mohan s.
25 October 2012 at 12:48
1. In which court do I need to file the complaint case under Section 138 N.I. Act in case drawer did not pay after receiving notice?
A complaint case under Section 138 N.I. Act can be filed in any competent court in whose jurisdiction any of the following acts have occurred:
a) Place of drawing of the cheque,
b) Address of bank where cheque was presented (holders bank address),
c) Address of bank where cheque is payable (drawers bank address)
d) Place from where notice was received by drawer of cheque
a. It is possible that each of these four acts could have occurred at different localities. The complainant can choose any one the above places to determine jurisdiction of court where they wish to file complaint.
2. What can I do if it has been more than 30 days since I received information of dishonour of cheque?
If the cheque is still valid i.e. 3 months (currently) have not passed from the date of its issue, you can represent the cheque again to your banker as there is no restriction regarding the number of times a cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing complaint. It may be noted that once a notice for payment is given then the holder must file a complaint under Section 138 N.I. Act within 30 days from expiry of notice period as a fresh cause of action will not arise if the cheque is presented again and it is dishonoured and failure to file complaint will lead to loss of remedy available under Section 138 N.I. Act.
3. How long after notice has been served can I file a case against the drawer?
After giving notice you need to file a complaint case against drawer under Section 138 N.I. Act within 30 days from the expiry of notice period i.e. 15 days. In other words you need to file complaint case against drawer within 45 days (15+30) from the date of issue of notice. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque.
4. What can I do if I do not have the drawer's address?
You need the address of the drawer of cheque to issue notice as contemplated under provisions of N.I. Act; also the address is necessary if you wish to avail other legal remedies available to you. You can send the notice to the last known address. In case the address of the drawer has changed and the drawer has not left a forwarding address and the notice is returned with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then you need to file a complaint case after 15 days (notice period) of receipt of such information or returned notice and within 30 days from expiry of notice period. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque
5. What should I do if the notice was returned and could not be served to the drawer?
When a notice is returned to the sender as unclaimed or with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then the date of receipt of such information or returned notice would be the commencing date for the notice period of 15 days. Complaint case under Section 138 N.I. Act must be filed within 30 days from expiry of notice period. Such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address or previous address.
6. Can Mohan Law Chambers assist in drafting of legal notice as required by Section 138 of N.I. Act.?
Yes, Mohan law Chambers offers assistance in drafting of legal notice as required by Section 138 of N.I. Act.
7. How long after receiving information of dishonour of cheque do I have to serve notice to the drawer?
You need to serve a legal notice to drawer of cheque demanding payment of cheque amount within 30 days of the receipt of information from your banker regarding dishonour of cheque under Section 138 N.I. Act.
8. What if the cheque was given for a reason other than to discharge a legally enforceable debt or other liability?
In cases where cheque was given for a reason other than to discharge a legally enforceable debt or other liability, the provisions of Section 138 N.I. Act are not applicable e.g. Cheque given as Gift, in charity, donation etc.
9. Can a cheque issued in security attract offence under Section 138 N.I. Act?
With respect to the dishonour of cheques given as security, legal position is not very clear. It is subject to presumption and proof thereof that may be given by either party in support of their case. High Court of Delhi in the case of M/s Datt Enterprises ltd. vs. V.K.Dua held that the security cheque does not attract the provisions of Section 138 N.I. Act., if cheques were given as a security cheque as per past practice and pending reconciliation of accounts and not towards discharge of any liability.
10. What is a legally enforceable debt or other liability?
Legally enforceable debt or other liability should be such which is contracted in accordance with law and which is not opposed to public policy viz., wagering contracts, debt obtained for running brothel or gambling house etc.
11. What is Section 138 N.I. Act and why is remedy available under it preferable to remedy available under other laws?
a. Section 138 N.I. Act was made to provide an additional criminal remedy over and above the civil remedies available; to provide a speedy and effective remedy to holder of dishonoured cheque.
b. Summary suit for recovery of money takes time (approximately 3 to 5 years) and criminal proceedings under Section 420 I.P.C. does not provide any provision for recovery of money and is meant only for prosecution of the drawer of the cheque who entertains dishonest intention to cheat.
12. What is a summary suit for recovery of money?
Summary suit is a civil legal proceeding initiated for recovery of money due under any written agreement, cheque etc. These proceedings are different from normal recovery suit, as here the liability to prove that petitioner is not liable to recover any amount is on defendant for which he needs to obtain leave to defend from the court.
13. What is the validity of the cheque in day to day business?
The current validity of cheques is 6 months. However, please note that from April 1, 2012. The validity will change to three months as per recent directive of RBI (under Sec. 35A, Banking Regulation Act, 1949)
14. What can I do if a cheque given to me has been dishonoured?
a. The holder of a cheque that has been dishonoured can seek remedy in the following manner:
i) Action under Section 138 Negotiable Instruments Act (N.I. Act): Give notice under within 30 days of receipt of information of dishonour from the bank. In case of non- payment by the drawer within the notice period of 15 days, then the holder must institute a complaint case for prosecuting drawer within 30 days of expiry of notice period.
ii) Civil Action as Summary Suit: Issue notice within 3 years from issue date of cheque and institute a summary suit for recovery of cheque amount along with interest and legal expenses. The notice can also be used while filing summary suit for recovery of money.
iii) Criminal Action: Initiate criminal proceedings by filing complaint under Section 420 Indian Penal Code (I.P.C.) within 3 years from issue date of cheque. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque when dishonest intent to cheat in inferred.
15. What documents / evidences do I need at the time of filing complaint case under Section 138 N.I. Act?
You will need at the minimum, the following:
a) Proof of service of notice - receipt of postal department / courier
b) Copy of notice
c) Cheque in original
16. What can I do if I do not file a complaint within 30 days from expiry of notice period?
If you have not filed a complaint case within 30 days after expiry of notice period, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from the date of issue of cheque.
17. What can I do if it has been more than 30 days since I received information of dishonour of cheque and 6 months has passed from the date of issue of cheque?
a. Other remedies are also available to recover the cheque amount. You can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque. In case the cheque was never presented during its validity period then a summary suit is the only available remedy for recovery of money.
(Notice can be given to drawer up to 3 years from date of issue of cheque for instituting a summary suit for recovery of money. Criminal proceedings for prosecution of drawer can also be instituted within 3 years from date of issue of cheque under Section 420 I.P.C.)
18. The drawer is asking me to settle the claim at a reduced value. What should I do?
Its up to you to settle the claim at a reduced value as the same will save your precious time, as well as legal hassle. Now-a-days courts are also encouraging amicable settlement between the parties. However, if you settle the dishonoured cheque amount at a reduced value, you will lose all remedies available under law.
19. What remedy do I have if the drawer delays in settling after conviction?
In a recent 2010 judgement, Supreme Court has laid strict rules to deal with such delaying tactics. Delay in settling cheques bounced will cost up to 20% of the cheque amount post-conviction. This is detailed as: 10% at District Court level; 15% at the High Court level; and up to 20% at the Supreme Court level. For e.g., Defaulter going for settlement will have to pay 10% of the cheque amount to avoid going to the jail.
20. Can I recover interest and legal expenses from the drawer of the dishonoured cheque?
Yes, you can recover interest and legal expenses from the drawer of the dishonoured cheque in a summary suit for recovery of money, but not in the proceedings initiated under Section 138 N.I. Act. However, under Section 138 N.I. Act the award maybe higher than the cheque amount.
21. What should I do if the drawer does not make payment upon receipt of notice?
You can adopt either or any of the remedies available to you:
a) Can file a criminal complaint against drawer of cheque under Section 138 of N.I. Act.
b) Can file a summary suit for recovery of money, interest and legal expenses.
c) Can file a criminal complaint against drawer of cheque under Section 420 of I.P.C. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque.
In case a person has filed suit for recovery, then he is not precluded from filing a complaint under Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code. The pendency of criminal matters would not be an impediment to proceeding with the civil suits.
Asha
25 October 2012 at 09:42
Query... 1. Can a private limited company allot shares in lieu of services? And if alloted can they forfeit shares if the service obligations are not fulfilled? 2. A euity shareholder holding 5-10% shares in a private limited company. Andwe demerge the company. Can this shareholder object for the demerger?
viikram
24 October 2012 at 20:33
Dear Experts, I have Two Query...
1. If one business is registered under shop establishment act Madhya Pradesh, Can this business perform its business activity in another city?
2. One person is claiming that he have tie up with some music company and forcing to buy his no objection certificate in 8000 Rs. to use music of those music companies. while his company/firm is registered with shop act in Bhopal (MP). can he sale this kind of license? can he sales these kinds of certificate other than Bhopal city.
Please suggest because its seems illegal activities by him. Also please suggest me which code will apply of IPC.
thanks
L N Das
24 October 2012 at 13:21
A is a joint venture company with X (OEM) established during 1994 in the premises of X on lease to supply material to X on JIT basis. Y is a group company established in India later during 2005. A falls under this group company of Y but is totally having separate entity. Y is having group company but it has also separate entity and not a JV with X (OEM). The corporate office of Y is functioning in the building of A although X (OEM) has not allowed Y to function their office.
Want expert opinion as to whether Y (group company) can operate their corporate office without getting any permission from X or not. If yes whether it is legal then there must be a section under Companies Act, 1956 of Ministry of Corporate Affairs.
Please let me know.
Ravi kumar
23 October 2012 at 18:08
A PRIVATE COMPANY ENGAGED IN MANUFACTURING ACTIVITY AND UNDER LOAN LIABILITY AGAINST MORTGAGE OF LAND AND BUILDING,A DIRECTOR OF ABOVE COMPANY AUTHORIZED BY BOD
"TO NEGOTIATE FOR SALE OF LAND & BUILDING OF THE COMPANY AND SETTLE THE BANK LOAN".
THE DIRECTOR SOLD THE LAND & BUILDING ON THE BASIS OF ABOVE RESOLUTION AND FUND WAS UTILIZED BY COMPANY TO SETTLE THE BANK LOAN.
WHETHER THIS ACTIVITY OF THE DIRECTOR IS ULTRAVIOLET AND ONE OF THE DIRECTOR CAN FILE A CIVIL SUIT AGAINST THE DIRECTOR ON THE BASIS OF DOCTRINE OF ULTRAVIOLET,ALSO CREATING A PARTY TO THE PURCHASING COMPANY.
Is civil suit by a single director against a third party (purchasing co) is maintainable who has purchased the property from company is maintainable?
Ravi kumar
22 October 2012 at 19:44
whether sale of land of company by a director authorised to negotiate for dealings for sale and settle the bank loan.
Is this activity is ultra vires and what is the consequence of this transaction on buyer, who has purchased and paid the consideration to company in good faith.
Asha
22 October 2012 at 18:32
Hie Everyone,
My father had invested in PVT LTD CO.
Now I had to get the money back, IT is nagpur based company .
Please can any body help me how to reply or get money back from that company.
(Mca) will help ???
koteswara rao jonnalagadda
22 October 2012 at 02:40
respected experts,
namaskar and wish you happy vijayadasami.
sir,
i have taken aloan from icici bank of rs 13.5lacs by mortgageing my residential property in sep 2008,on following terms.
type of loan-home equity loan-resident ind
amount sanctioned-13.5lacs
rate of interest-16.5%floating.
term-180 months.
e.m.i-rs19127/-p.m
on the above terms i have taken loan with a pre closer charges of 2%
since my health was badly effected and my age is 57years,doctor advised me to take rest by redusing all my stress,at this juncture in the month of june 2012 i went to the bank to find out my out standing balance for making arrengements to close the a/c.
for my shocking they told me my out standing balance is rs12.6 lacs,where as i have paid till may-2012 rs8.77 lacs,that means roughly.9 lacs adjusted towards principle and balance 7.9 lacs adjusted towards interest for 44 months.after getting back the principle also bank is charging on the original borrowing for this
type of deduction i never signed any document.at this juncture i kept money in my savings bank in the month of july ,
and writing letters to close loan a/c as per my caliculation it is approxmately 8to 9 lacs this money i kept at bank for more than 3 months and written 4 registered post-ack letters and 6to 7 e-mails but they are not coming forward to close my a/c or to show me my written commited letter as they are caliculating and buyfercating interest and principle component.
which is the right governing body or judicial body to solve this issue .
iam still paying regularly the emi's every month,bank is taking the advantage of sarface act.kindly guide me i am not interested to continue the loan,in the mean time i undergone for open heart surgery on 13 th aug 12 due to this torture this also i brought to the notice of the bank but no reply for it.
i am in multible losses ,kindly guide me how to come out the situationand if possible leave your mobile numbers for further guidence.i am from hyderabad.
thanking you,
with regards,
koteshwararao jonnalagadda
koteswara rao jonnalagadda
22 October 2012 at 02:37
respected experts,
namaskar and wish you happy vijayadasami.
sir,
i have taken aloan from icici bank of rs 13.5lacs by mortgageing my residential property in sep 2008,on following terms.
type of loan-home equity loan-resident ind
amount sanctioned-13.5lacs
rate of interest-16.5%floating.
term-180 months.
e.m.i-rs19127/-p.m
on the above terms i have taken loan with a pre closer charges of 2%
since my health was badly effected and my age is 57years,doctor advised me to take rest by redusing all my stress,at this juncture in the month of june 2012 i went to the bank to find out my out standing balance for making arrengements to close the a/c.
for my shocking they told me my out standing balance is rs12.6 lacs,where as i have paid till may-2012 rs8.77 lacs,that means roughly.9 lacs adjusted towards principle and balance 7.9 lacs adjusted towards interest for 44 months.after getting back the principle also bank is charging on the original borrowing for this
type of deduction i never signed any document.at this juncture i kept money in my savings bank in the month of july ,
and writing letters to close loan a/c as per my caliculation it is approxmately 8to 9 lacs this money i kept at bank for more than 3 months and written 4 registered post-ack letters and 6to 7 e-mails but they are not coming forward to close my a/c or to show me my written commited letter as they are caliculating and buyfercating interest and principle component.
which is the right governing body or judicial body to solve this issue .
iam still paying regularly the emi's every month,bank is taking the advantage of sarface act.kindly guide me i am not interested to continue the loan,in the mean time i undergone for open heart surgery on 13 th aug 12 due to this torture this also i brought to the notice of the bank but no reply for it.
i am in multible losses ,kindly guide me how to come out the situationand if possible leave your mobile numbers for further guidence.i am from hyderabad.
thanking you,
with regards,
koteshwararao jonnalagadda
Vinod kumar Agarwal
20 October 2012 at 19:36
I would like to source a questionnaire for cross examining a Bank officer. Thanks
Faq on n. i act
1. In which court do I need to file the complaint case under Section 138 N.I. Act in case drawer did not pay after receiving notice?
A complaint case under Section 138 N.I. Act can be filed in any competent court in whose jurisdiction any of the following acts have occurred:
a) Place of drawing of the cheque,
b) Address of bank where cheque was presented (holders bank address),
c) Address of bank where cheque is payable (drawers bank address)
d) Place from where notice was received by drawer of cheque
a. It is possible that each of these four acts could have occurred at different localities. The complainant can choose any one the above places to determine jurisdiction of court where they wish to file complaint.
2. What can I do if it has been more than 30 days since I received information of dishonour of cheque?
If the cheque is still valid i.e. 3 months (currently) have not passed from the date of its issue, you can represent the cheque again to your banker as there is no restriction regarding the number of times a cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing complaint. It may be noted that once a notice for payment is given then the holder must file a complaint under Section 138 N.I. Act within 30 days from expiry of notice period as a fresh cause of action will not arise if the cheque is presented again and it is dishonoured and failure to file complaint will lead to loss of remedy available under Section 138 N.I. Act.
3. How long after notice has been served can I file a case against the drawer?
After giving notice you need to file a complaint case against drawer under Section 138 N.I. Act within 30 days from the expiry of notice period i.e. 15 days. In other words you need to file complaint case against drawer within 45 days (15+30) from the date of issue of notice. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque.
4. What can I do if I do not have the drawer's address?
You need the address of the drawer of cheque to issue notice as contemplated under provisions of N.I. Act; also the address is necessary if you wish to avail other legal remedies available to you. You can send the notice to the last known address. In case the address of the drawer has changed and the drawer has not left a forwarding address and the notice is returned with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then you need to file a complaint case after 15 days (notice period) of receipt of such information or returned notice and within 30 days from expiry of notice period. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque
5. What should I do if the notice was returned and could not be served to the drawer?
When a notice is returned to the sender as unclaimed or with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then the date of receipt of such information or returned notice would be the commencing date for the notice period of 15 days. Complaint case under Section 138 N.I. Act must be filed within 30 days from expiry of notice period. Such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address or previous address.
6. Can Mohan Law Chambers assist in drafting of legal notice as required by Section 138 of N.I. Act.?
Yes, Mohan law Chambers offers assistance in drafting of legal notice as required by Section 138 of N.I. Act.
7. How long after receiving information of dishonour of cheque do I have to serve notice to the drawer?
You need to serve a legal notice to drawer of cheque demanding payment of cheque amount within 30 days of the receipt of information from your banker regarding dishonour of cheque under Section 138 N.I. Act.
8. What if the cheque was given for a reason other than to discharge a legally enforceable debt or other liability?
In cases where cheque was given for a reason other than to discharge a legally enforceable debt or other liability, the provisions of Section 138 N.I. Act are not applicable e.g. Cheque given as Gift, in charity, donation etc.
9. Can a cheque issued in security attract offence under Section 138 N.I. Act?
With respect to the dishonour of cheques given as security, legal position is not very clear. It is subject to presumption and proof thereof that may be given by either party in support of their case. High Court of Delhi in the case of M/s Datt Enterprises ltd. vs. V.K.Dua held that the security cheque does not attract the provisions of Section 138 N.I. Act., if cheques were given as a security cheque as per past practice and pending reconciliation of accounts and not towards discharge of any liability.
10. What is a legally enforceable debt or other liability?
Legally enforceable debt or other liability should be such which is contracted in accordance with law and which is not opposed to public policy viz., wagering contracts, debt obtained for running brothel or gambling house etc.
11. What is Section 138 N.I. Act and why is remedy available under it preferable to remedy available under other laws?
a. Section 138 N.I. Act was made to provide an additional criminal remedy over and above the civil remedies available; to provide a speedy and effective remedy to holder of dishonoured cheque.
b. Summary suit for recovery of money takes time (approximately 3 to 5 years) and criminal proceedings under Section 420 I.P.C. does not provide any provision for recovery of money and is meant only for prosecution of the drawer of the cheque who entertains dishonest intention to cheat.
12. What is a summary suit for recovery of money?
Summary suit is a civil legal proceeding initiated for recovery of money due under any written agreement, cheque etc. These proceedings are different from normal recovery suit, as here the liability to prove that petitioner is not liable to recover any amount is on defendant for which he needs to obtain leave to defend from the court.
13. What is the validity of the cheque in day to day business?
The current validity of cheques is 6 months. However, please note that from April 1, 2012. The validity will change to three months as per recent directive of RBI (under Sec. 35A, Banking Regulation Act, 1949)
14. What can I do if a cheque given to me has been dishonoured?
a. The holder of a cheque that has been dishonoured can seek remedy in the following manner:
i) Action under Section 138 Negotiable Instruments Act (N.I. Act): Give notice under within 30 days of receipt of information of dishonour from the bank. In case of non- payment by the drawer within the notice period of 15 days, then the holder must institute a complaint case for prosecuting drawer within 30 days of expiry of notice period.
ii) Civil Action as Summary Suit: Issue notice within 3 years from issue date of cheque and institute a summary suit for recovery of cheque amount along with interest and legal expenses. The notice can also be used while filing summary suit for recovery of money.
iii) Criminal Action: Initiate criminal proceedings by filing complaint under Section 420 Indian Penal Code (I.P.C.) within 3 years from issue date of cheque. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque when dishonest intent to cheat in inferred.
15. What documents / evidences do I need at the time of filing complaint case under Section 138 N.I. Act?
You will need at the minimum, the following:
a) Proof of service of notice - receipt of postal department / courier
b) Copy of notice
c) Cheque in original
16. What can I do if I do not file a complaint within 30 days from expiry of notice period?
If you have not filed a complaint case within 30 days after expiry of notice period, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from the date of issue of cheque.
17. What can I do if it has been more than 30 days since I received information of dishonour of cheque and 6 months has passed from the date of issue of cheque?
a. Other remedies are also available to recover the cheque amount. You can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque. In case the cheque was never presented during its validity period then a summary suit is the only available remedy for recovery of money.
(Notice can be given to drawer up to 3 years from date of issue of cheque for instituting a summary suit for recovery of money. Criminal proceedings for prosecution of drawer can also be instituted within 3 years from date of issue of cheque under Section 420 I.P.C.)
18. The drawer is asking me to settle the claim at a reduced value. What should I do?
Its up to you to settle the claim at a reduced value as the same will save your precious time, as well as legal hassle. Now-a-days courts are also encouraging amicable settlement between the parties. However, if you settle the dishonoured cheque amount at a reduced value, you will lose all remedies available under law.
19. What remedy do I have if the drawer delays in settling after conviction?
In a recent 2010 judgement, Supreme Court has laid strict rules to deal with such delaying tactics. Delay in settling cheques bounced will cost up to 20% of the cheque amount post-conviction. This is detailed as: 10% at District Court level; 15% at the High Court level; and up to 20% at the Supreme Court level. For e.g., Defaulter going for settlement will have to pay 10% of the cheque amount to avoid going to the jail.
20. Can I recover interest and legal expenses from the drawer of the dishonoured cheque?
Yes, you can recover interest and legal expenses from the drawer of the dishonoured cheque in a summary suit for recovery of money, but not in the proceedings initiated under Section 138 N.I. Act. However, under Section 138 N.I. Act the award maybe higher than the cheque amount.
21. What should I do if the drawer does not make payment upon receipt of notice?
You can adopt either or any of the remedies available to you:
a) Can file a criminal complaint against drawer of cheque under Section 138 of N.I. Act.
b) Can file a summary suit for recovery of money, interest and legal expenses.
c) Can file a criminal complaint against drawer of cheque under Section 420 of I.P.C. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque.
In case a person has filed suit for recovery, then he is not precluded from filing a complaint under Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code. The pendency of criminal matters would not be an impediment to proceeding with the civil suits.