Negotiable Instrument act was enacted before our country got its independence
therefore most of the provisions in the act are supported by English statute.
After the independence, certain amendments were made in the Act in order to firm
the provisions. The act was drafted in the year 1866 and it came into force in
Negotiable Instruments Act, regulates various sorts of negotiable
instruments like Promissory notes, Bills of Exchange and Cheques. In the simple
terms it means any transferable document which is on delivery.
In the Chapter XVII - Of Penalties in case of Dishonour of certain cheques for insufficiency
of Funds in the Accounts
form the Section 138 to Section 148 of The Negotiable
Instruments Act, 1881, a statutory and judicial prospective is focused on the
different aspects of provisions and procedures set up in the cases related to Dishonour of Cheque. This section has been very recently decriminalised and the
main purpose behind this is to promote foreign investment in our country.
Objective and Scope
Section 138 of the Negotiable Instruments Act deals with the punishment for the
dishonour of the cheque. Section 138 of the Negotiable Instruments Act 1881
provides the legal recourse to handle things of cheque bounce. The main
objective is to incentivize the trend of the use of cheques and to increase the
credibility of cheques transactions by making the offence. An offence committed
under Section 138 is a non-cognizable offence. Also, it is a bailable offence.
Offence under section 138 will be completed with following components:
- Drawing of Cheque by the drawer for the discharge of debt or other liability
- Presentation of Cheque within 6 months form the date on which it's drawn
- Dishonour of cheque and return unpaid by the drawee bank
- Statutory Notice within 30 days of receipt of information from the bank
regarding the return of cheque as unpaid to the drawer demanding payment of
- Failure to form payment by the drawer within 15 days from the date of receipt of
A person who is guilty for an offence under the Section 138 shall be
Imprisonment for a term which can be extended to 2 years, or with fine which can
extend upto twice the amount of the cheque, or with both.
Section 138 creates statutory offence in dishonor cheques matter on the basis of
insufficiency of funds in the account maintained by a person with the banker and
exceeds the amount arranged to be paid from that account by an agreement made
thereupon bank as mentioned within the act.
Procedure for Filing of Complaint:
After complying all chronology provided under Section 138 of the Act, the
Compliant is required to be made to the Concerned Magistrate within 30 days from
the day on which the period of 15 days for payment of monetary by the drawer
expires. The compliant is required to be signed by the Complainant himself or
duly authorised Power of attorney holder. On the day complaint is presented, if
the complaint is accompanied by affidavit of complainant, the concerned
magistrate shall examine complaint & documents.
Summons are going to be issued
to accused in accordance with the section 144 of the act as explained above. If
summon served upon the accused and therefore the accused appeared within the
court, the Court shall ask him to furnish bail to make sure his attendance
during trail (as the offence under Section 138 is bailable offence ) and issued
to the Accused in terms of section 251 of the CRPC Then trail of the case
Through Section 138 Payee is protected against illegal activity of the drawer.
It not solely aims to shield the interest of the payee but additionally to bring
a holiness to the drawers who issues the cheques.At last, I need to conclude
that the importance of speedy and timely disposal of cheque bounce cases are one
amongst the most concern before the judiciary as a result of the aim of timely
payment of monetary to payee and enacting the remedy for him would fail if
accused accomplish prolonging these cases.
- Dishonour of Cheque [S. 138 NI Act and allied sections] by Tejaswi Pandit [SCC
Suggested Articles on Section 138 of the Negotiable Instruments Act:
Section 138 of the Negotiable Instruments Act
Critical Analysis of Section-138 of Negotiable Instruments Act
Section 143-A of Negotiable Instruments Act, 1881 Has No Retrospective
Commentary: Re: Expeditious Trial Of Cases Under Section 138 Of N.I. Act
Decriminalizing Sec 138 Of Negotiable Instrument Act, 1881: Boom Or Bane A
Stopped Payment of Cheque: Can the Drawer Be Held Liable Under Section 138
of the Negotiable Instruments Act