Cheque Bounce Case procedure comes under Section 138 of the Negotiable Instruments Act, 1881. Cheque bounce case is technical. There are so many technicalities involved in the law. Cheque bounce case law and procedure is as under. Cheque bounce case law and procedure
So, now I will explain the law of Section 138 of the Negotiable Instruments Act in simple words. It says dishonour of cheque for insufficiency of funds in the account. When any person maintains a bank account. And he draws a cheque from his account for payment of the amount of money to another person for the discharge of whole or part of any debt or liability.
And when such cheque returned unpaid for the reason of insufficient funds. In that case, such a person has committed an offence u/s 138 of Negotiable Instruments Act.
Punishment in cheque bounce case (138 NI Act)
If a person can prove the case of cheque bounce. In that case, the court may pronounce punishment of imprisonment for a term which may extend to two years. Or with fine which may extend to double the amount of cheque or with.
The procedure of cheque bounce case law and procedure -When to present the cheque
The cheque has to present within six months from the date the cheque has drawn. But now the law has changed. Because the validity of cheque has reduced to three months. So, now the cheque has to present in the bank within three months from the date of the cheque has drawn.
When to send the demand notice
The payee or holder in due course of the cheque has to send demand notice for the payment of the said cheque amount. The said demand notice has to sent within 3o days from the receipt of information from the bank regarding return cheque unpaid. Defective notice may damage the case of the Complainant.
When to file the cheque bounce case
When the drawer received the notice and he fails to make payment of the cheque amount within 15 from the receipt of the notice. And payee or holder in due course shall file a complaint of dishonour cheque within thirty days after completion of fifteen days period. Debt or other liability means legally enforceable liability.
How to deal with the case by the drawer (Accused)
When the drawer (Accused) came to know that the payee (Complainant) has sent the false notice. In that case, the Accused has to reply to the notice immediately. He has to mention the facts of the case and the complainant has misused the cheque.
And even though, the payee or holder in due course (the complainant) has filed a case against the drawer, in that case, the first court verify the complainant on oath. And if the complainant full fill all requirement condition of section 138 of the N I Act, then court issue summons to the Accused.
After receiving the summons the accused has to appear before the Hon’ble Court. And he has to take bail by depositing a certain amount in the court. Then court shall record the plea of Accused. While recording the plea court ask to accused whether he pleads guilty or not. If the accused not pleaded guilty then the case shall proceed for trial.
Cheque bounce case law and procedure – Rebuttal of presumptions
It is presumed under the law that when the complainant receives the cheque that is for the discharge whole or part of any debt or other liability. But section 139 of the Negotiable Instrument Act gives the accused a chance to rebut the presumption. So during the cross-examination of the Complainant, the accused has to bring facts on the record.
How to cross-examine the complainant (Cheque bounce case law and procedure)
Accused shall keep in mind the following points during the cross-examination of the Complainant.
- First of all the accused has to check whether the complainant has fulfilled all the conditions.
- Accused has to see whether the disputed cheque has issued by the drawer for the discharge of legally enforceable debt.
- It needs to see whether disputed cheque was issued with signature only and other content was blank.
- Importantly accused has to check the transaction or agreement between the accused and the complainant is legal in the eyes of law.
- Whether the complainant is capable to provide any hand loan if the transaction is for hand loan.
- Accused has to check the complainant has shown the transaction in his income tax return.
- It is also important and needs to check that Complainant has the proper authority to file a complaint.
- Is there any documentary evidence to prove the transaction or agreement.
- If money is given by way of loan, then it is necessary to check whether the complainant is having proper money lending license.
Amendment in Negotiable Instrument Act
The Negotiable Instrument Act has recently amended and it is called The Negotiable Instrument (Amendment) Act 2018. Section 143A has inserted by the new amendment. And as per this section, after framing of charge accused shall pay an interim compensation of not more than 20% of the cheque amount to the complainant. And section 148 has inserted. As per section 148, in an appeal filed against conviction by the Accused, the appellate court may direct the accused to deposit a minimum of 20% of the fine or compensation filed appeal against the conviction.
Case law on the filing of the complaint – Dashrath Roopsingh Rathod Vs. Stae of Maharashtra & Anr.
In this case, the Supreme Court has changed the basic conditions under Section 138 of the Negotiable Instruments Act regarding the filing of a complaint under 138 of Negotiable Instrument Act
Earlier, a case under Section 138 of the N I Act filed at his place of business or residence of the holder in due course. But, Hon’ble Supreme Court ruled that the case has to be initiated at the place where the branch of the bank on which the cheque was drawn is located.
That the application of this judgment is retrospective. This means lots of cases pending in various courts across the country would witness a transfer.
Case law on rebuttal of presumption – Basalingappa Vs. Mudibasappa (2019 ALL SCR (Cri) 901)
Presumption of liability. Rebuttal of presumption by questioning financial capacity. The complainant alleged that the disputed cheque has issued by accused of the repayment of a loan of Rupees Six Lakhs. However, Accused put a suggestion to him that loan of only Rs.25000/- has taken. And Complainant answered to him that he does not remember. Complainant admitted cross-examination that he has retired in 1997 and he has received only Rs.8 lakh as retiral benefit. He is unable to show any document regarding how he spent/invested about Rs.18 lakh between the years 2009-2011.
That the accused has raised probable defence by questioning the financial capacity of the complainant. Besides, the complainant has not mentioned the date of the alleged loan in the complaint. Besides, he stated in cross-examination that it was stated to be around in Nov. 2011. But, he could not explain as to why cheque in question bears date as 27.2.2012. Complainant has never stated that a post-dated cheque was issued to Accused. Complainant has failed to establish his case. Therefore, the accused acquitted.
So, here I have explained some important aspects of the negotiable instrument act.
Here is the full act of negotiable instrument act
Also, read Bail and law of bail