What is the frame in which a cheque bounce case is resolved in India under section 138?

What is the frame in which a cheque bounce case is resolved in India under section 138?

What is a check?

A “cheque” is a bill of exchange drawn on a  specified banker and not expressed to be payable otherwise than on demand and it includes the  electronic image of a truncated cheque and a cheque in the electronic form.

What is a Bounced Check?

A bounced check is slang for a check that cannot be processed because the account holder has nonsufficient funds. Banks return, or bounce, these checks, also known as rubber checks, rather than honoring them, and banks charge the check writers NSF fees. Passing bad checks can be illegal, and the crime can range from a misdemeanor to a felony, depending on the amount and whether the activity involved crossing state lines.

Many times, bad checks are written inadvertently by people who simply are unaware that their bank balances are too low. To avoid bouncing checks, some consumers use overdraft protection or attach a line of credit to their checking accounts.

What Happens When a Check Bounces?

Bank fees are just one part of bouncing a check. In many cases, the payee also assesses a charge. For example, if someone writes a check to the grocery store and the check bounces, the grocery store may reserve the right to redeposit the check along with a bounced check fee.

Section 138 Dishonour of cheque for insufficiency, etc., of funds in the account:

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  exceeds  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 provision of  this  Act, be punished with imprisonment for a term which may extend to  two  years, or with fine which may extend to twice the amount of the cheque,  or with both: 

Provided that nothing contained in this section  shall apply unless-

(a) the  cheque  has been, presented to the bank  within  a period  of six months from the date on which it is  drawn  or  within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course. of the cheque as the  case may be, makes a demand  for  the  payment  of  the said  amount of money by giving a notice, in writing,  to
the  drawer  of the cheque, within thirty days of the receipt  of information by him from the bank regarding the return of  the cheque as unpaid; and

(c) the drawer of such cheque  fails to make the payment of the said amount of money to the payee or, as the case may be, to  the  holder in due course of the cheque,  within  fifteen days of the receipt of the said notice.

Explanation.-For  the  purposes of this section, “debt  or  other  liability” means a legally enforceable debt or other liability.

INGREDIENTS OF OFFENCE UNDER SECTION 138

*The cheque should have been issued for the discharge , in whole or part, of any debt or other liability.

*The cheque should have been presented within a period of six months or within its validity period whichever is earlier.

*The payee or holder in due course should have issued a notice in writing to the drawer within 30 days of the receipt of information by him from the Bank regarding the return of the cheque as unpaid.

*After receipt of the said notice from the holder in due course, the drawer should have failed to pay the cheque within 15 days of receipt of the said notice.

What are the Documents required for filing Complaint under section 138 of Negotiable Instruments Act 1881?

The following basic documents are necessary to file  Complaint under section 138 of Negotiable Instruments Act.

1.           Memo of Parties

2.           Complaint U/S 138 Negotiable Instruments Act, 1881

3.           Pre-Summoning Evidence/ By Way Of Affidavit (in some courts)

4.           List of Witnesses

5.           List of Documents with Documents

6.          Vakalatnama in favour of the Counsel

When a cheque is returned unpaid one should not wait to get the payment according to the convenience of the party issued the cheque. If necessary formalities are not completed within the time limit, the chances of recovering the amount will cease. Following are the procedure to send notice to the debtor and file complaint with court.

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