138 n i act.
Querist :
Anonymous
(Querist) 27 August 2011
This query is : Resolved
A took PMRY loan from bank on 2005 At present there is no acknowledgement of debt. It means it is time barrd. But bank has some cheque of borrower amount filled and signed by borrower. can bank file complaint U/s 138 N I Act on behalf of these cheque. Please sugggest b'caz it is matter of public money and I am bank Manager.
R.Ramachandran
(Expert) 27 August 2011
Please also indicate whether after taking loan the person made any repayments and when was the repayment made?
Raj Kumar Makkad
(Expert) 27 August 2011
As there is no lawful debt towards the loanee at such belated stage, the use of blank cheques of such loanee lying with the banks cannot be made.
prabhakar singh
(Expert) 27 August 2011
was the loan advanced under state sponsored scheme???
N.K.Assumi
(Expert) 27 August 2011
If it is under State sponsored Scheme than what? are they immune from liability?
prabhakar singh
(Expert) 27 August 2011
you could not get me Mr. N.K.Assumi
Devajyoti Barman
(Expert) 27 August 2011
If the cheques are not older than six months from the date of its drawings then definitely proceeding under section 138 NI Act cab be initiated .
Kiran Kumar
(Expert) 27 August 2011
I agree with Mr. Barman, the complaint is maintainable in the present case provided limitation period is not gone.
prabhakar singh
(Expert) 28 August 2011
Now to clarify ,if the loan was advanced under any state sponsored scheme then state might have undertaken its recovery obligation,which are enforced by issuing a Recovery certificate against the borrower for which a Bank manager is authorized to send RC to District Magistrate who proceeds to recover the loan as arrears of land revenue through its land revenue realizing agency,and law of limitation does not come to play any role in such recoveries but this root is not available to every loan advanced by Bank in its ordinary course of business but open strictly in cases where loan was advanced on initiation of state for which state under took an obligation of realization.
This is why i wanted to know "was the loan advanced under state sponsored scheme???"
but it costed me a sharp remark from Mr. N.K.Assumi.
Advocate Bhartesh goyal
(Expert) 28 August 2011
Generally at the time advancing money Bank takes undated cheques from borrower,if the borrower had given the undated cheques then bank can utilise the same and complaint u/s 138 of N.I.Act can be initiated.
Querist :
Anonymous
(Querist) 29 August 2011
Sir,
Actually as per recovery from Civil Suit is time barred and we want to use undated cheque for recovry of money from the borrower. whether it is possible.. if there is any citation please suggest me?
R.Ramachandran
(Expert) 29 August 2011
In the facts and circumstances indicated by you, it will be an uphill task for the bank to recover the amount from the borrower. You will be able to file a complaint u/s. 138 N.I.Act provided the cheque validity is there (probably the date has not been filled up by the borrower and the bank will fill it up according to its convenience), but to prove that the cheque was issued in discharge of any legally enforceable debt would be difficult.
prabhakar singh
(Expert) 29 August 2011
Let me say that if undated cheque(s) are presented and ultimately get bounced,the question would be what right bank can enforce??
Many of us as i gather from their opinion given here in before,may be of view that Bank can enforce its right by suit as well as by complaint proceedings provided by section 138 of the Negotiable Instrument Act.
But i suppose that the borrower would plead that those undated cheque(s)were handed over to the Bank just on the date of loan so that the Bank may realize the installments as and when they become due.
Any prudent man will believe this version and i do not foresee Bank has any strong version to disprove it to establish its version to the contrary .
As on the date ,the debt has become TIME BARRED( as you state) and the Bank has NO
ACKNOWLEDGEMENT IN WRITING OF THE DEBTOR TO ENHANCE THE LIMITATION under section 18 of the limitation Act, obtained from the debtor with in the period of limitation nor does the Bank has a PROMISE TO PAY A PAST DEBT CONTRACT in its favor from the borrower so that same may be enforced under section 25 of the Indian Contract Act.
The ultimate evidence would be that the Bank tried to collect by these cheque(s)an amount that has already become time barred and not enforceable at law.
So in that scenario the legal presumption of section 138 in favor Bank shall stand cogently rebutted,and cheque(s) would be found not realizable HENCE NO ACTION COULD BE POSSIBLE EITHER BY A CIVIL SUIT OR BY A COMPLAINT CASE.
However law of limitation does not extinguishes rights ,its simply shuts the door of courts to enforce a right if belated in time prescribed by it,hence if on presentation these cheque(s)gets en cashed then okay otherwise they would not be actionable in case they get bounced.
That is why i asked you that was the loan advanced under any state sponsored scheme where state has undertaken its realization,but you are mum.
If it is so you as Bank Manager can issue a
RECOVERY CERTIFICATE to the DISTRICT MAGISTRATE who will recover it as arrears of land revenue by its own machinery.
IF not, forget after presenting the cheque in case they remain unrealized.
