A cheque is a bill of exchange drawn upon a specified banker. The cheques are usually used in almost all payment transaction such as payment of salary, payment of fee, bills etc. Mostly the cheque are given for reason of securing a proof of payment. When a cheque is dishonored, the payee may sue the defaulter only if the amount mentioned in the cheque is towards discharge of a debt or any other liability of the defaulter towards payee.
If the cheque is issued as a gift, or for an unlawful purpose, then the defaulter cannot be prosecuted.
Important points( Cheque Bounce Criterions & others): –
- The cheque should have been drawn on an account maintain by the drawer.
- The cheque should have been dishonored or returned because of insufficiency of funds in the drawer account to constitute an offence under section 138 of NI act.
- The cheque should have been issued towards discharge of a debt or any legal liability.
- A cheque is dishonored if the signature does not match with that of signature in record of the payee or due to over writing in the cheque or if the cheque is presented three months after the cheque was issued or if the account is closed or if it’s presented in wrong branch etc.
- As per section 35A of the banking Regulation Act 1949, RBI directed that with effect from 1 April 2012, Bank should not make payment of cheques if cheque is presented three months after the date when it was issued.
- Payment should be directed to a specified person.
- The cheque must carry the signature of the drawer and must indicate some specific amount of money
Statutory law References-
- Section 138 of Negotiable instrument act 1881
- Negotiable Instruments (Amendment) Bill, 2015
Process to file a complaint: –
If the cheque is dishonored
Step one. -A legal notice should be sent to the drawer within 15 days after cheque is bounced
Step two: – Filing a complaint. If the payment is not made within stipulated time period (usually
15 days) after the legal notice has been served, the payee may file a complaint under section 138 of NI act within 30 days after the expiry of Notice period
Territorial Jurisdiction for filing a complaint: –
As per Negotiable Instruments (Amendment) Bill, 2015 that offence of rejection/return of cheque under section 138 of NI Act will be tried by the only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated.
Once the complaint is filed before the competent court of law the court will issue the summons to opposite party and court will determine the matter.
Some important judgments: –
- Dashrath Rupsingh Rathod Vs. State of Maharashtra 2014(3) RCR(Criminal) 904
- Harshendra Kumar D.Vs. Rebatilata Koley Etc. 2011(1) RCR(Criminal) 887
- Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd 2001 (1) RCR(Criminal) 834
- Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. 2009 (1) RCR(Criminal) 458
- Immediately send the Legal notice to the drawer once the cheque gets bounced.
- If the drawer failed to make payment with in stipulated time period, file a complaint within 30 days of receipt of notice by the drawer.