BOUNCING OF CHEQUE
- 2. if the cheque is returned on the ground of “closure of the account” If the cheque is returned on the grounds of insufficient balance. Return of cheque unpaid with the advice “account operation jointly, other Director’s signature required”, amounts to dishonour of the cheque within the meaning of sec. 138 . In such a case an action can be taken under section 138 only against the party who has signed the cheque.
- 3. Signature on cheque not matching with the signature in the record of the bank is treated as no different from “insufficient funds”. If a cheque is returned due to its payment being stopped by the drawer, it will be necessary to prove that the drawer had sufficient funds in his account at the time of return of cheque and the stoppage was for some other justifiable reason .
- 4. 1. A person must have drawn a cheque on a bank account maintained by him. 2. The cheque should have been issued in discharge, in whole or in part, of any debt or other liability. 3. The cheque has been presented to the bank within the period of its validity. 4. The cheque is returned by the bank unpaid because of funds insufficient.
- 5. 5. The payee makes a demand for the payment by giving a notice in writing,within 30 days of the receipt of information by him from the bank and the drawer fails to make payment of the said amount of money within 15 days of the receipt of the said notice. 6. Complaint is made within one month of the date on which the cause-of-action arises.
- 6. imprisonment up to two years or fine which may extend to twice the cheque amount or both.The offence is bailable , compoundable and non- cognizable.
- 7. 1. Every person at the time the offence was committed, was in charge of, and was responsible for the conduct of the business of the company is liable to be prosecuted. In other words, directors, secretary and officers of the company may be liable. 2. The company is also liable to be prosecuted. 3. If a person proves that the offence was committed without his knowledge or he exercised all due diligence to prevent the commission of such offence, he will escape prosecution. 4. A person nominated as a Director of a company by virtue of his holding any office or employment in the Central or State Government or a financial corporation owned or controlled by the Central Government or the State Government enjoys exemption from prosecution. 5. Company includes partnership firms.
- 8. Section 141 of the Act creates a vicarious liability. In criminal law, the general rule is against vicarious liability. Hence, section 141 of the Act is exceptional. It makes a person criminally liable for someone else’s actions. Often directors of an accused company take defense that the cheque related to a division / project of the company where they had no involvement or the cheque was issued by a Director without due authorization from the Board of Directors of the company. The Supreme Court has ruled that a holder of cheque cannot be expected to be aware of such matters which relate to “arrangements within the company in regard to its management, daily routine, etc.” As per the judgment of the Supreme Court, Directors of a company are prima facie in he position of being “in charge of affairs”.
- 9. BEFORE 1 AUGUST 2014 : The case was to filed in the court having jurisdiction over the bank to who`s account the cheque was issued. AFTER 1 AUGUST2O14 : The case is to be filed in the court having jurisdiction over the bank from who`s account the cheque was issued
- 10. Current situtation : AfterTHE NEGOTIABLE INSTRUMENT (AMENDMENT) ORDINANCE,2015 The case will be filed in the court having jurisdiction over the bank to who`s account the cheque was issued.
- 11. LEGAL AID
- 12. A Demand notice must be sent within 30 days of dishonour of cheque. The holder of cheque should file a criminal case in a court within 30 days from the expiry of notice period of 15 days.And on 15th day of given time period by notice , no payment has still been received . So now you have no more than 30 days within to file a complaint before Magistrate. The complaint will have to be filed at a court in the city of location of the bank where the cheque was presented. Complaint to be accompanied with affidavit and relevant documents in original.
- 13. The court will hear complainant issue summons under Sec. 138 and Sec. 141 of NI Act. Summons are sent and served through police station where accused is residing Statement of accused is recorded under section 313 of Cr.P.C. Accused will be asked to give reply to the questions and allegations against him Witnesses of accused to prove his innocence will be produced and the evidence will be recorded by the court.
- 14. Last stage is of arguments of advocates of the complainant and of the accused. After hearing final arguments, court will pass the judgment. In case the accused is acquitted, the matter ends. Bail application is submit by accused if he is convicted and pray for time to appeal to Sessions Court, but court will direct him to immediately deposit a fine as per judgement. The convict may appeal to Sessions Court within one month from the date of judgment of lower court. The dispute may go on from District and Sessions court to High Court and then to Supreme Court.
- 15. The matter can be settled at any time between the parties. In case of any such settlement, an application should be moved before the court to compound and close the case.