Time Limit of filing case against cheque bouncing

91 votes

Cheque bounce is among the most common financial frauds in the country and is punishable under section 138 of the Negotiable Instrument Act, 1881. This section has been incorporated to give a serious status to financial transactions in India, especially with regard to trade and commerce, and anyone who hinders the free flow of transactions by causing a cheque bounce is to be punished under the Act.
 

What is the Timeline in a regular Cheque Bounce Case?

Cheque bounce matters have become common in today’s time. Many a time, a cheque is bounced with mal intention of the payer of the cheque. It is thus important to seek justice in a timely manner in order to ensure you get the amount/money that is rightfully yours. If you have been wronged and a cheque in your favour has been bounced, you have a right to legal recourse in order to get your rightful claim and punish the wrongdoer. The timeline involved in a cheque bounce case under Section 138 of the Negotiable Instruments Act has been given in detail below:
 
Stage 1 : Filing of complaint under Section 138 with the Court
The complaint should be filed before the Trial Court within 30 days of expiring 15 days period given for payment. The Complaint should be supported with Original Returned Cheque, Original Copy of Cheque Return Slip received from Bank, Copy of Legal Notice with Acknowledgement and receipt for delivery of notice, Reply if any received against notice, Proof of amount receivable such as invoices, promissory note and etc. If the courts finds prima-facie a case is made out, then the complainant will be called to make sworn statement before the court.
 
Stage 2: Sworn Statement of Complainant
The complainant or his authorized agent should appear in the witness box and provide relevant details for filing the case. If the court is satisfied and finds substance in the complainant, then the summon will be issued to the accused to appear before the Court.
 
Stage 3: Appearance of Accused
After receipt of summon from the Court the accused shall appear in court in person or through his Counsel. The court will verify whether the summon issued by the court is received by the accused. In spite of the receipt of summon, if the accused failed to appear before the court then the the court will issue an arrest warrant against him. The court will enquire the accused whether he admits the charges made by the complaint. In case of admission of guilty, the court will post the matter for punishment. If the accused, denies the charges then he will be served with the copy of complaint and he will be directed to submit his version of defense.
 
Stage 4:  Examination in Chief
The Complainant shall present his evidence by way affidavit or oral and produce all documents including the original in support of his complaint. The complainant can also present his witnesses in support of his case.
 
Stage 5: Cross Examination
The complainant will be cross examined by the accused or his counsel. The other witnesses appeared in support of the complainant will also be cross examined in this stage.
 
Stage 6: Defense Evidence
At this stage the accused will be given an opportunity to leave his evidence. The accused will also be afforded an opportunity to submit his documents in support of his case, as well as witnesses in his support. Accused and his witnesses will be cross examined by the complainant. After this, the case is posted for arguments.
 
Stage 7: Arguments
The Complainant and the accused or this counsels shall submit their arguments before the Court. During the argument the counsel may submit the precedents of High courts and Supreme Court in support of their case. Usually, a written argument containing a gist of the oral argument is also submitted before the the court.
 
Stage 8 : Judgment
After the arguments, the case is posted for judgment. if the court finds in favor of the complainant then the accused will be punished with fine or imprisonment. If the court finds in favor of the Accused, then the court will acquit him. If accused is convicted, he will be subjected to arrest or he can move a petition for suspension his sentence for a period of 30 days, so he can file an appeal before the sessions court.
 

Cheque Bounce under Section 138 of Negotiable Instruments Act

The Negotiable Instrument act, 1881 (hereinafter referred to as the ‘NI Act’) encapsulates the legal framework for the use and operation of negotiable instruments in our country. Cheques are also a form of negotiable instrument and therefore fall under the purview of the NI Act. Among the penal provisions of the NI Act, Section 138 provides for the punishment in case of dishonour of cheques.
 
Section 138 provides the punishment for cheque bounce and states that in case a cheque made for the discharge in-whole/in-part of any debt/liability is dishonoured for either insufficiency of funds or for the amount exceeding the arrangement with the bank, the drawer of such cheque shall be punishable under this provision.
 
The following are the essential ingredients for constituting the offence under Section 138 of the NI Act:
 
1. A person must have drawn the cheque in favour of another person to discharge any debt or other liability wither in whole or in part
 
2. The cheque must have been presented for payment within the validity of the cheque i.e., within three months of the date of the cheque
 
3. The cheque must have been dishonoured for one of the following two reasons;
 
     a. Insufficiency of funds in the account
 
     b.  Value of the cheque exceeding the amount arranged to be paid from such account by an agreement made with the bank
 
4. The payee makes a demand to the drawer through a notice in writing, for the payment of the amount in the cheque within a period of 15 days from receiving information from the bank regarding the return of the cheque as unpaid
 
5.  Failure of the drawer to make such payment to the payee within a period of 15 days from the receipt of the demand notice from the payee
 
Pertinently, Section 138 provides a punishment of imprisonment for a period which may extend to 1 year or with fine which may extend to twice the amount of the cheque, or with both.
 
Section 138 of the Negotaible Instruments Act, 1881 states as follows:
“138 Dishonour of cheque for insufficiency, etc., of funds in the account. —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 19 [a term which may be extended to two years], 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 in due 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, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque 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 purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.”
 

What to do in case of Cheque Bounce?

The first and foremost thing to do in the case of cheque bounce is to seek the services of a cheque bounce advocate or lawyer. Irrespective of whether you are the drawer or the payee in the given situation, an advocate will best guide you to decide the plan of action that protects your interest. Given the civil and criminal consequences that may arise in case of cheque bounce, it is important to protect yourself from any liability before it’s too late. The detailed procedure for getting back the money due to you and also justice from the courts is provided in a separate section below.
 
Essentially, a lawyer will guide as to whether a demand notice in his/her name should be sent, or proceedings under the civil laws need to begin.
 

Who can file a Cheque Bounce case?

Ordinarily, the payee of the cheque files the cheque bounce case. But in special cases, the case can also be filed through a power of attorney. An important thing to keep in mind is that it is mandatory for the complainant to appear before the magistrate and be examined under oath.
 

Documents Required for a Cheque Bounce case:

The following documents are required before filing a cheque bounce case :

1) Original cheque and return memo
2) Copy of notice and original postal receipts.
3) Evidence affidavit.
 

What is the Structure of Payment of Court Process Fees to File a Cheque Bounce Case?

Every litigation process requires payment of court fees. Similarly, while filing a cheque bounce complaint, the drawee (complainant) has to pay a standard amount of court fees which varies case to case and entirely depends on the cheque amount against which the complaint is being filed in the court.
 
The standard court fee structure varies for different cheque amounts which is mentioned below:
 
Cheque Amount                            Court Fee
Rs. 0 to 50,000/-                             Rs. 200/-
Rs. 50,000/- to 2,00,000/-               Rs. 500/-
Above Rs. 2,00,000/-                      Rs. 1000/-
 

Punishment and Penalty for Cheque Bounce

On receiving the complaint, along with an affidavit and relevant paper trail, the court will issue summons and hear the matter. If found guilty, the defaulter can be punished with monetary penalty which may be twice the amount of the cheque or imprisonment for a term which may be extended to two years or both. The bank also has the right to stop the cheque book facility and close the account for repeat offences of bounced cheques.
 
If the drawer makes payment of the cheque amount within 15 days from the date of receipt of the notice, then drawer does not commit any offence. Otherwise, the payee may proceed to file a complaint in the court of the jurisdictional magistrate within one month from the date of expiry of 15 days prescribed in the notice.
 

How can a Lawyer help in Cheque Bounce Case?

Cheque bounce, though one of the most common offences in India, is still a serious issue to deal with as it may involve potential jail time for the issuer. Thus, it is of utmost importance to have a lawyer by your side when filing a cheque bounce case. An experienced cheque bounce lawyer can draft the legal notice and complaint on your behalf and can also prepare you for cross-examinations. A cheque bounce attorney, owing to his years of experience, can guide you through your legal journey and can help you understand the technicalities of the court procedure. He can ensure that the possibilities of you receiving the desired result in your cheque bounce case is more.
 

What Happens if Timely Action is Not Taken in a Cheque Bounce Case?

A cheque bounce case is time-bound and the time period to take any action against the defaulter under the cheque bounce law and the Limitation Act is limited. Therefore, it is crucial that timely action is taken when you are dealing with a case as serious as a cheque bounce. It is recommended to consult a lawyer at the first instance to get a timely result in a matter related to cheque bounce.

LawRato LawRato

909 votes

It's contains different stages after dishonour of cheque legal notice to be given with 30 days then accused should be given 15 days to pay money back & case to be filed with in 45days. A lot of rulings regarding check of time please contact me for details if you want to file a case under 138 of N I act

Advocate Avdesh Chaudhary LawRato

676 votes

Limitation is an important aspect for initiating proceedings u/s 138 or 141 of negotiable instruments act. You have to send a legal notice within 30 days from the date of return (dishonour) of cheque asking the noticee to pay the amount within 15 days. On expiry of fifteen days from the service of notice, you have to file a complaint before the Concerned magistrate within 1 month of the said expiry. However, it is pertinent to note that nothing precludes you from filing a separate civil suit (summary suit) for recovery of the amount due the limitation of which is 3 years from the cause of action/ date of dishonour.

Advocate Raghav Sabharwal LawRato

954 votes

The time limit for filing a case under Section 138, NI Act is one month immediately following the day on which the period of 15 days from the date of the receipt of the legal notice expires. Please feel free to contact in case of any queries.

Advocate Gurjyot Sethi LawRato