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Cheque Bounced Due to Wrongly Delivered Not Drawn on Us ? Legal Help
08-Jul-2024 (In Cheque Bounce Law)
usually no -Section 138 NI Act applies only where a cheque is drawn on an account maintained by the drawer and is returned unpaid for insufficiency/exceeding arrangement, so a return reason 'wrongly delivered, not drawn on us-normally shows the cheque was not validly drawn and will not attract Section 138 (Negotiable Instruments Act, s.138). [https://legislative.gov.in/sites/default/files/A1881-26.pdf]; see the Supreme Court's formulation of Section 138's ingredients in Jugesh Sehgal v. Shamsher Singh Gogi. [https://indiankanoon.org/doc/263997/] and Allahabad High Court quashing proceedings where a cheque of an erstwhile bank was dishonoured with the endorsement 'wrongly delivered, not drawn on us.-[https://indiankanoon.org/doc/33475252/]. Courts nonetheless examine the bank's return reason and may allow proceedings where the endorsement is a usual dishonour endorsement or a feeding/CTS error (Supreme Court in Lafarge Aggregates & Concrete India v. Sukarsh Azad; Allahabad HC in Sanjay Singh v. State of U.P. finding a MICR/feeding mistake). [https://indiankanoon.org/doc/81363089/] [https://indiankanoon.org/doc/144033248/]. Practical steps: (1) preserve the cheque and bank memo and send the statutory demand notice under Section 138 (per the NI Act) and, if payment is not made within the prescribed time, institute appropriate proceedings; (2) if the cheque is invalid on its face, pursue civil recovery or ask the drawer to reissue the cheque; and (3) if facts show the drawer knowingly issued an invalid cheque to deceive, consider criminal action for cheating under the Bharatiya Nyaya Sanhita (e.g., s.318 BNS) and proceed under the BNSS/BSA procedure and evidence regimes now in force. [https://legislative.gov.in/sites/default/files/A1881-26.pdf] [https://www.mha.gov.in/sites/default/files/250883_english_01042024.pdf] [https://www.indiacode.nic.in/bitstream/123456789/20099/3/A2023-46.pdf] [https://www.indiacode.nic.in/bitstream/123456789/20063/1/a2023-47.pdf]
If a cheque bounces due to being wrongly delivered and not drawn on us, the payee may not be able to file a case under Section 138 N.I. Act, as this section applies to dishonor due to insufficient funds or account closure.
However, the payee can:
- Send a legal notice to the cheque issuer demanding rectification or reissuance.
- Seek legal remedies under the Negotiable Instruments Act, 1881, if the cheque was wrongly issued due to misrepresentation.
- File a civil suit to recover the due amount.
To strengthen the case, the payee should retain:
- A copy of the wrongly delivered cheque.
- The legal notice sent to the issuer.
- Any supporting documents proving entitlement to the cheque amount.
6+
Adv. Chikirsha Mohanty
Delhi | 200+ Answers
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Before filing a case:
- Send a legal notice to the drawer demanding the cheque amount.
- If the drawer does not pay within 15 days, you can initiate legal action.
- If the cheque was issued by mistake or in the wrong name, the drawer may argue against liability, so proper documentation is crucial.
Adv. Ashwini Ketan Patani
Adv. Ashwini Ketan Patani
Kalyan | 25+ Answers
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- Issue a legal notice under the Negotiable Instruments Act within 30 days.
- If not resolved, take civil or criminal action depending on the circumstances.
7+
Adv. Garima Anil Mehrotra
Adv. Garima Anil Mehrotra
Mumbai | 700+ Answers
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For a Section 138 complaint, the cheque must bounce due to:
- Insufficient funds
- Account closure
- Stop payment instructions
- Request the correct cheque reissuance.
- Seek civil remedies for the owed amount.
Adv. Megha Gupta
Adv. Megha Gupta
Mumbai | 25+ Answers
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