Today the false and fake cases are more than the genuine ones. Most of the
Negotiable Instruments courts are flooded and burdened with cheque bounce cases
filed under Section 138 of the Negotiable Instruments Act 1881. The accused
often get victimized for issuing a security cheque to the complainant. In a
general chain of transactions, many company or lender keep a blank security
cheque in order to start the business or hand loan. Many of the cases in India
recorded that due to partial unpaid dues or EMI, many misuses those cheques and
file a false cheque bounce case.
Conditions precedent for constituting an offence under S. 138:There are numerous reasons which can be attributed to a bouncing of cheque:
- A person must have drawn a cheque for payment of money to another for the
discharge of any debt or other liability;
- The cheque has been presented to the bank within a period of three months from
the date on which it is drawn.
- That cheque is returned by the bank unpaid, either because insufficient
of funds or that it exceeds the amount arranged to be paid from that account
by an agreement made with the bank. Other numerous reasons are mismatch of signature,
overwriting, issue with the date of the cheques, payment stopped by account
holder, insolvency of customer, death of the customer etc.
- 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, [within 15 days] of the receipt of
information by him from the bank regarding the return of the cheque as unpaid;
- 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.
- The payee can file a complaint after laps of 15 days and within 30 days from the
date of delivery or the notice or return of the notice. Complaint is made within
one month of the date on which the cause of action arises.
Dealing with a fake or false cheque bounce case and Remedies:
Once the complaint is filed or the case has been booked for the Cheque Bounce
under Section 138 of the Negotiable Instruments Act 1881. Now the question
arises, how to deal with a false cheque bounce case. Basically, in India people
who are accused in a false cheque bounce case have to face legal issues. As they
don't know how to deal with it.
These are the important timely actions to be done for dealing with false cheque
- Procuring important documents
It is the most important thing that drawer must have a copy of all the
necessary documents as proof for example:
- Bank account statement.
- Bank draft cheque
- Copy of cheque. Etc.
It is useful because at the time of legal issues drawer has to show in court
that transaction has been made with a cheque issued by him.
- Information from your bank.
If you received any notice regarding false cheque bounce case, you need to
discuss about it with your bank immediately. Because you should know whether the
cheque you issued is bounced or not. Then the bank will tell you the cheque is
bounced or not and clarify the grounds for it.
- Counter Reply to Legal notice
Once you received a legal notice regarding your cheque bounce you have only 30
days to reply back to that notice. Hire a lawyer immediately who can send a
quick reply within the period of 30 days. And there is a lot of chances that
after sending legal notice your case has been dismissed.
- Book a Counter Case
Firstly in false cheque bounce case hire a lawyer to represent you in the court.
Now there are many remedies that you can use against the false case:
- Your lawyer can file a criminal case against the complainant for filing false
case against you.
- Your lawyer can also book Defamation case demanding for compensation that he or
she tried to defame you by mailing your reputation.
- Your lawyer can also claim for damages if you have suffered or have invested for
dealing with this false case.
Punishment For Cheque Bounce Under The NI Act
On receiving the complaint, along with an affidavit and relevant paper trail,
the court will issue summons and hear the matter. If you fail to take timely
actions then you may have to face the consequences. Let us understand the
provision of law.
In 1988, the Negotiable Instruments Act, 1881, was amended in the year 1988 and
Section 138 was inserted making the bouncing of cheques a punishable offence
amounting to a punishment of imprisonment of a term extendable to 2 years, or
with fine extendable to double the amount of the cheque or both. Even the banks
have rights to stop the cheque book facility and closed the account for repeat
offences of bounced cheque.
There is no limitation for awarding compensation. The main objective of
incorporating Section 138 in the act by an amendment in 1988 was to inculcate
faith in the efficacy of banking operations and credibility in transacting
business on negotiable instruments to prevent the issuance of dishonest cheques
by the drawer.
In case of Sujanti Suresh Kumar vs. Jagdeeshan
2002, Cr.L.J 1003 After the
amendment was made the Magistrate are empowered to impose fine exceeding
Rs.5000/- but prior to the amendment of 2002 a sentence of fine in excess of
Rs.5,000/- by First Class, Judicial Magistrate or Metropolitan Magistrate was
held to be unlawful. Hence there is no limit to the fine that can be imposed by
Mens rea [guilty state of mind] not required for offence under S. 138 of the
Negotiable Instruments Act 1881
In the case of Dashrath Rupsingh Rathod v. State of Maharashtra
, (2014) 9 SCC
129. The Hon'ble supreme court held that:
The objective of Parliament was to strengthen the use of cheques, distinct from
other negotiable instruments, as mercantile tender and therefore it became
essential for Section 138 to be freed from the requirement of proving mens rea
[guilty state of mind].
This has been achieved by deeming the commission of an offence dehors mens rea
not only under Section 138 but also by virtue of the succeeding two sections.
Section 139 carves out the presumption that the holder of a cheque has received
it for the discharge of any liability.
Section 140 clarifies that it will not be available as a defence to the drawer
that he had no reason to believe, when he issued the cheque, that it would be
In the matter Raj Kumar Khurana Vs.State of (NCT of Delhi) and
2009((2))ALT(Cri)323, the Hon'ble apex court held that return of a cheque by
the bank on the ground that it was reported lost by the drawer would not attract
the penal provision .The court observed the parameters for invoking the
provisions of Section 138 of the Act, thus, being limited, we are of the opinion
that refusal on the part of the bank to honour the cheque would not bring the
matter within the mischief of the provisions of Section 138 of the Act.
The court while exercising its jurisdiction for taking cognizance of an offence
under Section 138 of the Act was required to consider only the allegations made
in the complaint petition and the evidence of the complainant and his witnesses,
It could not have taken into consideration the result of the complaint petition
filed by the respondent No. 2 or the closer report filed by the Superintendent
of Police in the First Information Report lodged by the appellant against him
and the Hon'ble court held the complaint not maintainable.
In the matter Vinod Shivappa v. Nanda Belliappa
, MANU/SC/8187/2006 : (2006) 6
SCC 456 the Hon'ble court held that there is good authority to support the
proposition that once the complainant, the payee of the cheque, issues notice to
the drawer of the cheque, the cause of action to file a complaint arises on the
expiry of the period prescribed for payment by the drawer of the cheque.
If he does not file a complaint within one month of the date on which the cause
of action arises under Clause (c) of the proviso to Section 138 of the Act, his
complaint gets barred by time.
In the matter MJ Joseph versus Gladis Sasi on July 2010 of Kerala High Court, it
was held that the presumption under Section 118 and Section 139 of the
Negotiable Instrument Act can be drawn only when the execution of the cheque is
admitted or proved.
The admission of signature in a blank cheque is not admission of execution of
the cheque. The performance of the channel was not established in compliance
with Section 67 of the Indian Evidence Act. The accused has been acquitted by
Written By: Prime Legal Law Firm
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