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Vivek (Director)     17 October 2014

Cheque bounce fake case

Hello members,

Greetings. I run a company which rents out payment gateway to call centers for foreign online transaction. I had a new client and I learned that they do not have DOT to run a call center. I asked them to stop using our gateway and cancel all the charges they made as we cannot do business any longer. They asked me to meet them and when I did, they threatened me and forced me to sign a cheque for INR 138000 with no name on it. When I came back home, I called up my bank and cancelled the cheque. Also, I filed a police complaint against them. Today I received a legal notice and looks like they cooked up a story that I have borrowed that money from them and gave them this cheque in return which later bounced. I am worried. What should be my next course of action? Please help. Thanks.



 3 Replies

reeti shah (lawyer)     17 October 2014

Reply to the notice immediately denying all the allegations. They should receive your reply within 14 days from the date of receipt of their notice by you.. Sincerley Adv Reeti Shah reeti@corpusjurislaw.com 9930285557

Hardeep (Business)     18 October 2014

If case proceeds you will have to prove there was no debt and default on your part. Gather evidence accordingly

Nitish Banka (lawyer)     02 April 2018

Posted by: Nitish Banka  Categories: Criminal Law 
 

 

What is a Cheque Bounce?

A Cheque Bounce case is a criminal case envisaged under section 138 of Negotiable Instruments Act. A cheque is said to have bounced because of below mentioned reasons.

  1. Stop payment
  2. Insufficient balance
  3. account closed
  4. signature mismatch
  5. exceeds arrangement

Conditions necessary for cheque bounce

  1. The cheque is bounced due to insufficiency of funds or all the above reasons.
  2. A Legal notice is given within 30 days.
  3. A payment of due amount is not made within 15 days time.
  4. the payment was to be made for discharge of legally enforceable debt.

Strategies to fight cheque bounce

Dispute Legally enforceable debt.

Since onus is on the accused to prove that there is no legally enforceable debt here are the examples to show that there was no legally enforceable debt

Cheque bounced was given as Security

If the cheques were taken only as security for prompt repayment and those cheque were not indischarge of any debt or liability. The date on which cheques were taken there was no debt or liability Accused cannot be prosecuted under NI 138.

In the case of Joseph Vilangadan (Supra) the facts were that the Directors had given certain cheques as refundable security deposits to ensure due performance of their work. In the given facts and circumstances it was held that there did not exist any debt or liability and the cheques were given solely for the purpose of security and hence no action under section 138 of the Act was maintainable.

If there was no debt or liability at that point of time while issuing the cheque

In Shreyas Agro Services Pvt. Ltd. vs Chandrakumar S.B. on 16 February, 2006

The very scheme of procedure adopted shows that the cheques are not issued in respect of any current existing ascertained liability. The words “for discharge of any debt or other liability” inSection 138 of N.I. Act should be interpreted to mean current existing or past ascertained liabilities. The cheque issued in respect of future liabilities not in existence as on the date of cheque would not attract prosecution Under Section 138 of N.I. Act.

So even if security cheque is bounced the prosecution can be initiated and only defence is that there was no legally enforceable debt.

Related image

 

Friendly loan with respect of unaccounted money

As held in Sanjay Mishra vs Ms.Kanishka Kapoor The learned Judge held that the applicant has failed to establish that the cheque was issued by the 1st respondent in discharge of legal liability of the loan amount. The learned Judge observed that the 1st respondent has denied her signatures on the bill of exchange as well as the cheque subject matter of the complaint. The learned Judge has taken into account various circumstances borne out by the evidence on record and has passed order of acquittal. The learned Judge also considered the admission of the applicant that the amount advanced was an unaccounted amount which was not disclosed to the Income Tax Authority.

Cheque was lost and reporting of loss as well as stop payment prior to issuance of the cheque.

What is the case of the petitioner? According to him he had lost the cheque leaf. When was the cheque leaf lost? Under what circumstance was the cheque leaf lost? What is the conduct of the petitioner when he  realised that such cheque leaf was lost? Is there any conduct congruent to lose of such cheque leaf as alleged by the petitioner? Is there any conduct consistent with the theory of loss of cheque leaf? It is crucial and vital that there is not a single piece of acceptable conduct in which the petitioner is shown to have indulged in if as a matter of fact the cheque leaf were lost from his possession. If it were lost, one would have expected the petitioner, himself an employee of a Co-operative Society, to atleast issue a stop payment memo. That was not done. Of course, a convenient Bank Manager did attempt to oblige his customer, the petitioner, by stating in the course of cross examination that oral information was given. It is crucial that even the Manager does not say when that oral information was given and in respect of which cheque. If any such oral information were given, it is extremely unlikely that the cheque would have been dishonoured except on the ground of stop payment. The memo of dishonour does not significantly reveal such a ground for dishonour at all.

Accused Disputing Signature on Cheque

If the accused disputes the signature on the cheque. It is the banker who is the most reliable evidence to establish that the cheque is bounced due to signature mismatch. The bank manager has to summoned with all the records related to signature of the accused and testify in court that the cheque signatures mismatch.

There are also other defenses available to disprove cheque bounce cases however if the cheque is really issued for discharge of legally enforceable debt then it is better to compromise as the cheque bounce case is compoundable

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