Facing a Bounced Cheque from a Client: What Steps Should I Take Next?

Dear All,

I have a recruitment placement company. I served one of our clients, and he gave us a cheque of Rs. 1 lac. However, that cheque bounced two times. I filed a case under section 138; however, nothing has been done yet. It has been over a month now, and I don't know what to do next. Please help me out.

Thank you.

If the terms and conditions were written and in pursuance of which they give you a cheque that got bounced, you can file a summary procedure suit under Order 37, Rule 2 CPC, in which a decree may be passed without leave to defend to the defendant.

Thanks,
Sushil

You should be asking this to your lawyer, or getting a better lawyer. However, with the condition of the courts as they are, you are unlikely to get immediate relief. In any case, I am sure the customer is going to raise objections, stating there is no doubt due and that there is a dispute, etc. The case will likely go on for a long time. A settlement with the client is more optimal.

Understanding Professional Expertise in Legal Matters

Generally, a criminal lawyer does not know civil remedies and vice versa. Similarly, one professional cannot suggest solutions regarding all other professional strategies. The querist was not finding a solution to his problem, which is why he approached CiteHR. Here, even individuals who have obtained legal advice yet approach CiteHR to double-check whether they have been properly advised. If I do not know the solution to a problem, I will refrain from answering the query.

Everyone knows it takes years to get relief out of Section 138, but his curiosity was to find an alternative quick remedy.

Thanks,
Sushil

False Hope and Legal Realities

Giving false hope to any poster is a bad thing, which you seem to like doing.  If you have a solution, please call the person and offer to do it for him. It just happens that I deal with law and lawyers extensively, and I know that it takes a very long time, a lot of money, and effort to get any real benefit or relief from Section 138 cases. From the original post, it's clear that the poster does not know that. Telling him it will get done quickly, which is not going to happen, is unfair.

Let's talk about this after you have helped him in getting his money back quickly. I will be more than happy to admit I was wrong.

Without knowing the content of Order 37 CPC and the conditions which I set out in the post, it is wrong to allege false hope. Please discuss with your lawyer how many cases have resulted in relief for the plaintiff without allowing the defendant to defend. If you want, I can provide you with citations. Please correct your statement.

Thanks,
Sushil

The company owner has declared his company as bankrupt. Whenever I ask the lawyer about it, he gives me a lot of different advice and forces me to pay more and more to keep the case going. I have heard a lot of things about cheque bounce, like the criminal will get a non-bailable warrant, but it is so difficult to get it done.

The Reality of Legal Proceedings

Unfortunately, that is the reality. Lawyers are aiming to extract as much money as possible from you. The courts are burdened with pending cases, which prolong even the simplest of matters. The police do not prioritize criminal cases under Section 138 as they have more pressing responsibilities. Section 138 has essentially reached the end of its useful life, but that is a separate story.

The Challenges of Section 138 Cases

Initiating a Section 138 case today offers minimal benefits. It often serves as a mere intimidation tactic where the opposing party seeks to avoid legal repercussions that could lead to imprisonment. In scenarios where the individual is indifferent, confident in their legal representation, or financially insolvent, there is little advantage. In such instances, the likelihood of recovering owed funds is slim.

Conducting a Cost-Benefit Analysis

Subsequently, the key consideration is conducting a cost-benefit analysis. Factors such as the scale of your business, its ability to endure a legal dispute with limited chances of recuperation, and the potential deterrent effect on other clients must be evaluated. This is a decision that cannot be resolved by a member of this forum online. You must make the determination yourself or seek guidance from your business consultant or Chartered Accountant.

Since there is an element of criminality in a cheque bounce case, people may think twice before allowing their cheques to bounce. Whether proceedings take time or not, there is no other option but to approach courts.

In the future, clients should be asked to pay as per work progress and not at the end of the job. Trusted dealings are becoming difficult at times due to such attitudes of people who benefit from delays in courts. This is another risk factor.