Hi Friends,
I am a new joiner and I don't know how to post questions and all, so please help me with this. I also have a query regarding section 138 of the N.I. Act - what is the time limit for filing a complaint to the magistrate if one fails to pay the money within 15 days of receiving a notice under section 138 of the N.I. Act?
Does the Limitation Act apply in this case? Can we file a complaint within 1 year from the date when the 15 days of receipt of notice by the drawer have expired?
Thanks,
Sheetal Saluja
From India, Delhi
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I am a new joiner and I don't know how to post questions and all, so please help me with this. I also have a query regarding section 138 of the N.I. Act - what is the time limit for filing a complaint to the magistrate if one fails to pay the money within 15 days of receiving a notice under section 138 of the N.I. Act?
Does the Limitation Act apply in this case? Can we file a complaint within 1 year from the date when the 15 days of receipt of notice by the drawer have expired?
Thanks,
Sheetal Saluja
From India, Delhi
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Hi Sheetal,
Cheque bouncing is made punishable as an offense under the Negotiable Instrument Act. The drawer can be awarded two years of imprisonment, and the fine may extend to twice the amount of the cheque or both. The following are the essentials of Section 138 for making the dishonor of a cheque an offense:
1. Cheque should have been issued for the discharge, in whole or part, of any debt or other liability.
2. The cheque should have been presented within a period of six months or within the period of its validity, whichever is earlier. Note: Cheque may be presented any number of times for collection within its validity.
3. The payee or the holder in due course should have issued a notice in writing to the drawer within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
4. After the receipt of the said notice by the payee or the holder in due course, the drawer should have failed to pay the cheque amount within fifteen days of the receipt of the said notice. Note: Notice of dishonor is unnecessary when the party entitled to notice cannot, after due search, be found (Sec.98).
5. On non-payment of the amount due on a dishonored cheque within fifteen days of the receipt of notice by the drawer, the complaint should have been filed within one month from the date of expiry of the grace time of fifteen days, before a Metropolitan Magistrate not below the rank of a Judicial Magistrate of the First Class. The court may take cognizance of a complaint after the prescribed period if the complaint satisfies the court that he had sufficient cause for not making the complaint within such a period.
6. The offense under this Act is compoundable.
Regards,
Neeraj K. Singh
From India, Mumbai
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Cheque bouncing is made punishable as an offense under the Negotiable Instrument Act. The drawer can be awarded two years of imprisonment, and the fine may extend to twice the amount of the cheque or both. The following are the essentials of Section 138 for making the dishonor of a cheque an offense:
1. Cheque should have been issued for the discharge, in whole or part, of any debt or other liability.
2. The cheque should have been presented within a period of six months or within the period of its validity, whichever is earlier. Note: Cheque may be presented any number of times for collection within its validity.
3. The payee or the holder in due course should have issued a notice in writing to the drawer within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.
4. After the receipt of the said notice by the payee or the holder in due course, the drawer should have failed to pay the cheque amount within fifteen days of the receipt of the said notice. Note: Notice of dishonor is unnecessary when the party entitled to notice cannot, after due search, be found (Sec.98).
5. On non-payment of the amount due on a dishonored cheque within fifteen days of the receipt of notice by the drawer, the complaint should have been filed within one month from the date of expiry of the grace time of fifteen days, before a Metropolitan Magistrate not below the rank of a Judicial Magistrate of the First Class. The court may take cognizance of a complaint after the prescribed period if the complaint satisfies the court that he had sufficient cause for not making the complaint within such a period.
6. The offense under this Act is compoundable.
Regards,
Neeraj K. Singh
From India, Mumbai
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Thank you so much, Neeraj, for the information!
However, could you please tell me which part of the section states that the complaint should be filed within 30 days of the expiry of the grace period? To my knowledge, it is not provided in the section. If nothing is specified in the section, then the limitation period of one year from the date of the expiry of the grace period would apply. Could you please clarify?
Thanks
From India, Delhi
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However, could you please tell me which part of the section states that the complaint should be filed within 30 days of the expiry of the grace period? To my knowledge, it is not provided in the section. If nothing is specified in the section, then the limitation period of one year from the date of the expiry of the grace period would apply. Could you please clarify?
Thanks
From India, Delhi
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Hi Sheetal,
Section 142 of the Negotiable Instruments Act, 1881 (Cognizance of Offences), clauses (a) and (b) state that:
(a) No court shall take cognizance of any offense punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque.
(b) Such complaint is made within one month of the date on which the cause of action arises under clause (c) of the provision to section 138.
Regards,
Neeraj K. Singh
From India, Mumbai
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Section 142 of the Negotiable Instruments Act, 1881 (Cognizance of Offences), clauses (a) and (b) state that:
(a) No court shall take cognizance of any offense punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque.
(b) Such complaint is made within one month of the date on which the cause of action arises under clause (c) of the provision to section 138.
Regards,
Neeraj K. Singh
From India, Mumbai
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Dear Sheetal,
I would suggest before taking legal action, you must communicate in the below format:
"Dear Sir,
We regret to inform you that your Cheque No. 1111111, Dt 12-02-09, Rs XYZ against payment of our outstanding has been returned unpaid from the banker for the reason "INSUFFICIENT FUNDS/stopped by drawer" vide dishonor advice dated.
"In the event of the cheque being dishonored for any reason whatsoever, a demand draft will be arranged within 48 hours of the cheque being dishonored. You are also liable to pay the full bank commission charges on any dishonored document in addition to interest, freight cost of dispatch, and rebooking of goods."
Further, as per the Supreme Court's latest interpretation of Section 138 of the Negotiable Instrument Act, 1861, "bouncing of cheques reserves the right of other legal remedies both civil and criminal, it being an offense to the drawer."
In view of the above, you are hereby requested to send us a Demand draft for Rs. XYZ plus against RS ABC bank charges plus interest at 2% per month on such an amount for delayed payment.
If you have already sent the said payment, please ignore this letter; otherwise, treat this as a legal notice under Section 138 of the Negotiable Instrument Act."
Please note the expiry date is only 6 months from the date of issue.
From India, Delhi
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59I would suggest before taking legal action, you must communicate in the below format:
"Dear Sir,
We regret to inform you that your Cheque No. 1111111, Dt 12-02-09, Rs XYZ against payment of our outstanding has been returned unpaid from the banker for the reason "INSUFFICIENT FUNDS/stopped by drawer" vide dishonor advice dated.
"In the event of the cheque being dishonored for any reason whatsoever, a demand draft will be arranged within 48 hours of the cheque being dishonored. You are also liable to pay the full bank commission charges on any dishonored document in addition to interest, freight cost of dispatch, and rebooking of goods."
Further, as per the Supreme Court's latest interpretation of Section 138 of the Negotiable Instrument Act, 1861, "bouncing of cheques reserves the right of other legal remedies both civil and criminal, it being an offense to the drawer."
In view of the above, you are hereby requested to send us a Demand draft for Rs. XYZ plus against RS ABC bank charges plus interest at 2% per month on such an amount for delayed payment.
If you have already sent the said payment, please ignore this letter; otherwise, treat this as a legal notice under Section 138 of the Negotiable Instrument Act."
Please note the expiry date is only 6 months from the date of issue.
From India, Delhi
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Negotiable Instruments Act-WHAT MATTERS IF A CHEQUE IS DISHONOURED.doc x
AP - HOLIDAYS UNDER NEGOTIABLE INSTRUMENTS ACT, 1881 FOR THE YEAR 2020.pdf