N.I. Act

This query is : Resolved 

11 January 2019

Kindly guide me regarding the following issue:
The drawer of a dishonoured cheque issued fresh cheques for making payment for dishonoured cheques upon receipt of demand notice from the payee and also sent a reply clearly stating that he has attached fresh cheques with the reply for payment of dishonoured cheques. But the payee of the cheque did not deposit the fresh cheques in the bank and filed a complaint u/s 138 so as to pressurize the drawer and extract entire outstanding dues from him under the pretext of settlement. He has not produced before the Court the reply sent by the drawer as evidence. What should we do in such a case? Please provide relevant citations also. Thanks in advance.

P. Venu (Expert)
12 January 2019

Your reply to the Notice is crucial in admitting the complaint. Your counsel can point out this aspect and get the CMP dismissed.

Dr J C Vashista (Expert)
13 January 2019

The complainant is not bound to oblige as desired by you and present the fresh cheque for payment, it is his/ her own decision for which "no one" can compel him / her.
Appear before the Court on appointed date/ time with your lawyer, submit your averment and prove your bona fide where you intend to and willing pay the cheque amount. Role of your lawyer shall be crucial in getting the case compounded.

P. Venu (Expert)
13 January 2019

With due respect to Learned Expert Dr. J.C. Vasishta, the cause of action under NI 138 arises, in my understanding, when the drawer of the dishonured cheque fails to make payment within the prescribed period after receipt of the 'Notice'. The provisions of Section 138 and 142 are self-explanatory.

138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid. either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the Cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.”

Section 142 of the N.I. Act reads as under:

“142. Cognizance of offences: Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974 ),-

(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138;

[Provided that the cognizance of a complaint may be taken by the Court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.]

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138

In the instant case, the drawer has made the payment. As such, there is cause of action unless the freshly issued cheques are also dishonured.

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