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Siva (Consultant)     07 September 2010



Since we knew that the VALIDITY of a Cheque is only 6 months, how the Bankers submit the post-dated cheques (which were issued TWO years back) in Borrower’s SB account and file a suit u/s 138, if gets bounced?


Suppose, if the cheques got bounced, are the Bankers liable to enact sec. 138 NI Act against the Borrower?      [NOTE: Madras High Court’s answer is ‘NO’ to this question].


Consider a case that a Borrower availed an un-secured Personal Loan from a Bank. Also, he made the re-payments for about one and half years without any break.  Recently, he lost his job and couldn’t able to pay the EMI regularly but he’s intended to pay once his financial position gets stabled. But, without hearing his words, the Banker has gone and submit the post-dated cheques issues by him previously (2 years back) and lodged a complaint against borrower u/s 138 NI Act.


Here, at this juncture, can the Borrower prove that the Cheques issued were very old (i.e. issued before 2 years) by any FORENSIC TEST of the cheques and make the case void by explaining the Validity of Cheques?


First of all, how the Bankers enact criminal case u/s 138 NI Act for Non-Cognizable/CIVIL nature complaints, however, HC & SC severely condemns this approach?!


 9 Replies

Amit (Advocate)     08 September 2010

1 Like

Adesh Kumar Sharma (Senior Associate Lawyer)     08 September 2010

My dear friend,

The NI Act is the most technical act, so need to read it throughly to understand as to which provision is applicable under this situation.

This does not make any difference that the cheque was given two years before, the validity is counted from the day wen the date is mentioned on the leaf of the cheque not from the delivery of the Cheque Leaf. 

If someone handover the Blank Cheque only after signing on it, It can not be said cheque, becasue before mentioning the date on the leaf it the Bill of Exchange not Cheque. It becomes cheque on the day wen the date is put on it. 

First read section 138 of NI Act, which says that holder in due course or payee may make a demand as the case may be, the same be read as under:

138. Dishonour of cheque for insufficiency, etc., of funds in the accounts

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for 2["a term which may extend to two year"], or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder induce course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice, in writing, to the drawer, of the cheque, 3["within thirty days"] of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. 

Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability].
If the post dated cheque is given to make the payment of EMI, then the bank has every right to present the cheque if there is any default in the agreed schedule of payment. If the cheque is dishonoured on presentment then Bank has option none other then to file complaint under section 138 of NI Act. 
There is specific provision that says that the Cheque would be completed on the day wen the date is put on it, and before putting the date it not a cheque but it is only a bill of exchange. Read the provision:

118. Presumptions as to negotiable instruments of consideration



Until the contrary is proved, the following presumptions shall be made:-


(a) of consideration-that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;

(b) as to date- that every negotiable instrument bearing a date was made or drawn on such date;

(c) as to time of acceptance- that every accepted bill of exchange was accepted within a reasonable time after its date its date and before its maturity;

(d) as to time of transfer.- that every transfer of a negotiable instrument was made before its maturity;

(e) as to order of endorsements - that the endorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;

(f) as to stamps-that a lost promissory note, bill of exchange or cheque was duly stamped;

(g) that holder is a holder in due course - that the holder of a negotiable instrument is a holder in due course; provided that, where the instrument has been contained from its lawful owner, or form any person in lawful custody thereof, by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.

Now read the holding of the Supreme Court in Isaar Alloy case:(See attachment)


9. It, however, does not mean that the cheque is always to be presented to the drawer's bank on which the cheque is issued. The payee of the cheque has the option to present the cheque in any bank including the collecting bank where he has his account but to attract the criminal liability of the drawer of the cheque such collecting bank is obliged to present the cheque in the drawee or payee bank on which the cheque is drawn within the period of six months from the date on which it is shown to have been issued. In other words a cheque issued by (A) in favour of (B) drawn in a bank named (C) where the drawer has an account can be presented by the payee to the bank upon which it is drawn i.e. (c) bank within a period of six months or present it to any other bank for collection of the cheque amount provided such other bank including the collecting bank presents the cheque for collection to the (C) bank. The non presentation of the cheque to the drawee-bank within the period specified in the Section would absolve the person issuing the cheque of his criminal liability under Section138 of the Act, who shall otherwise may be liable to pay the cheque amount to the payee in a civil action initiated under the law. A combined reading of Sections 2, 72 and 138 of the Act would leave no doubt in our mind that the law mandates the cheque to be presented at the bank on which it is drawn if the drawer is to be held criminally liable. Such presentation is necessarily to be made within six months at the bank on which the cheque is drawn, whether presented personally or through another bank, namely, the collecting bank of the payee.

In the last I wud say that if the accused takes the plea that the cheque was given 2 years ago and the Bank can not present it after two years, it the unworthy and weakest  defence and can not be sustained.
You please upload the judgment so that we cud know that wot were the facts of the case and under wot circumstances the High Court reached on this finding.

Attached File : 35 35 sc judgment on presentation of cheque.doc downloaded: 358 times
1 Like

Siva (Consultant)     08 September 2010

Dear Mr.Aadesh,

Thanks a lot for your reply.

As per your request, here goes the judgment of Madras HC:



Keep off civil disputes, HC tells police:

Can criminal proceedings be initiated for issues concerning credit cards, personal loans, housing loans, hire-purchase schemes, default in payment of installments and cheque-bounce cases?

'' NO '' - is the Madras High Court's emphatic answer.


Neither the judicial/metropolitan magistrates shall entertain any private complaints from corporate firms in this connection, nor shall the police register criminal cases against persons concerned to please their corporate complainants, said Justice R Regupathi. Not stopping with that, the judge directed the high court's registrar (vigilance) to compile state-wide statistics on the number of private complaints lodged for these civil disputes, and the orders passed by the magistrates concerned.


Narrating the novel system adopted by private financial institutions/banks, the judge said they file private complaints before magistrates and secure an order directing the jurisdictional police to register a criminal case and carry out investigations under Section 156(3) of the CrPc. Despite the fact that the dispute is CIVIL in nature and the Police are under no obligation to register any case, police personnel contact the persons and intimidate them to repay the credit card payment or personal loan or hire-purchase amount due to the bank. Citing two specific cases that came up before him, Justice R. Regupathi said in both cases though there was nothing to investigate, the magistrate concerned, "with oblique motive to convert a civil case into a criminal case," directed police to register a case and probe.


- Magistrates asked not to entertain private complaints.

- Police not to register criminal cases in such complaints.
- Erring magistrates warned of stringent action.

- HC registrar asked to compile statistics on number of private complaints.

- Also asked to report on the orders passed by the magistrates concerned.



Also, kindly have a look of the below web-links (TIMES OF INDIA, 13th JULY, 2008):


1)      https://epaper.timesofindia.com/Repository/ml.asp?Locale=english-skin-custom&Mode=Gif&Ref=VE9JQ0gvMjAwOC8wNy8xMyNBcjAwMTAy


2)      https://epaper.timesofindia.com/Repository/ml.asp?Locale=english-skin-custom&Mode=Gif&Ref=VE9JQ0gvMjAwOC8wNy8xMyNBcjAwNjA0


Further, you may refer the below link as well (THE HINDU, Chennai, Friday, 22/08/08):


Siva (Consultant)     09 September 2010

Dear Mr. Amit,

The blog that you posted is very informative and gives a fair idea about sec. 138 NI Act.


Adesh Kumar Sharma (Senior Associate Lawyer)     09 September 2010

Dear Mr. Shiva,

You hav interpreted the finding of the High Court as wrong. I hav gone through the Judgement of the High Court, wherein the findings of the Court was that since there is a tool to penalise the Accused i.e. section 138 of NI Act, and the Complaint is pending before the court under section 138 of NI Act. In that case if the Bank or any individual filing a private complaint under section 156(3) of Cr. P.C to get registered an FIR against the accused for the same cause of action, that can not be permitted.  In that matter the High Court quashed the FIR registered under section  406 and 420 of IPC. 

The High court relied on the  the Supreme Court judgment (2000CriLJ824 , G. Sagar Suri and Anr. v. State of UP) which is made hereunder:

A criminal complaint under Section 138 of the Negotiable Instruments Act is already pending against the appellants and other accused. They would suffer the consequences if offence under Section 138 is proved against them. In any case there is no occasion for the complainant to prosecute the appellants under Sections 406/420 IPC and in his doing so it is clearly an abuse of the process of law and prosecution against the appellants for those offences is liable to be quashed.
I hope you got the point wot I mean.


Vijayendra Navale (Advocacy )     14 September 2010

Mr Aadesh sir, please forward citations for Material Alteration U/sec -138. Please....Don't mind.

Siva (Consultant)     19 September 2010

Pls find attached the lastest judgment pronounced on 26th February, 2010 by Magistrate Mr. P.R. BORKAR, IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD:

Also, pls make note of the following and it's one of the point of Judgment  -Prosecution ruled out in blank cheque bounce cases u/s 138 NI Act:

The object of the amendment and introduction of Chapter XVII in the Negotiable Instruments Act by Act of 1988 was mainly to encourage all major transactions including commercial or business transactions through cheques and to enforce credibility and acceptability of cheques in settlement of liability in general. So, provisions like Section 138 of Negotiable Instruments Act are salutary to give reliability, credibility and acceptability of negotiable instruments like cheques in daily life. However, the object was not to provide effective and speedy remedy for recovery of loans. Law makers must not have intended or imagined that money lenders or banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of the Negotiable Instruments Act. So, it is doubtful if provisions of Section 138 of the Negotiable Instruments Act would be attracted to a case in which a blank or post dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan.

Attached File : 27 27 prosecution ruled out in blank cheque bounce cases u s 138 ni act.pdf downloaded: 322 times

S.Lakshmikanthan (senior)     08 May 2014

Dear siva,

Though there are many HC judgments regarding the usage of the blank cheques given by debtors/borrowers by the bank or financial institution, whether it would attract sec.138 of NI act or not. but the controversy is still going on.

In the latest supreme court judgment: IN THE SUPREME COURT OF INDIA


CRIMINAL  APPEAL NO.   830      OF 2014 

(Arising out of SLP (Crl.) No.9752 of 2010)

 It is held that when the issuance of a cheque at the time of signing such contract has to be considered against a liability,  as the amount written in the cheque is payable by the person on the date mentioned in the cheque. To attract an offence under Section 138, there should be legally enforceable debt  or other liability  subsisting on the date of drawal of the cheque. In other words, drawal of the cheque in discharge of existing or past adjudicated liability is  sine qua non for bringing an offence under Section 138.


so as in ur case, at the time of signing of the cheque u dont have any past or existing libility with the bank and after signing only u have got the loan amount. so rely on the judgment. hope it is helpful to u.


ganesh   25 July 2015

Hi, Please help. I got a posted cheque almost 1 and  half year. i requested them for an early date but I didn't get any response. please suggest what i can do



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