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A Quick Guide To File A Case Under Section 138 A Quick Guide To File A Case Under Section 138

Bronze medal Reporter ADV. RYAN Posted 14 May 2019 Post Comment Visitors: 575 Read More News and Blogs
A Quick Guide To File A Case Under Section 138

With the coming of modern technology, our need to transfer money through people also evolved through time leading us to find faster source to transfer money from one person to other. The payment of money through cash was found for easier transaction that is safe and easy to carry around in large amount. Thus came the importance of Negotiable Instruments Act 1881.

 Section 138- Cheques are denied due to insufficiency of funds in the payee account . Bouncing of cheques is helps to describe a situation where a person paid in the form of a cheque is unable to encash the given cheque. It has been defined in Section 138 Negotiable Instruments Act, 1881, any instrument drawn by a person in payment to other person- which is returned to the bank due to insufficiency funds in the account or the amount exceeds the prescribed limit or the account is closed due to unforeseeable reasons. The person being paid is known as the Payee or Drawee. The person paying through cheque is known as the Drawer or Payer. Thus, it is due to the inability of the drawer to pay or repay the amount which is owed to the payee.

Certain conditions have to be met while filing a suit under Section 138;

The cheque is presented to the bank within 3 months of it being drawn up or within the prescribed period of validity, whichever is earlier.

Grounds for dishonour of Cheques

  1. Funds Insufficient
  2. Account Closed
  3. Stop Payment instructions
  4. Refer to drawer for further instructions 
  5. Not a clearing member
  6. Effect of other endorsements

How to File a Case if Cheque Bounces

If a cheque issued by a person or a company cannot be encashed by the bank then the individual may seek other options after fulfilling the conditions given in Section 138. The complaint must be filed and registered in the Magistrate Court. An appeal can be filed in the Sessions Court. Section 142 of the Negotiable Instruments Act, 1881, provides the procedure for filing a complaint if a cheque bounces.

Procedure for filing a suit under Section 138:

1.A complaint must be made in writing by the payee.

2.The complaint must be made within one month of serving notice and fifteen days of non-payment.

3.No court inferior to the Metropolitan Magistrate or the Judicial Magistrate can try the case

Dayawati v. Yogesh Kumar Gosain (Delhi High Court) It is land marked judgement that bought the distinction between  money suit and the section 138 i.e., which then became a criminal case.

Documents Required to File a Case

1.An affidavit must be filed.

2. A copy of the notice sent as well as the post receipt.

3.The original cheque along with the memo of return from the bank.

4.All the evidence must be documentary in nature as to provide adequate proof for filling a suit in court.

5.It must be filed according to the jurisdiction in which the cheque was bounced. 

Dashrath Roopsingh Rathod Vs. State of Maharashtra & Anr.- Case to be instituted  must be at the place where Branch of the Bank on which Cheque was drawn is located or in the same jurisdiction.


The penalties that can apply to a drawer :

1.Imprisonment which may extend to 2 year or fine amount for twice the amount to be paid or with both.

For further information you can refer to lawyers in India



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Roopsingh Rathod case has been overruled by the subsequent amendment to Section 142 of NI Act.

14 May 2019

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