• Negotiable Instrument Act

  • Negotiable Instrument are the documents commonly used in commercial transactions and monetary dealings. The law regarding the penalties in case of dishonour of cheques is contained in the Negotiable Instrument Act, 1881 [For short the NI Act]. The substantial law for the offences committed under the NI Act is contained in section- 138 of NI Act and the procedural law can be noted from other sections- 139 to 147. The offence under section-138 of NI Act can be committed by both, individual and Company.     

    The vital ingredients of the offence under S-138 of the NI Act are thus:

    1. The cheque is drawn for the discharge of debt or liability.
    2. The cheque is presented to the bank for its encashment within the prescribed period of three (3) months.   
    3. The bank intimates the holder of the cheque regarding the return of the cheque as unpaid. 
    4. The holder of the cheque makes a demand for the payment of the cheque amount to the drawer of the cheque within thirty (30) days of the receipt of the information by him from the bank regarding the return of the cheque as unpaid.
    5. The drawer of the cheque fails to make the payment of the cheque amount to the holder of the cheque, within 15 days of the receipt of the said notice.
    6. The Complaint to the Court of is made to the Court of Metropolitan Magistrate or Judicial Magistrate of First Class within thirty (30) days of the expiry of statutory period of 15 days, given to the drawer of the cheque to make the payment of cheque amount to the holder of the cheque.   
    7. The Court has discretion to take cognizance of the offence even after the prescribed period of thirty (30) days.
    8. The punishment for the offence under Section 138 of NI Act is the imprisonment of two (2) years, or Fine [which may extend to twice the amount of the cheque] or both.   

    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. For the purposes of NI act, “company” means anybody corporate and includes a firm or other association of individuals. A “director” in relating to a Firm means a partner in the Firm. In case of a Company, the Company is the principle offender and the remaining persons are made offenders by virtue of the legal fiction created by the legislature, as provided in Section-141 of NI Act.   

    The persons who would be liable for prosecution under NI Act for the offences by a Company include the following:-  

    1. The Company;
    2. 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.
    3. Director;
    4. Manager;
    5. Secretary;
    6. Other Officers of the company.

    The persons who would not be liable for prosecution under NI Act for the offences by a Company include the following:-  

    1. The person who had no knowledge, or who had exercised all due diligence to prevent the commission of such offence.
    2. The person who 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. 

    Hello Counsel undertakes Negotiable Instrument Act Cases all over India. For convenience sake we have categorised issues pertaining to the Negotiable Instrument Act law in the following categories.

    To know more on Negotiable Instrument Act, go on clicking on the following links  

    Criminal Courts

    [In Hierarchical Order]

    • Supreme Court Of India
    • High Courts Of Various States
    • District & Sessions Judge [D&SJ] 
    • Metropolitan Magistrates [MM]
    • Judicial Magistrates [JM]
    • Mediators & Concilliators.

    Legislations Governing The NI Act

    Judgments: NI Act

    • Bridgestone India Pvt. Ltd. Versus Inderpal Singh, Criminal Appeal No.1557 Of 2015, Order Dated- 24.11.2015, Bench- Jagdish Singh Khehar, J & R. Banumathi, Supreme Court Of India- Territorial Jurisdiction Of Courts [Full PDF Judgment]
    • Devender Kumar Versus Khem Chand, Crl. Rev. P. 679/2012, Decided on 06-10-2015, Bench- Ashutosh Kumar, J, Delhi High Court.- On Legally Enforceable Debt & Liability [PDF].- On Legally Enforceable Debt & Liability & Onus to prove and of rebuttal.
    • Don Ayengia . Versus The State of Assam & Anr., Criminal Appeal Nos. 82-83 OF 2016,  Judgment Dated: 28.01.2016, T.S. Thakur & Kurian Joseph, JJ, Supreme Court OF India [Full PDF Judgment]- Plea of “security” qua the cheques.- The Court held, “This would ordinarily and in the context in which the cheques were given imply that once the debt / liability was discharged, the cheques shall have to be returned. In case, however, the amount was not paid within the period stipulated, the cheques were liable to be presented, for otherwise there was no logic or reason for their having been issued and handed over in the first instance. If non-payment of the agreed debt/liability within the time specified also did not entitle the holder to present the cheques for payment, the issue and delivery of any such cheques would be meaningless and futile if not absurd.- If cheques were issued in relation to a continuing contract or business where no claim is made on the date of the issue nor any determinate amount payable to the holder, one could perhaps argue that the cheques cannot be presented or prosecution launched on a unilateral claim of any debt or liability.
    • Goa Plast (P) Ltd. vs. Chico Ursula D'souza & Anr., (2003) 3 SCC 232- Presumption of debt & liability U/S-139 of the NI Act & Right to rebuttal
    • Krishna Janardhan Bhat vs. Dattatraya G. Hegde, (2008) 4 SCC 54- - Presumption of debt & liability U/S-139 of the NI Act & Right to rebuttal
    • Lata Pramod Dave Versus M/s. Mode Export Private Limited, Criminal Writ Petition No.3188 OF 2014, Judgment Dated: 17.03.2016, Bench: Shalini Phansalkar-Joshi, J, Bombay High Court [Full PDF Judgment]
    • Rangappa vs. Sri Mohan, (2010) 11 SCC 441- Presumption of legally enforceable debt & liability U/S-139 of the NI Act & Right to rebuttal.

    Kindly CLICK HERE or e-mail us at office@hellocounsel.com if you are facing any Legal Issue and want to have Legal Consultations with the empanelled Lawyers at Hello Counsel.

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