CHEQUE DISHONOUR

TI IS PRESUMED THAT THE CHEQUE WAS TENDERED TO CLEAR THE DEBIT BALANCE OF LOAN A/C & THERE ARE NO SUFFICIENT FUNDS IN THE SB A/C. NATURALLY THE CHEQUE IS BOUND TO BOUNCE.. ON BOUNCING OF CHEQUE ACTION U/S 138 OF NEGOTIABLE INSTRUMENT ACT WOULD BE ATTRACTED IF CHEQUE IS RETURNED BY BANKER ON PRESENTATION WITH REASONS "INSUFFICIENT FUNDS".

CGSANGAMNERKAR (09785018961)

LET ME RESTATE MY QUESTION.

A BORROWER HAS 2 ACCOUNTS - 1] LOAN ACCOUNT   2] SAVINGS ACCOUNT  with the SAME BANK AND BRANCH.

FOR DISCHARGE OF LOAN AMOUNT HE GIVES THE CHEQUES FROM THE THAT SAVING ACCOUNT(WHERE A DEBTOR ALREADY HAS A RIGHT OF LIEN ON SUCH CREDIT BALANCES) -

IF THERE IS NO BALANCE IN SAVING ACCOUNT WHEN THE CHEQUE WAS SENT TO THE SAVINGS DEPARTMENT FOR CREDIT TO LOAN ACCOUNT - ON A PARTICULAR DAY

WOULD IT CONSTITUTE DISHONOUR UNDER THE PROVISIONS OF 138 OF NI ACT.  IF SO WHAT ABOUT RIGHT OF SET OFF WHICH IS ALREADY AVAILABLE.

ANY CASE DEALING WITH THIS QUESTION.

Dear Mr. Rao,

I just want to make one thing clear that if the mode of payment for EMI's of Loan was Cheque, then you have to present it  to your bank with the due procedure for the same. The day when you received intimation of such dishhonour, within 30 days of such intimation you have issue a demand notice u/s 138 of NI Act giving him 15 days time to make payment. If he fails to make payment within the stipulated period then after expiry of 15 days but within next 30 days you can file criminal complaint u/s 138 of NI Act before the Judicial Magistrate first class or Metropolitan Magistrate as applicable to your case.

Remember one thing if that person had opted mode of payment for EMI's as ECS, then you can not use Cheque for repayment of Loan amount, as it would be presumed that the cheque was given as security and on security Chques no criminal prosecution can be launched upon. In case of ECS and ECS is dishonoured. Then you have to issue demand notice within 30 days of such intimation giving him 15 days for payment. If he fails to make payment den after expiry of 15 days but within next 30 days you can file criminal complaint under section 25 of Payment of Settlement Act for the offence committed.

I hope you query is resolved