Procedure | Judgement | Section 138 | Documents Required | Conduct a Cheque Bounce Cases In India

procedures for check bounce cases

Procedure | Judgement | Section 138 | Documents Required | Conduct a Cheque Bounce Cases In India

*Documents Required*

  • Original Dishonoured Cheque
  • Original Dishonour Memo – this is a document issued by the Bank
  • Copy of the Legal Notice issued by the Payee (Payee is the person who receives the cheque. He/she is also known as holder of the cheque
  • Original receipt from the post office for having sent the notice and Acknowledgement of delivery
  • Original Reply notice issued by the Drawer (the person who issues the cheque
  • If any Any document/s which acts as a proof to show that the money is legally recoverable from the drawer of the cheque

Process Section 138 of the Negotiable Instruments Act, 1881 (NI Act), deals with the offence pertaining to dishonour of Cheque for insufficiency of funds, stop payment etc., in the drawers account.

A cheque must be deposited in the Bank within its period of validity, i.e., 90 days. In case of insufficiency of funds or specific instructions, the cheque shall be returned by the Bank with the endorsement, “insufficiency of funds” or “stop payment”, as the case may be.

PROCEDURE/STEPS FOLLOWED IN COURT

Complaint – to be filed under Section 138 of the NI Act before the Magistrate Court wherein the Payee/Complainant should be present in Court at the time of filing such a complaint. At the time of filing the Complaint, all the original documents will be verified by the Magistrate and marked as Exhibits.

Sworn Statement – This is an Affidavit which will be filed by the Complainant before Court. The Sworn Statement, in usual course, is recorded on the same day as filing of the complaint if all the documents are in order. The Sworn Statement is also taken as the Payee/Complainant’s evidence.

Summons – Issued to the Drawer/Defaulter through Court or in some cases by the Police, intimating the Drawer to appear before the Court on the date mentioned in the summons.

Bail – Once the Accused receives the summons, he/she will have to appear in Court on the date mentioned in the summons along with his/her Advocate who shall file a bail application. Please note that, when the Accused applies for bail, he/she will either have to give a personal bond for an amount which will be decided by the Court as Surety amount or he/she will have to be accompanied by any of his/her family or friend who will act as a Surety. In such a case, Surety Application will be filed along with the Bail Application along with income certificate/land records (of the surety) and the person who is providing Surety will have to be present in Court along with the Accused. Since this offence is a bailable offence, the Court will immediately grant bail, provided the procedure has been carried out correctly.

Plea – The Court will ask the Accused if he/she pleads guilty to the offence of having dishonoured the cheque. If the Accused accepts the offence, he/she will have to plead guilty. If he/she doesn’t, then he can plead not guilty and choose to raise a defence.

Evidence by the Complainant – If sworn statement has been filed by the Payee/Complainant, as mentioned above and original documents marked as exhibits, then the Court will automatically move on to the next stage.

Cross Examination of the Complainant – the Advocate representing the Accused will have to file an application to cross examine the payee/Complainant and once the court allows the said application, the Advocate representing the Accused will cross examine (ask questions) to the Complainant.

313 Statement – In this stage, the Court will ask a few questions to the Accused regarding the offence and record his/her statement. Thereafter, the Accused may given an opportunity to present his/her defence, if he/she requests for the same.

Evidence by the Accused, if any – The Accused may provide his/her evidence by way of an Affidavit and submit documents supporting his/her case, to be marked as exhibits, if any.

Cross Examination of the Accused – The Advocate representing the Complainant will cross examine the Accused.

Arguments to be addressed by the Complainant Advocate

Arguments to be addressed by the Accused Advocate and the Complainant Advocate will be given a chance to reply.

*Judgment | Punishment & Penalty*

If the Accused is found guilty of the offence of dishonour of the cheque, he/she shall be punished with imprisonment for a term which may extend to two (2) years, or with fine which may extend to twice the cheque amount or both. The Court may also award interest on the cheque amount in the alternative.

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