In this article, Sanjana Tripathy does a critical analysis of section 138 of the Negotiable Instruments Act.

WHAT IS A CHEQUE?

A cheque is a written instrument containing an unconditional order addressed to a banker signed by the person who has deposited money to the banker requiring him to pay on demand a certain sum of money to the bearer of the instrument.

Section 6 of the Negotiable Instruments Act, 1881 defines cheque-

‘Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in electronic form.’

There are two expressions which is used in this definition namely ‘cheque in electronic form’ and ‘truncated cheque’. For the purpose of this definition,

1. “Cheque in electronic form” is a cheque which is drawn with the help of a computer program signed in a secure system with a digital signature with or without biometrics and asymmetric crypto system or electronic signature.
2. “Truncated Cheque” is a cheque which is truncated during clearing cycle either by clearing house or by the bank whether paying or receiving payment immediately on generation of an electronic image for transmission, substituting the further physical movement of the written cheque.

TYPES OF CHEQUES

The different types of cheques are as follows:- (See Here)

1. Bearer Cheque– When the words “or bearer” are present on the cheque, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. However, such cheques are risky because if such cheques are lost, the finder of the cheque can collect payment from the bank.
2. Order Cheque- When the words “or order” appears on the cheque instead of the word “bearer”, it is called an order cheque. Such a cheque is payable to the person known as the payee, or to somebody else to whom it is endorsed (transferred).
3. Uncrossed / Open Cheque– When a cheque is not crossed, it is known as an “Open Cheque” or an “Uncrossed Cheque”. The payment of such a cheque can be obtained at the counter of the bank. An open cheque may be a bearer cheque or an order one.
4. Crossed Cheque– Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like “& CO.” or “Account Payee” or “Not Negotiable”. A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account.
5. Anti-Dated Cheque– If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as “anti-dated cheque”. Such a cheque is valid upto three months from the date of the cheque.
6. Post-Dated Cheque– If a cheque bears a future date for encashment, it is called a post-dated cheque. A post dated cheque cannot be honoured before the date on the cheque.
7. Stale Cheque– If a cheque is presented for payment after the expiry of its validity i.e. beyond 3 months from the date on which the cheque is issued it is called stale cheque. A stale cheque is dishonoured by the bank.

E-CHEQUE

E-cheque is a payment made directly from a bank account via internet. It can be processed in few steps and has more security than paper cheques such as authentication, digital signatures, encryption etc. It is part of Electronic Fund Transfers along with ATMs, Debit and Credit Card transactions which require technologies for gaining access to the bank account. E-cheques were developed due to huge transactions in electronic commerce. They are used for all types of transactions similar to a paper cheque and are governed under the same laws as the paper cheque. (See Here)

Section 138 of Negotiable Instruments Act, 1881

The Negotiable Instruments Act, 1881, provides for three instruments namely promissory notes, bills of exchange and cheques. The word ‘negotiable’ means transferable with respect to consideration and ‘instrument’ is a written document which creates a right in favour of a person. Thus negotiable instrument means a document (sum of money) transferable by delivery. (See here)

Section 138 of the Negotiable Instruments Act, 1881 provides for circumstances under which a case for dishonour of cheques is filed. It states that a cheque has to be presented to the bank within 6 months from the date on which it was drawn or within a period of its validity whichever is earlier. Also the following circumstances must be seen:-

1. The payee or holder, during validity of the cheque, makes a demand for payment of money specified in the cheque by giving a written notice within 30 days of the receipt of the information from the bank that the cheque was returned as unpaid to the drawer of the cheque.
2. The drawer of cheque failed to pay the said amount to the payee or holder, during validity of the cheque, within 15 days of receipt of notice.

Either or both civil and criminal complaints can be filed. In case of a criminal complaint, the drawer of the cheque will be punished with:-

1. Maximum imprisonment for 2 years;
2. Fine which may extend to twice the amount of the cheque; or
3. Both

In case someone wants to go for civil proceeding, a money recovery suit has to be filed under Order 37 of Civil Procedure Code within 3 years of the date of cause of action. The drawer of the cheque will be ordered to pay the full amount of the cheque and the interest accrued from the date of suit to the date of decree. The choice is on the plaintiff. If a sufficiently large amount is involved it is advisable to file both.

GROUNDS FOR DISHONOUR OF CHEQUES

The following are the grounds under which cheques presented to the bank are dishonoured:- (See Here)

1. Insufficiency of funds– This means that the amount written in the cheque is more than the actual amount in the bank account of the drawer. While writing a cheque, the drawer has to be sure that he has sufficient funds in his account otherwise the cheque presented to the bank would get dishonoured.
2. Irregular Signature- If the signature of the drawer in the cheque does not match the specimen signature available with the bank, the cheque will get dishonoured.
3. Alterations- According to RBI guidelines on Alterations/Corrections on the cheque effective from 1st December, 2010, no changes shall be allowed on the cheques except the mentioned date on the cheque. If any changes are to be made, a new cheque has to be issued. (See Here) Even if the alteration is signed for verification then also the cheque will be considered invalid and will get dishonoured by the bank.
4. Post-dated Cheque– It is a cheque in which a future date is mentioned for collection through an account. It has to be presented to the bank on the date mentioned on the cheque. If it is presented before that date then it will get dishonoured.
5. Stale Cheque- If the cheque is presented to the bank after the expiry of its validity i.e. after three months, the cheque gets dishonoured.
6. Stop Payment instructions– A ‘Stop Payment’ instruction is made to a bank to cancel a cheque or stop the process of payment. This order is made by the account holder and can be enacted if cheque or payment has not been processed. The cheque will get dishonoured in this case.
7. Frozen Account- It is an account from which the account holder cannot withdraw or transfer money due to a court order but he can check his transactions and also receive deposits. Therefore a cheque presented for collection through this account will get dishonoured by the bank.

Section 138 OF NEGOTIABLE INSTRUMENTS ACT, 1881

The Act is silent in terms of territorial jurisdiction under Section 138. This issue needs to be examined from point of view of Criminal Procedure Code, 1973. Section 177 of the Criminal Procedure Code, 1973 provides that every offence shall be tried by that court within whose jurisdiction it was committed. (See here) In Harman Electronics (P) Ltd. v. National Panasonic India (P) Ltd. [(2009) 1 SCC 720] it was held that, offence under Section 138 of Negotiable Instruments, 1881 is governed by Section 177 of Criminal Procedure Code, 1973 with respect to territorial jurisdiction. (See here)

In 2016, Gujarat High Court in its judgment of Brijendra Enterprise v. State of Gujarat and Others (Criminal Misc.Application No. 13062 of 2011) explained the issue on territorial jurisdiction in case of dishonour of cheques with examples. It was held that when a cheque is delivered for collection of money through an account, the complaint should be filed in that court within whose jurisdiction the branch of the bank is located where the payee or holder maintains his account and secondly when the cheque is presented for payment over the counter, the complaint has to be filed before the court within whose jurisdiction the branch of the bank is located where the drawer maintains his account.

It was further held that:- (See here)

1. There should be inquiry and trial shall be done only in that court within whose jurisdiction the branch of the bank is located.
2. If there is any cheque bouncing case pending in any court before the inception of the proposed legislation then it should be transferred to a court which comes under the new system of jurisdiction.
3. If more than one case is filed by the same payee against the same drawer which is pending then all subsequent complaints have to be filed in the court which comes under the proposed legislation [Section 142(2)].
4. If a complaint filed in a court which has jurisdiction under the proposed legislation, all the upcoming complaints under Section 138 have to be filed in the same court notwithstanding of the fact that those cheques were presented within the jurisdiction of the court.
5. Explanation I of Section 6 was amended due to insufficiency as it draws a presumption of drawing of a physical cheque which resulted in addition of Explanation III for the purpose of reference to Information Technology Act, 2000.

PERSON SPECIFIC OFFENCE

The Supreme Court in N. Harihara Krishnan v. J. Thomas (Crl. App. No. 1534 of 2017) held that offence under Section 138 is person specific. The general concept under Criminal Procedure Code, 1973 that cognizance was taken against the offence and the offender was not appropriate in prosecution under Negotiable Instruments Act, 1881. The first ingredient which constitutes the offence is the fact that a person drew a cheque. The identity of the drawer of the cheque should be known to the complainant (payee) to start the trial. Only then will there be a dispute if the person alleged to have drawn the cheque denies the very fact. The other facts that are required to be proved for punishing the alleged drawer of cheque that got dishonoured is that the payee followed each of the steps given under Section 138 before commencing the prosecution. Otherwise there will be no cause of action. Disclosure of name of drawer of the cheque is one of the most important allegations which should be mentioned in the complaint. Therefore for prosecution under Section 138 there must be cognizance of offence and not the person is inappropriate. There cannot be a prosecution without the accused. (See here)

CAN A GROUND THAT ‘CHEQUE WAS ISSUED AS SECURITY’ BE USED FOR DISMISSING A COMPLAINT OF DISHONOUR OF CHEQUE

The Supreme Court in HMT Watches Ltd. v. Abida (Crl. Appeal No. 472 of 2015) held that a complaint under Section 138 cannot be dismissed by a High Court on the ground that the cheque was issued as a security invoking its power under Section 482 of Criminal Procedure Code, 1973. The court further held that:-

The questions such as:-

• Whether cheques were issued as security?
• Whether there was an outstanding liability?

are questions of fact which are to be determined only by the trial court after evidence of parties have been recorded. The High Court should not have given its views on those disputed questions in a petition under Section 482 of Criminal Procedure Code, 1973 for the purpose of coming to a valid conclusion. The defence provided by the accused though credible should not be taken into consideration to exercise jurisdiction. This does not imply that trustworthy documents should not be investigated to find out if criminal proceedings would amount to harassment to the drawer or abuse of process of court. The court cannot encourage such practice but also cannot go beyond its jurisdictional powers to interfere with an otherwise genuine proceeding.(See here)

OFFENCE AGAINST COMPANIES

Section 141 of the Negotiable Instruments Act, 1881 states the offence of Section 138 committed by companies:-

• 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: Provided that nothing contained in this sub-section 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:

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

• Notwithstanding anything contained in sub-section (1), where 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.

Explanation.— For the purposes of this section,—

• “company” means any body corporate and includes a firm or other association of individuals; and
• “director”, in relation to a firm, means a partner in the firm.

Therefore for the cheque dishonour case to prosecuted against any company the Director who has signed the cheque on behalf of that company must be in charge of the daily activities of the company on that day when the cheque was signed.

There are other issues which need to be answered under this Section such as:-

Issue 1. Whether company can be included as accused if cheque is signed by Director on behalf of the company? What will happen if the accused company is let off?

Issue 2. Whether notice under Section 138 is mandatory to be given to the Director who has signed the cheque?

Issue 3. Whether a cheque issued on personal capacity of the Director will make a company liable if it gets dishonoured?

Regarding the first issue, the Supreme Court in N. Harihara Krishnan v. J. Thomas (Crl. App. No. 1534 of 2017) held that failure to include a company as accused would be enhance the prosecution against the accused even if the previous complaint was valid against the signatory of the cheque. The court relied on its earlier decision in Aneeta Hada v. Godfather Travels & Tours Private Limited (2012) 5 SCC 661 in which it was held that for prosecution to be maintained the company must be included as accused within the limitation period for filing the case. (See  Here)

In Anil Gupta v. Star India Private Limited & Others (Criminal Appeal No. 1364 of 2014), the Supreme Court held that if the accused company is let off, the case cannot continue against Managing Director who is only vicariously liable. The court while applying the doctrine of strict construction opined that commission of an offence under Section 141 is a condition precedent to attract the vicarious liability of others. The words “as well as the company” in the section make it clear that first the company has to be prosecuted then only the signatory could be vicariously liable subject to the petition and proof.

Regarding the second issue, the Supreme Court in Kirshna Texport & Capital Markets Limited v. Ila A. Agarwal & Ors. (Criminal Appeal No. 1220 of 2009) held that Section 138 does not include necessity of issuing individual notices to the directors of the company in case of dishonour of cheques. The directors are in charge of the affairs of the company and would be aware of the notice received by the company. Therefore on a literal construction it is not required to issue individual notice under Section 138. It was further stated that if the directors contend that they had no knowledge about the offence committed or they diligently tried to prevent such commission, it would be a defence at any stage of the trial except stage of notice under Section 138. If the provision of giving notice is read in Section 141 then it will go against the meaning of the Section and remedy under Section 138 will become complicated.

Regarding the third issue, the Supreme Court in Mainuddin Abdul Sattar Shaikh v. Vijay D Salvi (Criminal Appeal No. 1472 of 2009) held that accused can be made liable under Section 138 even if the company is not accused as on the facts it was held that complainant did not have to necessarily prove that the accused was in charge of the affairs of the company by virtue of the position held by him. Plain reading of Section 138 states the basic ingredients which constitutes the offence first being that for a person to be held liable must be the drawer of the cheque on account maintained by him with the bank  for payment of money to another person from that account in discharge of the whole or part of any debt or liability.

This case was supported by the judgment in P.J. Agro Tech Limited and Ors.  v. Water Base Limited [(2010) 12 SCC 146] wherein it was held that cheque drawn by an employee of a company on his personal account even though he was doing it on behalf of the appellant company and its Directors, the appellant company and its Directors cannot be held liable under Section 138.

BLANK CHEQUE

A blank cheque is a signed cheque without a written amount. In a common judgment (Criminal Misc. Application Nos. 968, 1067, 1754 & 1756 of 2014) Gujarat High Court held that the statement that if a blank cheque is issued it should not be filled in and if it is filled then it would amount to material alteration within Section 87 of Negotiable Instruments Act, 1881 is not always necessary. It depends on the facts of the case. The following issues were asked:-

1. Does Section 20 of Negotiable Instruments Act, 1881 applicable  to a cheque?
2. Filling up of a blank cheque amounts to Section 87 of Negotiable Instruments Act, 1881. Is it necessary?
3. Is there any implied authority to fill up a blank cheque with any amount desired?

The court answered that Section 20 makes it clear that no alteration can be made in a cheque for reason only that it would eventually be filled up. At the same time, it cannot be said when a blank cheque is given there is an implied authority to fill it up. Every filling up of a blank cheque may not come under Section 87 because there is no insertion, erasure, alteration etc. because there is no complete negotiable instrument within the Act. Therefore Sections 20 and 87 do not apply to a blank cheque.

Bare reading of the provisions of Negotiable Instruments Act, 1881 proves that under this Act drawer may give a signed blank cheque to the payee with an implied or express consent to fill it up and then present for payment to the drawee.

Regarding implied authority, the court held that if a blank cheque or post-dated cheque is issued, trust is placed that the cheque will be used as per agreement between the parties. If not, then prosecution under Section 138 would be an abuse of process of law. (See Here)

PRINTED DATE/YEAR ON CHEQUE

The Supreme Court in T. Vasanthakumar v. Vijayakumari (Criminal Appeal No. 728 of 2015) reversed the judgment of Karnataka High Court and held that printed date/year on a cheque does not conclusively prove the authenticity of the fact that the cheque was issued on that particular date/year. (See Here)

CHEQUE DISHONOUR OF ADVANCE PAYMENT IN CONTRACTS

The Supreme Court in Indus Airways Pvt. Ltd. & Ors. v. Magnum Aviation Pvt. Ltd. & Anr. (Criminal Appeal No. 830/2014), held that post-dated cheques issued by purchaser as advance payment is not considered to be in discharge of legally enforceable debt or liability and hence does not come under Section 138 of Negotiable Instruments Act, 1881. (See Here)

CHEQUE REPORTED LOST

In K. Sadanandan V. Satheesh Kumar (Crl.Rev.Pet.No. 2016 of 2003), the High Court of Kerala held that in case a cheque is returned by the bank due to “cheque reported lost”, it will not come under Section 138 of Negotiable Instruments Act, 1881. It was further held that the penal provision in Section 138 of the Negotiable Instrument Act, 1881 shows that a legal liability drawn would be applicable when a cheque is returned unpaid by the bank. Such non-payment by the bank may either be :

(i) due to the credited amount of that account being insufficient to honour the cheque, or

(ii) it is more than the amount arranged to be paid from that account by an agreement made with that bank.

Before proceeding with the case, the legal requirements mentioned therein must be have been abided and court has to be convinced that all the ingredients of the offence have been complied with. Therefore it is clear that the parameters for invoking the provisions of Section 138 of the Act is limited. (See Here)

DISHONOUR OF CHEQUE ISSUED AS SECURITY FOR REPAYMENT OF LOAN

The Supreme Court in Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Limited (Crl. Appeal No. 867 of 2016) held that dishonour of a post-dated cheque for repayment of loan described as a security in the loan agreement comes under Section 138 of Negotiable Instruments Act, 1881. Regarding the security clause in the agreement, the court stated that the word ‘security’ refers to those cheques for repayment of installments. Repayment becomes dues when loan is advanced and installment is due. The loan was disbursed on 28th February, 2002 before the date of cheque leaves. Once the loan was disbursed and installments fell due on the date of the cheque as per the agreement, dishonour of such cheques would fall under Section 138. The cheque leaves represent the outstanding liability.

ISSUE REGARDING SERVICE OF NOTICE

This issue has been dealt with in many cases and it was decided that notice is presumed as served if it is returned with plausible reasons namely ‘refused’ or ‘not available in house’ or ‘house locked’ or ‘shop closed’ etc. The following guidelines were given in Kalamba Jail v. Gautam Umed Parmar (Crl. Revision Application No. 435 of 2011 decided on 3rd April, 2013):-

1. When the notice is sent with correct address of drawer, requirement under Section 138(b) is complied with.
2. There is not need to give much emphasis on basic facts regarding mode and manner of issue of notice to the drawer.
3. Court must be satisfied that a case under this section is applicable and statutory requirements mentioned in the above two points have been complied with.
4. Then the drawer can rebut that he did not know about the notice delivered at his address or that notice was delivered at the wrong address or that the notice was never tendered or postman’s report was false.

It was further held that there is no dispute about service of notice under Section 27 of General Clauses Act, 1897 and Section 28 of Bombay General Clauses Act, 1904. (See here)

POWER OF ATTORNEY

While passing a combined judgment in the cases A.C. Narayanan v. State of Maharashtra & Anr. (Criminal Appeal No. 73 of 2007) and Shri. G. Kamlakar v. M/S Surana Securities Ltd. & Anr. (Criminal Appeal No. 1437 of 2013), the Supreme Court held that Power of Attorney can file a complaint under Section 138 of Negotiable Instruments Act, 1881 provided that he must specifically plead and support the complaint by relevant documents. If the Power of Attorney does not know about the transactions of the company then he/she will cannot be examined.

SPEEDY DISPOSAL OF CHEQUE BOUNCING CASES

The Supreme Court in M/S Meters and Instruments Private Limited v. Kanchan Mehta (Criminal Appeal No. 1731 of 2017) held that the accused in a case under Section 138 can be discharged without the consent of the complainant if the court is satisfied that he has been compensated adequately. The court issued certain guidelines for conduct of cases under Section 138:- (See Here)

1. Offence under Section 138 is a civil wrong. It has to be tried summarily as per provisions of Criminal Procedure Code, 1973. Section 258 of Criminal Procedure Code, 1973 is applicable and the court can discharge the accused if it is satisfied that the complainant is compensated.
2. The object of the provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged but is not debarred at later stage subject to appropriate compensation as may be found acceptable to the parties or the Court.
3. Compounding requires consent of both parties but in the interest of justice the court can close the case and discharge the accused without such consent if it is satisfied that the complainant is duly compensated.
4. Procedure for trial of cases under Chapter XVII of the Act has to be summary. The Magistrate’s discretion under second proviso to Section 143, to hold that it was undesirable to try the case summarily as sentence of more than one year may have to be passed, is to be exercised after considering the further fact that apart from the sentence of imprisonment, the Court has jurisdiction under Section 357(3) Cr.P.C. to award suitable compensation with default sentence under Section 64 IPC and with further powers of recovery under Section 431 Cr.P.C. Therefore, prison sentence of more than one year may not be required in all cases.
5. Since evidence of the complaint can be given on affidavit, subject to the Court summoning the person who gave the affidavit and examining him and the bank’s slip being evidence of the dishonor of cheque, it is unnecessary for the Magistrate to record any further preliminary evidence. Such affidavit can be given as an evidence at all stages of trial or other proceedings. The manner of examination of the person giving affidavit can be according to Section 264 Cr.P.C. The plan is to follow summary procedure except where exercise of power under second proviso to Section 143 becomes necessary, where sentence of one year may have to be awarded and compensation under Section 357(3) is considered inadequate, having regard to the amount of the cheque, the financial capacity and the conduct of the accused or any other circumstances.

MEDIATION IN CHEQUE DISHONOUR CASES

Section 89 of Code of Civil Procedure provides for Mediation in civil cases. In Afcons Infrastructure Limited and another v. Cherian Varkey Constructions Company Private Limited [(2010) 8 SCC 24], the Supreme Court set out certain cases in which Mediation is not permissible:- (See Here)

1. Representative suits under Order 1 Rule 8 of Civil Procedure Code, 1908 involving public interest and interests of numerous persons who are not parties to the suit.
2. Disputes regarding election to public offices.
3. Cases which involve grant of authority by court
4. Cases regarding serious allegations like fraud, forgery, coercion, fabrication of documents etc.
5. Cases in which protection of courts is required

The suits in which ADR mechanism is used in disputes:-

1. Related to trade, commerce and contracts
2. Related to tortious liability
3. Related to consumers
4. Between employers and employees
5. Between neighbours (trespassing, nuisance etc.)
6. Related to partnership among partners
7. Among members of societies/associations/apartment owners’ associations
8. Related to matrimony, custody of children , maintenance etc.
9. Related to partition/division among family members/coparceners/co- owners

MERE HANDING OVER CHEQUE TO COMPLAINANT

The Rajasthan High Court in Smt. Asha Baldwa v. Ram Gopal (S.B. Criminal Misc (Pet.) No. 2726/2014), held that mere handing of cheque which later got dishonoured does not come under the offence of Section 138. The cheque was issued by the Petitioner’s son and after that the Petitioner was added as a partner to the firm. Section 141(2) was pointed out by the Petitioner according to which allegations can be made against the company or its partners only if the offence was committed with their consent, collusion or negligence. When the complaint was read, it was found out that the Petitioner only handed over the cheque to the Respondent and no allegations were made as to her role in the  commission of the offence. Whereas the complainant-respondent contended that since the Petitioner handed over the cheque to him she was liable under Section 138 of Negotiable Instruments Act, 1881. (See Here)

CHEQUE DISHONOUR IN CASE OF PARTNERSHIPS

In Katta Sujatha v. Fertilizers & Chemicals Travancore Ltd. (2002) 7 SCC 655, the Supreme Court held that partner of a firm is liable to be convicted for offence under Section 138 if he was in charge of the conduct of business of the firm or if it was committed with the consent or negligence of that partner.

NEGOTIABLE INSTRUMENTS (AMENDMENT) BILL, 2017

A new bill has been introduced in Lok Sabha with the objective of reducing delay in proceedings of dishonour of cheques and provide interim relief to the payee.The Amendment Bill has inserted a new Section 143A which provides that the drawer of dishonoured cheque should pay interim compensation of 20% of the value of the cheque during pendency of proceedings:-

1. In a summary trial if drawer pleads not guilty.
2. In any other case upon framing of a charge.

The time limit for payment of interim compensation is 60 days from the date on which the order made in this context. It shall be deductible from the fine imposed under Section 138 or any other compensation given under Section 357 of Criminal Procedure Code, 1973. The said amount shall be recovered as given under Section 421 of Criminal Procedure Code, 1973.

It also provides for insertion of Section 148 which states that in an appeal by drawer against conviction under Section 138, the court has the power to order the appellant to deposit minimum 20% of fine or compensation awarded by the trial court. The same has to be deposited within 60 days of the date of the order made in this context.

The appellate court can direct the delivery of the amount to the complainant during pendency of appeal. If the appellant is acquitted then that amount will have to be paid to the him along with the rate of interest published by Reserve Bank of India prevalent at beginning of that financial year. (See here)

Let’s see what benefits the new amendment bill will provide for litigation process in cheque dishonour cases.

CONCLUSION

It can clearly be seen that there have many changes in law regarding dishonour of cheques especially jurisdiction. This law promises to aid in speedy trial in such cases and also to bring sanctity to the system by reducing default of payments. (See here)

 

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REFERENCES

1. www.livelaw.in
2. Shivam Goel, ‘The Negotiable Instruments Act 1881: Critical Analysis’
3. Article- Effect of Recent Amendments in Negotiable Instruments Act on the Pending Cases as well as Appeals
4. Article- Legal Notice under Section 138 Returned Unclaimed
5. Negotiable Instruments Act, 1881