Cheque bounced - fresh cheque issued - still summoned


Dear Sir,

We had issued 3 cheques of Rs. 55000 each to one person for his service for which he has never given any valid proper bill. And also cash in advance of Rs. 45000 was given for his service. Out of 3 cheques 2 got cleared and 3rd was deposited at later date than the cheque was issued. Hence 3rd cheque got bounced and he sent notice without even mentioning about cash in advance in the total amounts shown as per him, to which we replied within 15 days period with clarification of cash in advance as we have voucher signed by him but were unable to make payment within 15 days period as we wanted him to return the dishonored cheque against the fresh cheque that we were willing to issue. Old cheque couldn't not be used due to 3 months validity limitations. Later we sent fresh cheque of Rs. 55000 to that person after 23-24 days of notice received although he had not sent the dishonored cheque back. He replied that although we have sent cheque of Rs.55000 but it was after 15 days of notice and hence now he will file case against us. Also he filed case against us and we have been summoned to be present in court on 26th May, 2013.

In present scenario:
He has the fresh issued cheque of Rs. 55000 with him but not ready to deposit and has filed case. Has dishonored cheque with him. Also as per his services estimate he has demand of extra Rs. 50000 to which we already had oral communication that we will sort this extra payment but it is not in accordance with the service we actually obtained. There may be some differential amount to be paid in addition to bounced cheque amount but not Rs. 50000. So basically he is misusing this bounced cheque to get the unjustified extra amount by any means.

Kindly tell us what options do we have. We have already given fresh cheque of Rs. 55000 to him even before he filled case but not in period of 15 days. Will this point be proved worthy in court that we have already given fresh cheque but he is not ready to deposit & creating unnecessary trouble.

Should we try to settle this out of court before the summons date or appear for the first hearing?


What could be the court verdict on this issue? There as some cases in which court has given penalty of double the amount of cheque and also 6 months imprisonment.

Your views and advices will be highly appreciated.


Thanks & Regards,

Ashish

 
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You have to face the trial of case and also to prove by cogent evidice that you have paid entire due amount to himYour case is strong so chances to win the case is more and more .


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If you pay the dues (against the bounced chq) within 15 days of receipt of court summons, then there will be no trial. See the below judgement:

Re : Alavi Haji vs. Palapetty Muhammed and Anr - By Hon'ble Supreme Court of India - Date of Judgment - 18.5.07

Held


The accused in the cases of Section 138 cheque bounces cannot take a stand that the Complainant has not served 15 days mandatory notice u/s 138, since even otherwise the accused within 15 days of receipt of summons from Criminal Court pay the amount to payee / beneficiary and seek closure of the complaint.

Issue

A short question which arises in this case is that whether the accused can take a stand that he was not served 15 days notice and escape the clutters of case filed under Section 138 of Negotiable Instruments Act.

Views and Comments of Supreme Court

The matter has been placed before the 3 Judge Bench of the Supreme Court, pertaining to the question of service of notice in terms of Clause (b) of proviso to Section 138 of the Negotiable Instruments Act, 1881 (N I Act).

The following question has been referred for consideration of the larger Bench :

In terms of the provisions of the N I Act, the necessary averments in regard to the mode and the manner of compliance of issuing 15 days notice is required to be made in the complaint. Whether in the absence of any averments in the complaint to the effect that the accused had a role to play in the matter of non-receipt of legal notice; or that the accused deliberately avoided service of notice, the same could have been entertained.

The Court has observed that cheque bounce case provisions were inserted in the N I Act with the object of promoting and inculcating faith in the efficacy of banking system and its operations and giving credibility to negotiable instruments in business transaction. The introduction of the said Chapter was intended to create an atmosphere of faith and reliance on banking system by discouraging people from not honouring their commitments by way of payment through cheques. Section 138 of the Act was enacted to punish those unscrupulous persons who purported to discharge their liability by issuing cheques without really intending to do so.

Apart from civil liability, criminal liability is sought to be imposed by the said provision on such unscrupulous drawers of cheques. However, with a view to avert unnecessary prosecution of an honest drawer of the cheque and with a view to give an opportunity to him to make amends, the prosecution under Section 138 of the Act has been made subject to certain conditions. These conditions are stipulated in the proviso to Section 138 of the Act. Under Clause (b) of the proviso, the payee or the holder of the cheque in due course is required to give a written notice to the drawer of the cheque within a period of thirty days from the date of receipt of information from the bank regarding the return of the cheque as unpaid. Under Clause (c), the drawer is given fifteen days time from the date of receipt of the notice to make the payment and only if he fails to make the payment, a complaint may be filed against him.

The issue with regard to interpretation of the expression 'giving of notice' used in Clause (b) of the proviso is no more res integra. In K. Bhaskaran v. Sankaran Vaidhyan Balan and Anr., the said expression came up for interpretation. Considering the question with particular reference to scheme of Section 138 of the Act, it was held that failure on the part of the drawer to pay the amount should be within fifteen days 'of the receipt' of the said notice. 'Giving notice' in the context is not the same as 'receipt of notice'. Giving is a process of which receipt is the accomplishment.

It is for the payee to perform the former process by sending the notice to the drawer at the correct address and for the drawer to comply with Clause (c) of the proviso. Emphasizing that the provisions contained in Section 138 of the Act required to be construed liberally, it was observed thus :

If a strict interpretation is given that the drawer should have actually received the notice for the period of 15 days to start running no matter that the payee sent the notice on the correct address, a trickster cheque drawer would get the premium to avoid receiving the notice by different strategies and he could escape from the legal consequences of Section 138 of the Act. It must be borne in mind that Court should not adopt an interpretation which helps a dishonest evader and clips an honest payee as that would defeat the very legislative measure. The context envisaged in Section 138 of the Act invites a liberal interpretation for the person who has the statutory obligation to give notice because he is presumed to be the loser in the transaction and it is for his interest the very provision is made by the legislature. The words in Clause (b) of the proviso to Section 138 of the Act show that payee has the statutory obligation to 'make a demand' by giving notice. The thrust in the clause is on the need to 'make a demand'. It is only the mode for making such demand which the legislature has prescribed. A payee can send the notice for doing his part for giving the notice. Once it is dispatched his part is over and the next depends on what the sendee does.

This Court held

We cannot also lose sight of the fact that the drawer may by dubious means manage to get an incorrect endorsement made on the envelope that the premises has been found locked or that the addressee was not available at the time when postman went for delivery of the letter. It may be that the address is correct and even the addressee is available but a wrong endorsement is manipulated by the addressee.

In such a case, if the facts are proved, it may amount to refusal of the notice. If the complainant is able to prove that the drawer of the cheque knew about the notice and deliberately evaded service and got a false endorsement made only to defeat the process of law, the Court shall presume service of notice.

This, however, is a matter of evidence and proof. Thus even in a case where the notice is returned with the endorsement that the premises has always been found locked or the addressee was not available at the time of postal delivery, it will be open to the complainant to prove at the trial by evidence that the endorsement is not correct and that the addressee, namely the drawer of the cheque, with knowledge of the notice had deliberately avoided to receive notice. Therefore, it would be pre- mature at the stage of issuance of process, to move the High Court for quashing of the proceeding under Section 482 of the Code of Criminal Procedure.

Concluding remarks of the Supreme Court

It is also to be borne in mind that the requirement of giving of notice is a clear departure from the rule of Criminal Law, where there is no stipulation of giving of a notice before filing a complaint. Any drawer who claims that he did not receive the notice sent by post, can, within 15 days of receipt of summons from the court in respect of the complaint under Section 138 of the Act, make payment of the cheque amount and submit to the Court that he had made payment within 15 days of receipt of summons (by receiving a copy of complaint with the summons) and, therefore, the complaint is liable to be rejected.

A person who does not pay within 15 days of receipt of the summons from the Court along with the copy of the complaint under Section 138 of the Act, cannot obviously contend that there was no proper service of notice as required under Section 138. In the instant case, the complainant issued lawyer's notice and the same was returned saying that the accused was 'out of station'. We are of the view that on facts in hand the requirements of Section 138 of the Act had been sufficiently complied with and the decision of the High Court does not call for interference.

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In our case we have given fresh cheque after 15 days of notice i.e. on 23-24th day after notice as we wanted him to return bounced cheque by collecting fresh cheque from our office. But that person is not ready to deposit that cheque and has filled case saying 15 days are over. We had sent fresh cheque even before he filled the case. His purpose of doing this is to get the extra unjustified amount which according to him is Rs. 50000. He has no cheque or proof for the that extra unjustified amount. And as far as we know he can only demand the amount of cheque bounced & may be penalty as decided by judge. Right? We would like to know when judge gives 6 months or a year imprisonment for bounced cheque? Because recently there were few cases in newspaper were a lady was fined penalty of twice the amount of cheque and also sentenced 6 months imprisonment. Kindly give views on this verdicts.[Case was like it was given as security cheque against money borrowed from friend which got bounced and even after notice, payment was not made by the lady] What should we do? Should we contact person for settlement and give few extra money in addition to bounced cheque (for which fresh cheque already issued) if he agrees? Because either ways we might be charged penalty, may be with with imprisonment or may be few thousand for settlement if that person agrees. Your views and advices are highly appreciated. Thanks to all above replies.
 
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Dear Ashish, I copy pasted the SC judgement so that you realise that if you pay the bounced chq amt to the person within 15 days of receiving the Court summons, and inform the same to the court, the court will not encourage any case against you. If the person is not acepting the payment, you can request the Court to accept the payment, or maybe submit your argument that you are willing to pay but the person does not want payment and wants to harass, so you may pray the court to quash the case.

 

I am not a lawyer so pls consult a lawyer with the options available.

 
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advocate.dma@gmail.com

Please do not think of contesting, it is futile and you are already willing to pay, infact paid.

 

at the best I suggest you to make a DD of the cheque amount in his favor and tell the court about reason for delay in issueing fresh cheque / DD. In all likelyhood court will not proceed further, it is ruled in one of the cases that even if accused pays on the first date matter ends there.

 

Also insist to take back your both the old cheques in exchange of this DD. Lets see after 26th May. 

 
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Hi,

I am Santosh from Bangalore. I am facing an issue and would request you experts to guide me on this.

I had payed a training institute 70000 for a course and they failed to complete the training and after 3-4 months of struggle I got a check from the head of the institue for 20500 refund. The guy gave me a undated check and told me that he would be confirming me on the date by next few days, but it has been almost 2 months now and he still isnt confirming me the date nor replying to my calls. What should I be doing? should I place the check at the bank without informing him?

 

 
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