Description
This is a ppt about the dishonour of cheque under section 138.
Dishonour of Cheque
• • • A cheque is dishonoured when the holder is refused payment. The bank on whom the cheque is drawn would give a “noting”. That is, reason for the dishonour of cheque. This becomes the proof of the fact that the cheque was presented and dishonoured. The drawer of the cheque and all subsequent endorsers, become liable to pay the holder in due course, severally and jointly. The holder must give formal notice of dishonour to all parties against whom he intends to proceed. The notice can be oral or written. Notice must expressly and clearly inform that the cheque has been dishonoured. Notice must be given within a reasonable time after the dishonour. If a notice of dishonour is not sent by the holder, the person is discharged from his obligation under the instrument.
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Section 138
• section 138 creates statutory offence in the matter of dishonour of cheques on the ground of insufficiency of funds in the account maintained by a person with the banker. • Normally in criminal law existence of guilty intent is an essential ingredient of a crime. • However the Legislature can always create an offence of absolute liability or strict liability where „mens rea? is not at all necessary. • creation of the strict liability is an effective measure by encouraging greater vigilance to prevent callous attitude of drawers of cheques in discharge of debts.
Parallel proceedings in case of dishonour of a Cheque
• On the dishonour of a cheque, one can file a suit for recovery of the cheque amount along with the cost & interest under order XXXVII of Code of Civil Procedure 1908 ( which is a summary procedure and) can also file a Criminal Complaint u/s 138 of Negotiable Instrument Act for punishment to the signatory of the cheque for having committed an offence. • However, before filing the said complaint a statutory notice is liable to be given to the other party
Dishonour of a cheque by a company
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On the dishonour of cheque by the company one can file a suit for recovery of the amount under Order XXXVII of CPC. If there is no notice to the company bringing to their knowledge the dishonour of cheques and the life of the cheque is still valid which is usually six months from the date of issue. One can present the cheque again and on receipt of the information about the dishonour of the cheque you immediately issue notice within 15 days from the receipt of the information of dishonour of cheque to the company. If the company does not pay the amount within 15 days from the receipt of the notice, one can file complaint under Section 138 of the Negotiatble Instrument Act. The said complaint is to be filed within one month on the expiry of 15 days period of notice
Conditions to be satisfied to initiate proceedings under section 138
• Existence of a live account • Issue of Cheque in discharge of a debt or liability • Presentation of the cheque within six months or within the period of its validity • Return of the cheque unpaid for reason of insufficiency of funds • Issue of the notice of dishonour demanding payment within thirty days of receipt of information as to dishonour of the cheque. • Failure of the drawer to make the payment within fifteen days of the receipt of the payment
Notice of Dishonour of a Cheque
• • • Notice of dishonor may be given to a duly authorized agent of the person to whom it is required to be given. where he has died, to his legal representative where he has been declared an insolvent, to his assignee, maybe oral or written, may, if written, be sent by post, and may be in any form, but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonored, and in what way, and that he will be held liable thereon, it must be given within a reasonable time after dishonor, at the place of business or ( in case such party has no place of business) at the residence of the party for whom it is intended. It means, its to be given on the next day after the dishonour of cheque. IF the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid.
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1988 – Sections 138 to 142
• • It was only in 1988 that a need to revise the law was felt. Therefore, on the suggestions of the Law Commission, The Banking, Public Financial Institutions and Negotiable Instruments Law (Amendment) Act, 1988 was passed by the Parliament. This Act introduced a new chapter, namely Chapter XVII (Section 138 - Section 142), to the Negotiable Instrument Act 1881. The Chapter is a complete code in itself with respect to the dishonour of cheques and deals with various aspects of dishonour of cheques. Though this chapter was enacted with the ultimate intention to provide quick and effective remedy, it has failed in its essential purpose. According to a report published in Mumbai, nearly 70,000 cases worth Rs. 6,000/- crores are pending. Further, the number of cases that have added to the backlog far exceeds the number of cases that have been disposed of. This is hazardous to the economy of the country.
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Amendment in 2 0 0 2
• • • • The main object of the Bill was to lay down provisions for the speedy disposal of cheque bouncing cases and to make the punishment stricter. The definition of Cheques Section 13 of the Information Technology Act is amended to include electronic cheques. The punishment, under section 138 of the Negotiable Instrument Act, 1881, is increased from one year to two years; Section 143 has been inserted so that courts are given power to try the offence of cheque bouncing summarily. Through this section, the courts are also directed to conduct the trial as expeditiously as possible. Courts must also make the effort to conclude the trial within six months from the date of filing of the complaint.
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doc_704759272.ppt
This is a ppt about the dishonour of cheque under section 138.
Dishonour of Cheque
• • • A cheque is dishonoured when the holder is refused payment. The bank on whom the cheque is drawn would give a “noting”. That is, reason for the dishonour of cheque. This becomes the proof of the fact that the cheque was presented and dishonoured. The drawer of the cheque and all subsequent endorsers, become liable to pay the holder in due course, severally and jointly. The holder must give formal notice of dishonour to all parties against whom he intends to proceed. The notice can be oral or written. Notice must expressly and clearly inform that the cheque has been dishonoured. Notice must be given within a reasonable time after the dishonour. If a notice of dishonour is not sent by the holder, the person is discharged from his obligation under the instrument.
•
• •
•
•
Section 138
• section 138 creates statutory offence in the matter of dishonour of cheques on the ground of insufficiency of funds in the account maintained by a person with the banker. • Normally in criminal law existence of guilty intent is an essential ingredient of a crime. • However the Legislature can always create an offence of absolute liability or strict liability where „mens rea? is not at all necessary. • creation of the strict liability is an effective measure by encouraging greater vigilance to prevent callous attitude of drawers of cheques in discharge of debts.
Parallel proceedings in case of dishonour of a Cheque
• On the dishonour of a cheque, one can file a suit for recovery of the cheque amount along with the cost & interest under order XXXVII of Code of Civil Procedure 1908 ( which is a summary procedure and) can also file a Criminal Complaint u/s 138 of Negotiable Instrument Act for punishment to the signatory of the cheque for having committed an offence. • However, before filing the said complaint a statutory notice is liable to be given to the other party
Dishonour of a cheque by a company
•
•
•
•
On the dishonour of cheque by the company one can file a suit for recovery of the amount under Order XXXVII of CPC. If there is no notice to the company bringing to their knowledge the dishonour of cheques and the life of the cheque is still valid which is usually six months from the date of issue. One can present the cheque again and on receipt of the information about the dishonour of the cheque you immediately issue notice within 15 days from the receipt of the information of dishonour of cheque to the company. If the company does not pay the amount within 15 days from the receipt of the notice, one can file complaint under Section 138 of the Negotiatble Instrument Act. The said complaint is to be filed within one month on the expiry of 15 days period of notice
Conditions to be satisfied to initiate proceedings under section 138
• Existence of a live account • Issue of Cheque in discharge of a debt or liability • Presentation of the cheque within six months or within the period of its validity • Return of the cheque unpaid for reason of insufficiency of funds • Issue of the notice of dishonour demanding payment within thirty days of receipt of information as to dishonour of the cheque. • Failure of the drawer to make the payment within fifteen days of the receipt of the payment
Notice of Dishonour of a Cheque
• • • Notice of dishonor may be given to a duly authorized agent of the person to whom it is required to be given. where he has died, to his legal representative where he has been declared an insolvent, to his assignee, maybe oral or written, may, if written, be sent by post, and may be in any form, but it must inform the party to whom it is given, either in express terms or by reasonable intendment that the instrument has been dishonored, and in what way, and that he will be held liable thereon, it must be given within a reasonable time after dishonor, at the place of business or ( in case such party has no place of business) at the residence of the party for whom it is intended. It means, its to be given on the next day after the dishonour of cheque. IF the notice is duly directed and sent by post and miscarries, such miscarriage does not render the notice invalid.
•
•
1988 – Sections 138 to 142
• • It was only in 1988 that a need to revise the law was felt. Therefore, on the suggestions of the Law Commission, The Banking, Public Financial Institutions and Negotiable Instruments Law (Amendment) Act, 1988 was passed by the Parliament. This Act introduced a new chapter, namely Chapter XVII (Section 138 - Section 142), to the Negotiable Instrument Act 1881. The Chapter is a complete code in itself with respect to the dishonour of cheques and deals with various aspects of dishonour of cheques. Though this chapter was enacted with the ultimate intention to provide quick and effective remedy, it has failed in its essential purpose. According to a report published in Mumbai, nearly 70,000 cases worth Rs. 6,000/- crores are pending. Further, the number of cases that have added to the backlog far exceeds the number of cases that have been disposed of. This is hazardous to the economy of the country.
• •
•
Amendment in 2 0 0 2
• • • • The main object of the Bill was to lay down provisions for the speedy disposal of cheque bouncing cases and to make the punishment stricter. The definition of Cheques Section 13 of the Information Technology Act is amended to include electronic cheques. The punishment, under section 138 of the Negotiable Instrument Act, 1881, is increased from one year to two years; Section 143 has been inserted so that courts are given power to try the offence of cheque bouncing summarily. Through this section, the courts are also directed to conduct the trial as expeditiously as possible. Courts must also make the effort to conclude the trial within six months from the date of filing of the complaint.
•
doc_704759272.ppt