Juris Desk
A common incident in financial transaction is dishonour of cheques. When someone goes to a bank and presents a cheque issued by some other person or company, and if the bank refuses to pay money against the cheque due to insufficient fund in the account concerned, the person or company who issued the cheque commits an offence.
The Negotiable Instrument (NI) Act, 1881 tells us what remedy one may have in the event of dishonour of cheque.
Dishonour of cheque for insufficiency of funds
According to section 138 of NI Act, 1881, 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 that account is returned by the bank unpaid, such person shall be deemed to have committed an offence.
The cheque may have been returned 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.
The person commits this offence shall be punished with imprisonment for a term which may extend to one year, or with fine which may extend to thrice the amount of the cheque, or with both.
Along with this remedy, the holder of the cheque shall retain his right to establish his claim through civil court if whole or any part of the value of the cheque remains unrealised.
However, to avail these remedies, the holder of the cheque has to fulfill the following conditions:
i) 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
ii) The payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the stipulated amount of money by giving a notice, in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, and
iii) The drawer of such cheque fails to make the payment of the stipulated amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within 30 days of the receipt of such notice.
The notice required to be served under this provision, shall be served in the following manner:
By delivering it to the person on whom it is to be served
By sending it by registered post with acknowledgement due to that person at his usual or last known place of abode or business in Bangladesh
By publication in a daily Bangla national newspaper having wide circulation.
If any fine is realised under this section, any amount upto the face value of the cheque as far as is covered by the fine realised shall be paid to the holder.
Restriction in respect of appeal
Section 139 of the NI Act, 1881 says, no appeal against any order of sentence under section 138 shall lie, unless an amount of not less than 50% of the amount of the dishonoured cheque is deposited before filing the appeal in the court which awarded the sentence.
Offences committed by companies
Section 140 of the NI Act, 1881 says, if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
However, nothing in this provision shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.
If any offence under this act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
For the purposes of this section, “company” means anybody corporate and includes a firm or other association of individuals, and “director” in relation to a firm, means a partner in the firm.
Cognizance of offences
According to section 141 of the NI Act, 1881, no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque.
Any such complaint has to be made within one month of the date on which the cause of action arises under section 138.
A Court of Sessions or any higher courts shall try any offence punishable under section 138.
Source:
http://www.dhakatribune.com/juris/2014/jan/29/dealing-bank-cheques-lawfully#sthash.E6Ed018b.dpuf
