dishonour of cheque
Section 138 of the Negotiable Instruments Act, 1881 makes it an offence when a cheque drawn for discharge of a legally enforceable debt or liability is returned unpaid for insufficient funds or because it exceeds the arranged amount. The conditions: the cheque is presented within its validity (three months); the payee sends a written demand notice within 30 days of learning of the dishonour; and the drawer fails to pay within 15 days of receiving the notice. The complaint must be filed within one month after that (s.142).
Section 139 presumes that the cheque was issued for a debt, but the presumption is rebuttable. The offence is punishable with imprisonment up to two years or fine up to twice the cheque amount, or both. After Dashrath Rupsingh Rathod, the 2015 amendment to s.142(2) gave jurisdiction to the court where the payee's bank branch is.
Example
The complaint was premature because it was filed on day 12 after the notice, before the 15-day period for payment under s.138 had ended.
In Indian law
- Sections 138, 139 and 142, Negotiable Instruments Act, 1881
- Dashrath Rupsingh Rathod v. State of Maharashtra, 2014 INSC 514
See also
Read more in the study notes
- Penal provisions for dishonour of cheques (ss.138-148) and the Bankers' Books Evidence Act, 1891 (Banking Law)
- Negotiation, endorsement, assignment and presentment (Banking Law)
- Dishonour, noting and protest, acceptance for honour, material alteration, special rules of evidence and bills in sets (Banking Law)
- Kidnapping, abduction, slavery and forced labour (Bharatiya Nyaya Sanhita)
- Information leading to discovery and confession of a co-accused (sections 23 proviso and 24) (Bharatiya Sakshya Adhiniyam)
- Accomplice, approver and corroboration (Bharatiya Sakshya Adhiniyam)