ITS A CRIMINAL OFFENCE COMMITTED BY THE DRAWER OF THE CHEQUE!
Once you get confirmed that you will not realise/receive the money from the Drawer you can proceed with legal proceedings initiating a criminal proceedings against the Drawer.
Pre-requisites to file a Complaint:
1. There should be a Cheque issued in discharge of an enforceable debt or liability.
2. The Cheque should have been presented to the Bank within six months from the date on which it is drawn.
3. The Cheque should have been returned unpaid (DISHONOURED) for insufficiency of funds or due to the Cheque Amount exceeding the amount arranged to be paid to the Account with the Bank or as per the stop payment instructions issued by the drawer to the Bank.
4. A Demand should have been made for the payment of the amount of the Cheque by a written notice to the drawer within thirty days from the receipt of information by the payee or holder in due course from the Bank regarding the unpaid Cheque.
5. The drawer of the cheque should have failed to make the payment of the money to the payee or the holder in due course within fifteen days of the receipt of the notice demanding payment.
Section 138 of Negotiable Instruments Act says :
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 exceeding 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 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.
The Provisions were incorporated by Legislature with a view to encourage the culture of use of Cheque’s and enhancing the credibility of the Instrument.
Time frame prescribed to file a complaint under Section 138 NI Act:
1. The period for sending notice demanding payment is to be reckoned from the date of receipt of Intimation of Dishonour on the last presentation of the Cheque to the Bank i.e.- within 30 days from the date of receipt of Intimation of dishonour from the bank.
2. The payee or the holder in due course who issued a notice, on the failure of the drawer to make payment has to wait for fifteen days from the date of receipt of notice by the drawer. If Cheque amount is not paid within this period – On the 16th day, the right to file Complaint arises for the Complainant, but within one month from the said 16th day complaint has to be filed.
Holder of a Dishonoured Cheque:
1. It shall be presumed that holder of Cheque received it for discharge of debt/liability unless the contrary is proved. – Section 139 of N.I.Act
2. It shall not be defence in the Offence that drawer had no reason to believe when he issued the Cheque that it may be dishonoured – Section 140 – N.I. Act.
3. If person committing Offence u/s 138 is Company, every person who at the time when the Offence was committed was in charge of/responsible for conduct of business as well as the Company shall be deemed to be guilty of Offence and shall be punished accordingly.
Section 141 – N.I. Act
The Complaint cannot be quashed on the ground that the accused persons at the time of offence were not in charge of or responsible to the Company for its conduct.
4. When a notice is returned by the sender as unclaimed such date would be the commencing date in reckoning the period of 15 days.
5. An Offence in terms of Section 138 of the Act is committed even if the cheque is returned on the ground of closure of Account.
6. There is no restriction regarding the number of times a Cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing Complaint.
7. No Court shall take cognizance (take into account/register) u/s 138 except on written Complaint made by Payee or holder in due course, such Complaint is to be made within prescribed time to a Metropolitan Magistrate or judicial Magistrate of First Class – Section 142 – N.I.Act
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