Is ni act u/s 138 attracted ?

Originally posted by : sk mohataji
	Against civil suit, settlement arrived outside court. Defendant paid Demand Draft. Delayed delivery of demand draft. Demand draft returned from bank stating out of date/stale.b Can NI Act U/s 138 be issued for Demand Draft returned being out of date ? Drafts are valid for 90 days, but was delivered on 89th day, hence returned.

When was the DD (as consideration of settlement) presented in the Bank of complainant for realisation and crediting the amount in his/ her account i.e., within its validity or not?

If it was presented after its validity it can be revalidated by the accused through his / her Banker (the Bank which prepared the draft) and re-issue.

Provisions of Section 138 of the Negotiable Instruments Act, 1881 attract for "dishonoured cheque for insufficient funds  etc" and not for any other instrument, including demand draft in question.

DD was deposited same day on receipt, i.e., 89th day, morning. If DD were outdated, bank will not accept such instruments. But even DD is a negotiable instrument. Definitely this is not the case of insufficient funds, as amounts in accounts are debited in advance prior to isuuing of Drafts. Now the defendant is having second thoughts and does not intend to settle. Can NI act action be initiated ?

Section 138 of the NI Act shall not be applicable.

This is a simple thing that can be settled in a day.   Accompany with purchaser of the draft to the bank and get draft revalidated and present it immediately or issue a notice to the purchaser of draft and seek revalidation.   The amounts at present are with Banker and not with the purchaser. or drawer of that returned cheque.

If you suspect that the other party is having other intentions, issue a notice to the Bank not to cancel the demand draft as it was at present in your custody as security for dues by purchaser and was returned as stale.

Defendant collected original Draft with promise to pay online. But now is not paying. In good faith, draft was handed and acknowledged. But now they are having second thoughts. Issuing notice to bank does not help as only the draft purchaser can apply to the bank for revalidation. Blocking for nss at bank, does not help us. Hence, only alternative left was to issue NI Act. Notice and proceed accordingly. Kindly revert with your valued suggestions.

You are not going to sacrifice further by demanding the paying banker in your capacity as payee not to cancel the demand draft as it was given in good faith to the purchaser for revalidation and you are a valid holder in due course and the purchaser as your agent has collected the demand draft for the purpose of revalidation only.  Either bank rejects or obliges.  If the Bank rejects,  and confirms such cancellation then you can establish malafides of the drawer of bounced cheque.  The capacity of the purchaser of demand draft as per new relationship is as agent for you for revalidation which amounts to cheating and criminal breach of trust if it is canceled without your specific permission.

Sir, your suggestions makes sense to me.  Under the circumstances it appears that we should proceed with sec.406, 420 and not 138. Kindly confirm if I have sensed rightly. Thanks

Facts posted suggest that the author in inclined to initiate another dispute or litigation than effectuating the settlement.

1. Section 138 of the NI Act are not attracted.

2. Initiate and proceed for other legal option for cheating and fraud.

Sir, is anyone interested in litigation. Only when all options are closed, we try take shelter under law to safeguard ourselves.

One saying goes - ja tere ko court kachari lag jaye, meaning his next 7 generations are for finished.

Fact is one company petition of 1960 is still pending. 2 generations of the family have expired, third is about to leave and 4th generation has moved to USA. Is there any sense if justice prevails now ? A time bound litigation approach needs to be practised and is easy, simple and affordable, but surprisingly not being practised. 3 crore litigation pending, 3 generations wait for justice, can we afford now. Time and costs need to be accounted. None wants litigation, but one is helpless to get Taareekh pe Taareekh