Cases of cheque bounce are not uncommon these days. In most of the transactions be it re-payment of loan or payment of fees for business purpose, payments are made by cheque. These cheques bearing large amounts sometimes remain unpaid and are returned by the bank on which they are drawn. For such cases punishment is provided by Section 138 of Negotiable Instruments Act, 1881 (hereinafter the Act). Offence of dishonour of cheque as mentioned u/s. 138 of the Act is considered as a criminal offence.
Section 138 says: 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 provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both.
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Vicarious Liability of Directors And Officers on Bouncing of Cheques:
Proper and smooth functioning of all business transactions, particularly of cheques as instruments primarily depends upon the integrity and honesty of the parties. Undoubtedly, dishonour of a cheque by the bank causes incalculable loss, injury and inconvenience to the payee and the entire credibility of the business transactions within and outside the country suffers a serious setback. A company being an artificial person created by law acts through its directors and officers who are responsible for the conduct of the business of the company. A criminal liability on account of dishonour of cheque primarily falls on the drawer company and is extended to officers of the Company. The normal rule in the cases involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in statutes extending liability to others. Section 141 of the Negotiable Instrument Act,1881 ("NI Act") regulates offences by companies.
E-Cheque System in India:
With amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to the Negotiable Instruments Act, 1881, ECT is now legalized. After initial implementation in the national capital region, it will spread gradually across the country, though the stipulated deadline for the phased commencement is December 31, 2006. In 2002, 'e' is for an e-cheque. An electronic cheque. A cheque that never expires. A cheque that never bounces whether because of insufficient balance in the account or a faulty signature. A cheque the creditor doesn't have to present physically at his bank. A cheque that enables outstation payments to be credited to the payee's account within 2-3 days flat. A cheque that transfers money at half the cost of a demand draft.
Rapid advances in technology and liberalisation of the Indian economy has created an ideal market for people trying to misuse existing brand values that have been cultivated and nurtured over a period of time. Counterfeiting is a serious crime. The law punishes counterfeiters and those who purchase counterfeit goods (with fines and legal actions). Counterfeiting is often associated with money laundering and exploitation of child labour. The first and foremost thing is know what is counterfeit
An Analysis Of Section 138 Of The Negotiable Instruments Act:
Advent of cheques in the market have given a new dimension to the commercial and corporate world, its time when people have preferred to carry and execute a small piece of paper called Cheque than carrying the currency worth the value of cheque. Dealings in cheques are vital and important not only for banking purposes but also for the commerce and industry and the economy of the country. But pursuant to the rise in dealings with cheques also rises the practice of giving cheques without any intention of honoring them. Before 1988 there being no effective legal provision to restrain people from issuing cheques without having sufficient funds in their account or any stringent provision ot punish them in the vent of such cheque not being honoured by their bankers and returned unpaid. Of course on dishonour of cheques there is a civil liability accrued. However in reality the processes to seek civil justice becomes notoriously dilatory and recover by way of a civil suit takes an inordinately long time. To ensure promptitude and remedy against defaulters and to ensure credibility of the holders of the negotiable instrument a criminal remedy of penalty was inserted in Negotiable Instruments Act, 1881 in form of the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 which were further modified by the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002. This article endeavours to elucidate the penal provision light of the amendments and the judicial interpretations
Virtual Cheques - A Distant Reality:
It was reported in Economic Times on the 20th February 2002 that the Reserve bank of India is setting up a task force to study and suggest an amendment to the Negotiable Instruments Act-1881 (NI Act) to make it feasible for issue of Negotiable Instruments on the Internet. The suitable amendment has also been passed and the required changes were also made under the Information Technology Act- 2000.
Stopped Payment of Cheque:
A stopped payment is usually requested if the cheque has been declared missing or lost. But many a times the drawer, to escape his debt or liability has used it as an instrument of deception. The 1988 amendment in Section 138 of Negotiable Instruments Act is also silent about Stopped Payment. The present paper reviews various judgments to see how this aspect is covered by the Courts and what tests have been laid down to make a stopped payment order punishable under section 138 of Negotiable Instruments Act and in that case Clause (c) should be interpreted.
Dishonour Of Cheque:
The main object of this piece of legislation is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Section 138, THE NEGOTIABLE INSTRUMENTS ACT 1881 is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. The dishonour of cheque is now a criminal offence punishable by imprisonment up to one year or with fine up to the double the amount of dishonored cheque or with both.
Fraud is any dishonest act and behaviour by which one person gains or intends to gain advantage over another person. Fraud causes loss to the victim directly or indirectly. Fraud has not been described or discussed clearly in The Indian Penal Code but sections dealing with cheating. concealment, forgery counterfeiting and breach of trust has been discusses which leads to the act of fraud. In Contractual term as described in the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a party to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter in to a contract.
Bankers Right to lien and set off:
A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor.
Foreign Currency Convertible Bonds:
India is the 7th largest and 2nd most populous country in the world. It is also the 4th largest economy in the world. A series of striving monetary reforms stimulating foreign investment has moved India firmly into the front-runners of the rapidly emerging markets at the international frontier. Foreign Exchange Management Act, 1999 (vFEMA), the successor of Foreign Exchange Regulation Act, 1973 (FERA) represents the evolution from 'regulation' to 'management' as FEMA propounds a more positive, flexible and contemporary approach towards the market trends. Post introduction of Foreign Exchange Management Act, 1999 into the market mechanism by the Government noteworthy developments have been brought into existence. With the opening up of the Indian economy there has been a considerable statistical enhancement and substantial improvement in the country's foreign exchange reserves, constructive growth in the foreign trade, and rationalization of various tariffs. In addition there has also been a significant liberalization of Indian investment abroad and relaxation of policies regulating foreign investments in India, increased access to external commercial borrowings by Indian companies and major participation by the foreign institutional investors in the domestic stock markets.
In recent years, and especially since the terrorist attacks of September 11, 2001, worldwide efforts to combat money laundering and the financing of terrorism have assumed heightened importance. Money laundering and the financing of terrorism are global problems that not only threaten security, but also compromise the stability, transparency and efficiency of financial systems, thus undermining economic prosperity
Bill of Lading:
A bill of lading serves as evidence for a contract of affreightment . This usually arises when a ship owner, or other person authorized to act on his behalf employs his vessel as a general ship by advertising that he is willing to accept cargo from people for a particular voyage.
However, it must be observed that all countries do not follow the same form of legislation globally. The broad categories may be stated as follows:
i. The Hague Rules.
ii. The Hague/Visby amendments.
iii. The Hamburg Code.
iv. Hybrid systems based on the Hague/Visby and Hamburg regimes
Power of Indian courts to issue Garnishee Order:
Garnishee means a judgment-debtor's debtor . He is a person or institution that is indebted to another whose property has been subject to garnishment. He is a person who is liable to pay a debt to a judgment debtor or to deliver any movable property to him. A third person or party in whose hands money is attached by process of court; so called, because he had garnishment or warning, not to pay the money to the defendant, but to appear and answer to the plaintiff creditor's suit.
Literally the word 'wager' means 'a bet' something stated to be lost or won on the result of a doubtful issue, and, therefore, wagering agreements are nothing but ordinary betting agreements. Section 30 of the Indian Contract Act talks about wagering agreements, which reads as agreements by way of wager are void. The section does not define 'wager.' Section 30 states.
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