Dishonour of cheque for insufficiency, etc., of funds in the account
Full Text
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 provision of this Act, be punished with imprisonment for 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, 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 of other liability” means a legally enforceable debt or other liability.
Plain English Summary
Criminalizes the dishonour of cheques issued for legally enforceable debts due to insufficient funds or exceeding credit limits, prescribing up to 2 years imprisonment, fine up to double the cheque amount, or both.
Key Legal Elements
- Cheque drawn on an account maintained by drawer for discharge of legally enforceable debt/liability
- Presented to bank within validity period (3 months)
- Returned unpaid due to insufficiency of funds or exceeding arrangement
- Statutory notice in writing given within 30 days of receiving return memo
- Drawer fails to pay within 15 days of notice receipt
Punishment
Imprisonment up to 2 years, or fine up to twice the amount of the cheque, or both
Practical Note
1. MANDATORY STATUTORY TIMELINES: • Validity: Cheque must be presented within validity (RBI circular dated Nov 4, 2011 reduced validity from 6 months to 3 months). • 30-Day Notice: Statutory demand notice in writing must be dispatched within 30 days of receiving the bank return memo. Under Section 27 General Clauses Act and C.C. Alavi Haji (2007), dispatch to correct address raises presumption of service; returned "unclaimed" or "refused" is deemed served. • Cause of Action: Drawer has 15 clear days from receipt of notice to pay. Cause of action arises strictly on the 16th day. Filing before 15 days expire is premature and fatal (Yogendra Pratap Singh v. Savitri Pandey). • 1-Month Filing Window: Under Section 142, complaint must be filed within 1 month from the 16th day before the competent Magistrate. 2. EXPANDED DEFINITION OF DISHONOUR: Supreme Court rulings have settled that Section 138 covers: • "Stop Payment" (Modi Cements Ltd. v. Kuchil Kumar Nandi, 1998) • "Account Closed" (NEPC Micon Ltd. v. Magma Leasing Ltd., 1999) • "Signatures Differ" (Laxmi Dyechem v. State of Gujarat, 2012) • "Refer to Drawer" 3. COMPLAINANT STRATEGY & PRESUMPTIONS: • Statutory presumptions under Sections 118(a) and 139 mandate that the cheque was issued for a legally enforceable debt once signature is admitted. • Blank Signed Cheque: Handing over a blank signed cheque authorizes payee to fill particulars under Section 20; it does not invalidate prosecution (Bir Singh v. Mukesh Kumar, 2019). • Interim Compensation: Advocate for complainant should immediately apply under Section 143A for up to 20% interim compensation upon framing of notice/plea. 4. ACCUSED DEFENSES: • Rebutting Presumption: Accused only needs to raise a probable defense based on "preponderance of probabilities" without stepping into the witness box (Rangappa v. Sri Mohan, 2010). • Financial Capacity: Accused can challenge complainant's financial capacity/source of funds to advance substantial cash loans (Basalingappa v. Mudibasappa, 2019). • Time-Barred Debt: Cheque for a time-barred debt is not legally enforceable unless accompanied by an express signed agreement under Section 25(3) Contract Act. • Security Cheque: Mere plea of "security cheque" is insufficient if legally enforceable debt existed on presentation date (Sunil Todi, 2021; Sripati Singh, 2021). • Compounding: Offence is compoundable under Section 147 at any stage (Damodar S. Prabhu, 2010).
हिंदी पाठ
खाते में निधियों की अपर्याप्तता, आदि के कारण चेक का अनादर।—जहां किसी व्यक्ति द्वारा किसी बैंककार के पास अपने द्वारा संधारित खाते में से किसी अन्य व्यक्ति को किसी ऋण या अन्य दायित्व के पूर्णतः या अंशतः उन्मोचन के लिए किसी धनराशि के संदाय के लिए लिखा गया कोई चेक बैंक द्वारा या तो इस कारण असंदत्त लौटा दिया जाता है कि उस खाते में जमा धनराशि चेक का समादर करने के लिए अपर्याप्त है या यह कि वह उस धनराशि से अधिक है जो उस बैंक के साथ किए गए किसी करार द्वारा उस खाते से संदत्त किए जाने के लिए तय की गई थी, तो ऐसा व्यक्ति अपराध का दोषी समझा जाएगा और इस अधिनियम के किसी अन्य उपबंध पर प्रतिकूल प्रभाव डाले बिना, कारावास से, जिसकी अवधि दो वर्ष तक बढ़ाई जा सकेगी, या जुर्माने से, जो चेक की राशि के दोगुने तक हो सकेगा, या दोनों से, दंडित किया जाएगा:
परंतु इस धारा में अंतर्विष्ट कोई भी बात तब तक लागू नहीं होगी जब तक कि—
(क) चेक को उसके लिखे जाने की तारीख से छह मास की अवधि के भीतर या उसकी विधिमान्यता की अवधि के भीतर, इनमें से जो भी पहले हो, बैंक में प्रस्तुत न कर दिया गया हो;
(ख) चेक का आदाता या सम्यक्-अनुक्रम-धारक, जैसा भी मामला हो, बैंक से चेक के असंदत्त लौटाए जाने की सूचना प्राप्त होने के तीस दिन के भीतर चेक के आहर्ता को लिखित में सूचना देकर उक्त धनराशि के संदाय की मांग न करे; तथा
(ग) ऐसे चेक का आहर्ता उक्त सूचना की प्राप्ति के पंद्रह दिन के भीतर आदाता को या यथास्थिति, चेक के सम्यक्-अनुक्रम-धारक को उक्त धनराशि का संदाय करने में विफल न रहे।
स्पष्टीकरण।—इस धारा के प्रयोजनों के लिए, “ऋण या अन्य दायित्व” से कोई वैध रूप से प्रवर्तनीय ऋण या अन्य दायित्व अभिप्रेत है।