ble Mr. Justice C T Ravikumar J & Hon'ble Mr. Justice Prashant Kumar Mishra J

Fact: Anjali Kumari, the petitioner, faced trial under Section 138 of the Negotiable Instruments Act, 1881, for issuing a dishonored cheque. She was initially granted anticipatory bail, but due to its violation, a non-bailable warrant was issued. The petitioner sought to recall the warrant and requested bail from the trial court. The trial court granted bail on the condition that she provide a bond of ₹20,000 with two sureties of the same amount and pay 20% of the cheque amount to the complainant on the next date.

Legal Issue : Whether the condition imposed by the trial court and upheld by the High Court, requiring the petitioner to pay 20% of the cheque amount as a precondition for bail, was legally sustainable.

Contention of the Parties :

Petitioner's Submission : The condition to pay 20% of the cheque amount was unjust and contrary to established legal principles, specifically citing the decision in "Ramesh Kumar vs. The State of NCT of Delhi" [2023 INSC 596]. It was contended that criminal proceedings should not be converted into mechanisms for monetary recovery.

Respondent's Submission: The condition was justified under the circumstances.

In financial transactions, a cheque serves as a vital instrument for accessing bank funds. Termed a 'bill of exchange,' it demands payment on demand and is drawn by a specified banker. The individual issuing the cheque is the 'drawer,' and the recipient is the 'drawee.' Simply put, a cheque facilitates legal withdrawal from the bank, requiring the drawee's name, date, amount, and the drawer's signature.

Cheque Bounce: Causes and Implications

In the era of online transactions, cheques remain relevant, especially in substantial transactions. However, several factors can lead to a cheque bounce, from insufficient funds and signature discrepancies to post-dated issues or improper handling. The consequences of a bounced cheque include legal notices and potential penalties.

Common Reasons for Cheque Bounce:

Insufficient Balance: Transaction exceeding current account balance.

Signature Mismatch: Discrepancies in the drawer's signature.

Expired Cheque: Depositing after the 3-month validity period.

Post-Dated Cheques: Depositing before the due date.

Incomplete or Damaged Cheques: Illegible details or damages.

Legal Implications and Notices

A bounced cheque triggers legal proceedings, typically initiated by a legal notice under Section 138 of the Negotiable Instruments Act, 1881. The notice must be sent within 30 days of the cheque return, providing a 15-day window for payment. Non-compliance may result in further legal actions.

Validity of a Cheque Bounce Notice:

Drawer Details: Name and address.

Compliance with Section 138: Mentioning legal basis.

Purpose of Cheque Issuance: For debt or liability.

Bank Presentation Details: Date, reason for return.

Timely Notice: Sent within 30 days via registered post.

Responding to a Cheque Bounce Notice

Receiving a notice necessitates a prompt response or payment within 15 days to avoid legal actions. The reply, preferably from a legal advisor, should address facts, allegations, and include a summary of defense without admitting guilt.

Legal Penalties and Cautions

The consequences of a cheque bounce range from fines and imprisonment to damage to credit scores. The severity varies based on factors like the cheque amount, repeated offenses, and compliance with legal proceedings. Efficient resolution is crucial to mitigating these penalties.

Legal Penalties Include:

Monetary Fine: Double the bounced cheque amount.

Imprisonment: Up to 2 years, often coupled with fines.

Credit Score Impact: Detrimental effect on CIBIL score.

Bank Consequences: Loss of chequebook privileges.

Current Scenario and Recommendations

Cheque bounce cases contribute significantly to the backlog of legal cases in India. Fast-track courts, amendments to existing laws, and improved banking practices are recommended for expeditious resolution. The need for precision when issuing cheques is emphasized to prevent inadvertent errors leading to legal repercussions.

“Cheque is bounced when a person (Drawer), to discharge his debts, draws a Cheque from his account, in the favour of another person (Payee) and the same Cheque is returned by the bank unpaid, either due to the reason of the inadequate amount or due to the reason that the Cheque demands an amount that is more than the  Drawer’s entitled limit.  

Notice under section 138 Negotiable Instrument Act

Negotiable Instruments are written statements implying payment of money, either on demand or within a particular time period with the drawer’s/payer’s name on it. In India, Negotiable Instruments Act, 1881 codifies the law governing transactions involving negotiable instruments. There are various negotiable instruments; such as cheques, promissory notes, bills of exchange, bank notes, etc.…