138 ni act

Querist : Anonymous (Querist) 09 May 2010 This query is : Resolved
the applicant is a transporter and provided transport facility to party in tune of 10 lac.the party issued the cheque of rs 10 lac to applicant.but when cheque deposited by applicant the same returned with memo "cheque destroyed in system" what is this is it covered under 138 ni act any citation please.when applicant asked the meaning of memo the bank replies that party had cancelled the said cheque.

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Raj Kumar Makkad (Expert) 09 May 2010
If party has cancelled the cheque then definitely this is covered under 138 NI Act and complaint is maintainable. The aim and object of the cheque dealing and 138 NI Act is very much clear. Such intension vide which an issued cheque is cancelled is an offence.

B K Raghavendra Rao (Expert) 10 May 2010
If the drawer of the cheque has cancelled the cheque, it amounts to issuing stop-payment instructions to the bank. Stop payment instructions are not covered under the NI Act. Section 138 is applicable only if the cheque bounces for 'insufficient funds'. However, the applicant has option to file criminal case against the drawer for cheating under Section 420 of IPC.

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