21. Cheque Bounce Case - Under 138 N.I.A.
Section 138 of the Negotiable Instruments Act, 1881, deals with the offense of dishonor of a cheque due to insufficiency of funds in the bank account of the drawer. It provides a legal recourse for the payee (the person to whom the cheque is issued) in case of dishonor of the cheque.
Important Factors under Section 138 :
1. Dishonor of Cheque :
2. Notice of Dishonor :
The payee must send a written notice to the drawer of the cheque within 30 days from the date of dishonor, demanding payment of the amount mentioned in the cheque. The notice must provide the drawer 15 days to make the payment from the receipt of the notice.
3. Legal Action :
If the drawer fails to make the payment within 15 days of receiving the notice, the payee can initiate legal proceedings by filing a complaint before the appropriate court. The complaint should be filed within one month from the expiry of the notice period.
4. Jurisdiction :
The complaint under Section 138 can be filed in a court within whose local jurisdiction the bank branch on which the dishonored cheque was drawn is situated.
5. Punishment :
Upon conviction, the court may impose a punishment of imprisonment for a term which may extend to two years, or impose a fine that may be up to twice the amount of the cheque, or both.
6. Compounding :
In certain cases, where both the parties agree, the offense under Section 138 can be compounded. This means that they can reach a settlement, and upon payment of the agreed amount, the court proceedings can be withdrawn.
It is important to note that the information provided here is a general overview, and the application and interpretation of Section 138 may vary in specific cases. It is advisable to consult with a legal professional for guidance and advice regarding individual circumstances related to the dishonor of a cheque under Section 138 of the Negotiable Instruments Act, 1881.
