STEPS
TO BE FOLLOWED IN A CHEQUE BOUNCE MATTERS – SECTION 138 OF THE NEGOTIABLE
INSTRUMENTS ACT
A great hardship is caused to a person if a
cheque issued in his favour is dishonoured. To discourage cheque dishonor, the
cheque bouncing act is an offence and punishable. The complainant to bring an
effective action should ensure satisfactory compliance of the law.
In India the cheque dishonor is governed under
the Negotiable Instruments Act, 1881.
Careful reading of the Section 138 of the
Negotiable Instruments Act, 1881 provides the steps that are required to be
followed with regard to the dishonor of the cheque for insufficiency, etc., of
funds in the account.
Below is a simple and a ready note of the steps
(compliance) to be followed in a dishonor of the cheque as provided under Section
138 of the Negotiable Instrument Act, 1881:
1. The cheque must have been presented to the
Drawee-Bank within 3 months from the date on which it is drawn, or within the
period of its validity, whichever is earlier.
2. Within 30 days of receipt of information from
the Bank about dishonour of the cheque, the payee should have made a written
demand on the drawer for payment of the amount of money represented by the
cheque.
3. The Drawer gets 15 days from the receipt of
notice to make the payment to avoid liability.
4. A written Complaint should be made to the
Metropolitan or a first class judicial magistrate by the payee within 1 month
from the date on the expiry of 15 days time given to the drawer to discharge
his liability.
5. The Complaint in writing is to be made by the
Payee or holder in due course of the cheque. [The Supreme Court in (1998) 1 SCC
687 held that when the Complainant is a body corporate, it is the de jure
Complainant and it is necessary to associate a de facto (real person)
Complainant to represent the former in Court proceedings and has to be examined
as the Complainant.]
6. The Hon’ble Court will take cognizance of the
Complaint on the basis of the contents of the complaint and proceeds further to
examine the Complainant.
7. The Hon’ble Court will issue Notice/Summons to
the accused.
8. The Hon’ble Court will examine the Complainant
and the Accused [Either party to lead evidence with original documents to prove
their case].
9. The Hon’ble Court on hearing the parties will
pass final order/judgment.
Prepared & Copyright Hemanth S, HEMANTH & ASSOCIATES; for
suggestion and information please email legal@hemanthassociates.com
