Sir
A gives a cheque to B. the cheque bounces.. legal notice sent to A... On receipt of notice A approaches B and gives a fresh cheque for same amount and same cause of action and promises to honour the same on presentation... But the second cheque also bounced so B again sent legal notice to A... Notice not replied so A wants to file a complaint under sec.138 of Negotiable Instruments Act. Will it be a good case in law? Please advise... Thank you...
From India, Mumbai
A gives a cheque to B. the cheque bounces.. legal notice sent to A... On receipt of notice A approaches B and gives a fresh cheque for same amount and same cause of action and promises to honour the same on presentation... But the second cheque also bounced so B again sent legal notice to A... Notice not replied so A wants to file a complaint under sec.138 of Negotiable Instruments Act. Will it be a good case in law? Please advise... Thank you...
From India, Mumbai
Why will A want to file a complaint??
It should be B who may want to file a case for bounced cheques.
Yes,it gives rise to action under sec138 of NI act.
Extract of Sec 138
Section 138 in The Negotiable Instruments Act, 1881
18 [ 138 Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]
From India, Pune
3131It should be B who may want to file a case for bounced cheques.
Yes,it gives rise to action under sec138 of NI act.
Extract of Sec 138
Section 138 in The Negotiable Instruments Act, 1881
18 [ 138 Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—
(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Explanation.— For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]
From India, Pune
Yes, B can file a case against A under NIA 138. You have wrongly mentioned A instead of B.Though the cause was same, B has acquired the cheque with the intention to square up the debt.Here A seems to be a willful defaulter and in other words we may interpret that A is harassing B mentally and monetarily.
From India, Jamshedpur
From India, Jamshedpur
Hello Vadayar,
Like other members pointed-out, it's B who will be eligible to file the case U/S 138 of NIA.
However, NIA covers cheque bouncing due to insufficient funds.
Pl ascertain whether A has not issued Stop Payment instructions to his Bank for the cheque issued.....in which case, I think, the situation could get tricky.
Some people do adopt this route to buy time--though not morally/ethically correct.
Rgds,
TS
From India, Hyderabad
Like other members pointed-out, it's B who will be eligible to file the case U/S 138 of NIA.
However, NIA covers cheque bouncing due to insufficient funds.
Pl ascertain whether A has not issued Stop Payment instructions to his Bank for the cheque issued.....in which case, I think, the situation could get tricky.
Some people do adopt this route to buy time--though not morally/ethically correct.
Rgds,
TS
From India, Hyderabad
Most important part in the section is the payment by cheque 'in settlement of debt due or a liability'. In this case if you can prove that A owed money to B on account of some transaction which gives rise to the situation that A is obliged to pay to B (for example goods sold by B to A), then yes, there is a good case.
But if A is giving a simple advance to B (or a loan to B) and such cheque bounces, then there is no prior debt or obligation to pay and therefore there can not be any case against A.
From India, Pune
But if A is giving a simple advance to B (or a loan to B) and such cheque bounces, then there is no prior debt or obligation to pay and therefore there can not be any case against A.
From India, Pune
I agree with what is stated by seniors but I am looking it from different angle.The main essence or weight age should be given to whether the lender will be able to recover the money lend by him by filing case u/s 138 of NI Act? By filing case u/s 138 of NI Act lender may or may not recover his money. At the most Court may order for imprisonment for 3 or 6 months to defaulter but after punishment the main question of money will remain stand still. There are number of cases pending in various courts under NI Act. I think it will take 4 to 6 months to just appear on board. There are no fast track courts for disposing cases under NI Act. A thought must be given before filing case under NI Act. Issuing notice through lawyer is advisable for just threatening but seasoned/habituated defaulter may discard such notices. It is better for you to keep in touch with defaulter, keep him up date with your financial crisis and recover your money tactfully. Further after your service of notice to defaulter if he makes you part payment and you accepts it then after that you can't sue him u/s 138 of NI Act. Then in that case you shall have to obtain fresh cheque for balance amount. Please remember this is a vicious circle.
A. Prakash
From India, Halol
A. Prakash
From India, Halol
The query is based on incorrect information. In NI 138 cases, the complainant gets back the money if the charge is proved. Nowadays, the punishment awarded is nominal - till the raising of the court. However, this is a difficult task; being a criminal case, the charge needs to be proved beyond reasonable doubt.
It is true that disposal of the case takes much time, This is because of the wide spread abuse indulged by the so-called blade mafia and the advocates who are willing to be less than professional. The modus operandi is an open secret. Money is advanced at usurious rates against blank undated and unsigned cheques. The cheques are subsequently filled up and cases against a fancy sum under NI Act is filed even if the borrower has cleared his debt and interest! This type of cases constitute 90% of the pending cases. Real cases are few and far between.
From India, Kochi
It is true that disposal of the case takes much time, This is because of the wide spread abuse indulged by the so-called blade mafia and the advocates who are willing to be less than professional. The modus operandi is an open secret. Money is advanced at usurious rates against blank undated and unsigned cheques. The cheques are subsequently filled up and cases against a fancy sum under NI Act is filed even if the borrower has cleared his debt and interest! This type of cases constitute 90% of the pending cases. Real cases are few and far between.
From India, Kochi
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