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    Dishonour of Cheques in India: A Guide along with Model Drafts of Notices and Complaint
    Dishonour of Cheques in India: A Guide along with Model Drafts of Notices and Complaint
    Dishonour of Cheques in India: A Guide along with Model Drafts of Notices and Complaint
    Ebook80 pages1 hour

    Dishonour of Cheques in India: A Guide along with Model Drafts of Notices and Complaint

    By Pritish Prabhu

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    Negotiable instruments were devised by the mercantile community as a safe and very dependable method of discharging pecuniary liabilities and as a substitute for cash payment, which would always involve an element of simple risk due to either the magnitude of the amount sought to be paid, or, the geographical distance between the payer and the payee. Such instruments could also be cleverly and conveniently used by several persons to discharge their financial liabilities. However, a smooth working of the system of negotiable instruments primarily depended on the honestly and integrity of the parties thereto. A practice, it is said, has already crept into the several metropolitan markets in Indian to give cheques merely as a divide to stall for the time being the undesirable contingency of being prevented upon to make the payment on the spot, thus substantially eroding the credibility of cheques as trustworthy substitute for cash payment. A cheque that is dishonoured may cause incalculable loss, injury or inconvenience to the payee of endorsee thereof, in view of the fat that due to latter's unexpected disappointment; he has also to lick the dust while meeting his own future commitments to the persons. 
    Negotiable Instruments Act 1881 (said act for short), is a special law. The provisions contained in Chapter XVII, of the said act make certain deviation relatable to the mode of method of preferring the complaint, the forum before which, the complaint has to be made, the period, within which the compliant has to be preferred from the time of accrual of cause of action for the commission of an offence under section 138 of the said act, etc. The dishonour of a cheque by the drawer shall constitute an offence and the offender is liable to punished under section 138 of the N.I act, which can extend upto two years in prison, or with fine which may extend to twice the amount of cheque, or with both. 
    The Negotiable Instruments Act 1881, is a fairly complex and a technical act, which requires its thorough study, for litigating a case governed by it effectively. The draftsman of a complaint under the said act, has to especially take care and see that all the necessary requirements for filing a complaint under the said act are properly met, for otherwise the complaint runs the risk of being defeated on technical grounds. This book is an earnest attempt to understand the technicalities and intricacies of the said act, thereby making the draftsman of the cheque dishonour complaint aware and abreast of the things that he or she has to take care of, while drafting or litigating a case under the said Act. 

    LanguageEnglish
    PublisherWinchester Publications
    Release dateSep 20, 2018
    ISBN9781386286349
    Dishonour of Cheques in India: A Guide along with Model Drafts of Notices and Complaint

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      Dishonour of Cheques in India - Pritish Prabhu

      Preface

      Negotiable instruments were devised by the mercantile community as a safe and very dependable method of discharging pecuniary liabilities and as a substitute for cash payment, which would always involve an element of simple risk due to either the magnitude of the amount sought to be paid, or, the geographical distance between the payer and the payee. Such instruments could also be cleverly and conveniently used by several persons to discharge their financial liabilities. However, a smooth working of the system of negotiable instruments primarily depended on the honestly and integrity of the parties thereto. A practice, it is said, has already crept into the several metropolitan markets in Indian to give cheques merely as a divide to stall for the time being the undesirable contingency of being prevented upon to make the payment on the spot, thus substantially eroding the credibility of cheques as trustworthy substitute for cash payment. A cheque that is dishonoured may cause incalculable loss, injury or inconvenience to the payee of endorsee thereof, in view of the fat that due to latter’s unexpected disappointment; he has also to lick the dust while meeting his own future commitments to the persons.

      Negotiable Instruments Act 1881 (said act for short), is a special law. The provisions contained in Chapter XVII, of the said act make certain deviation relatable to the mode of method of preferring the complaint, the forum before which, the complaint has to be made, the period, within which the compliant has to be preferred from the time of accrual of cause of action for the commission of an offence under section 138 of the said act, etc. The dishonour of a cheque by the drawer shall constitute an offence and the offender is liable to punished under section 138 of the N.I act, which can extend upto two years in prison, or with fine which may extend to twice the amount of cheque, or with both.

      The Negotiable Instruments Act 1881, is a fairly complex and a technical act, which requires its thorough study, for litigating a case governed by it effectively. The draftsman of a complaint under the said act, has to especially take care and see that all the necessary requirements for filing a complaint under the said act are properly met, for otherwise the complaint runs the risk of being defeated on technical grounds. This book is an earnest attempt to understand the technicalities and intricacies of the said act, thereby making the draftsman of the cheque dishonour complaint aware and abreast of the things that he or she has to take care of, while drafting or litigating a case under the said Act.

      For the best understanding of the concepts under the said act, it is recommended that a bare act, without commentaries, be brushed through in its entirety first, before contemplating the concepts under the said act. 

      An endeavour has been made to format the book and the drafts contained in it, in the best possible manner so as to make it appear systematic. However, if some formatting or grammatically errors do creep in, the author and the publisher of this book apologize for the same in advance.

      Scope and Purpose of the Said Act

      The law relating to Negotiable instruments is the law of commerce in general and contains mercantile usages which require that the contract appearing on the face of the instrument should be taken as the real contract. The mercantile community found Negotiable Instruments Act as a boon and therefore, expressed gratitude for the man who discovered the brilliant idea of Negotiable paper in words.

      Specific purpose of section 138

      The object of section 138 is to inculcate faith in the efficacy of banking operation and credibility in transacting business on the negotiable instruments. Despite civil remedy, section 138 intended to prevent dishonesty on the part of the drawer of the negotiable instruments to draw a cheque without sufficient funds in his account maintained by him in a bank and induce the payee or holder in due course to act upon it. Section 138 draws presumption that one commits the offense if he issued the cheque dishonestly. Once a cheque has been drawn and issued to the payee and the payee has presented the cheque and, thereafter, if any instructions are issued to the bank for the non payment and the cheque is returned to the payee with such an endorsement, it amounts to dishonour of cheque and it comes within the meaning of section 138.

      Section 138 is a penal provision the commission of which offense entails a conviction and sentence on proof of guilt in a duly conducted criminal proceedings. Once the offense under section 138 is completed, the prosecution proceedings can be initiated not for recovery of amount covered by the cheque but for bringing the offender to the penal liability.

      Section 138 is intended to curb dishonest act in financial circles. With increasing use of cheques in commercial transactions and requirements introduced regarding payments over a particular limit through cheques only, it became important that the acceptability of cheques as a mode of payments to be improved and those person who accept cheques instead cash towards payments, should have a sense of security that the cheque will not be dishonoured on presentation.

      Provisions of the said act are intended to prevent or curtail mischief effecting economy of country.  Even though the normal rule is that an act or illegal omission in order to constitute an offence, must be had with the requisite mental condition in the form of intention, knowledge or reasonable belief, that pre-requisites could be statutorily dispensed with in appropriate cases by

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