Cheque bounce and stop payment

Dear Experts,


Requiring your helps on the following

1.       I have entered in to a Sub-contract with the Main Contractor for a Construction Job in Tamil Nadu and in turn sub-contracted the same work to another Subcontractor (hereinafter called as Sub-1)

2.       Sub-1 has not delivered the performance under the subcontract conditions agreed, so he has been terminated in the month of February 2011. Wrote Sub-1 a letter stating that the payment shall be paid as per contract conditions for the works executed as and when the same has been paid to me by the Main Contractor.

3.       Main contractor directly employed another subcontractor for the same works (hereinafter called as Sub-2) with the oral consent. In light of the Project completion I asked the Main Contractor to proceed with subcontracting to Sub-2 and I came out of liabilities form that work.

4.       Works were going on smoothly and when the 1st bill was claimed in the month of May 2011, due to the underperformance of Sub-1, penalties were applied on the running bill raised by Sub-2

5.       Sub-1 was claiming for his money when the payment received by Sub-2 from Main contractor. Main contractor says that he cannot pay to Sub-1 in that bill as the penalties have been deducted due to the delays by sub-1.

6.       All parties came to a mutual agreement that from the next bill onwards the payment can be made to Sub-1 in equal instalments. Have valued his works done and an amount of 4 lacs is payable to him without considering any penalties to him.

7.       He has waited for 5 more months to get this money but Sub-2 also could not perform properly to get the bills paid from Main contractor, as a result Sub-1 has threatened me that he will call police and will stop the work of Sub-2 until the dues were cleared to him.

8.       Main Contractor asked my help in sorting this issue out since he is my subcontractor, so upon confirmation from Main contractor that he pays me for Sub-1 works and for the smooth carrying out of the works, in good will and gesture I as a guarantor gave 6 Post-dated cheques for 1 lac each including for the period he waited to receive his 4 lacs.

9.       Date has come for 1st cheque and he presented the same in his bank and called me and told, I said I did not receive the money from Main contractor so please hold it. He said he has already deposited so please clear it. I had to clear that by borrowing 1 lac with high interest as he has already deposited. I informed the Main contractor what happened for the 1st cheque, he said he will clear it as soon as the payment is received, but not done till now.

10.   Date has come for the 2nd instalment and I called up and said Sub-1 not to deposit as I do not have money and the Main contractor has not paid me either, he held it for 1 more week and deposited the cheque and It got bounced due to INSUFFICIENT FUNDS.

11.   He is behind me for the 2nd instalment and 3rd instalment is due on 10th September. I am explaining him that how would I be liable if they did not pay me. Sub-1 says I am responsible as I gave the cheque to him.

Please advise me what to do further on the above.


Has he issued any legal notice to you regarding the bounce of cheque? when its got bonced?



very complicated situation , try to settle among your selves since it will take years and years in legal system.


No, he has not done yet, may be he is in that intention by now


It is the fact that you have issued the cheques and the law says that you have to maintain the sufficient balance in your account to honour the cheque. he can initiate the legal process against you once the cheque got bounced and you are entitled for the bail as its bailable offence, and you can later contest the matter. First issue letter to bank to stop the payment of other two cheques by taking the appropriate advice from your counsel (as without loking into documents its hard to advice).

Total likes : 1 times


Thanks so much Mr. Ajit.




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