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This article aims to explain the legal framework governing cheque dishonour under Section 138 of the NI Act, with particular focus on the significance, format, and essentials of a cheque bounce notice. It also highlights key judicial developments shaping the interpretation of these provisions.
“On the request of the petitioner, the complainant waited and represented the cheque through its banker, but once again it got dishonoured with the same remark – refer to drawer.”
“A meaningful reading of Sections 20, 118 and 139 of the NI Act makes it clear that a person who signs a cheque and delivers it to the payee remains liable unless he successfully rebuts the statutory presumptions.”
The Court also pointed out that service of summons on the accused in a complaint filed under Section 138 of the NI Act continues to be one of the main reasons for the delay in disposal of the complaints.
For the purpose of transfer of any case or proceedings under Section 406 of the CrPC, the case must fall within the ambit of the expression “expedient for the ends of justice”.
“If the word ‘may’ is read as ‘shall’, it will have drastic consequences, as in every complaint under Section 138, the accused will have to pay interim compensation up to 20 per cent of the cheque amount and such an interpretation will be unjust and contrary to the well-settled concept of fairness and justice, exposing the provision to the vice of manifest arbitrariness.”
The Supreme Court was called upon to decide whether the appellant Court was right in rejecting the application of the accused seeking opinion of the handwriting expert in Cheque Dishonour case.
Kerala High Court stated that the petitioner failed to adduce any cogent evidence to prove that the cheque in question was not aimed at discharging any legally enforceable debt.