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Raghu (Director)     22 June 2010

Applicability of 138 NI

I have an issue where there were few cheques issued to unknown recipients as a part of an agreement. But the recipient party did not fulfill the clauses of the agreement however went and submitted the cheques for clearance. Appropriate instructions were passed to bank to stop honoring the cheques. All the legal notices were responded with the same responses.

What would the status of these cases be - with respect to 138 NI act


 6 Replies

Devajyoti Barman (Advocate)     22 June 2010

Since the cases u/sw 138NI Act are under the principle of  strict liability, whatever defences you have can be agitated at the trial only.

kranthi (retainer advocate)     23 June 2010

yes u have face the sec.138 case before court , before thos u will settle the matter as  early as possible

Mohd Musabbir Ansari (Legal Practice/Litigation New Delhi 09582547570 )     24 June 2010

Dear Raghu As per Section 138 of Negotiable Instrument Act the Person who signs the Cheque is Liable for that.This is the clear case of Strict Liability. What you have to prove before the Court is that all cheques has been gaines fraudently.



        DEAR MR.RAGHU,

                                        You are saying that the cheques were issued to unknown receipients.You are also saying that it was a part of the agreement.How can U enter into an agreement with unknown  persons.Your version is not clear.You can ask the bank to stop honouring the cheques only with valid reasons.
Contact an efficient advocate and try to sort out ther matter beyond the court or you should have very strong defence when U R fighting UR case in the court.


Issuing cheques to Unknown recipients (third parties) is quite a common feature in business circle on the basis of an agreement to that effect between parties. The jural relationship is created between the issuer and the recipient. But the issuer has to defend when the case comes to court with all the defences available to him why he was prevented to pay up the cheque amount. However, the reply to the statutory notice already been sent, the accused must stick on to the context to a maximum extent, since any other reasons are canvassed during the trial, they may not hold water.

Raghu (Director)     28 June 2010

Thanks for the responses and advises.

The fact is, there was an agreement. A part of the agreement is to pay up some amount to people not known to me - documented and agreed. There were certain clauses that the opposition party was supposed to fulfil as a part of the agreement. The opposition party took half the amount as a part of theagreement and gave a slip. Now, I am getting notices from those people (who I dont know - but instigated by the person with whom I had the agreement). Its a clear violation of the agreement and thats what I responded to the notices - I dont owe a single rupee to anybody and I am still ready to pay the money provided all the clauses in agreement are fulfilled.

what is the best way out - the primary party with whom I had an agreement is giving a slip even to the Cops - simple words, he is underground

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