Negotiable Instrument Act 1881

[A Rengarajan]

Dear All

Section 138 of Negotiable Instruments Act, 1881 provides penalties  in case of  dishonour of certain cheques  for insufficiency of funds in accounts. One of the amendment in 2002 is that  increased  the punishment  up to two years  and also  increased  the time  for giving  notice to  30 days  from the earlier  15 days. 

proviso (b)  to  Section 138 of the Act as follows

b ) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, within  thirty days   ( fifteen days ) of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

We need to issue notice within 30 days of the  receipt of information  from the bank regarding the return of the cheque as unpaid .  The attached case that the person served notice for entire dues not only to return of cheque. Unless a notice is served in conformity with Proviso (b) appended to Section 138 of the Act, the complaint petition would not be maintainable  

The appellant has  issued a notice on 31.10.2000 to Respondent no.,1 stating

" Your cheque No. 693336 dated 30/4/2000 for Rs. 1,00,000/- has also been returned unpassed by the bank authorities with the plea that A/C No. 1461 has already been closed. Hence the undersigned is now free to take up any legal step against you to get the amount of my pending bills.

In view of the above, you are requested to remit the payment of my pending bills within 10 days from the date of receipt of this letter otherwise suitable action as deemed fit will be taken against you."

Conclusion:  While issuing notices to the opposite party, we need to highlight only  cheque amount which was dishonoured from the bank. Still some more payments yet to be payable by the opposite party.  .  In case if you combine both then it is not valid notice under Section 138 of Negotiable Instruments Act.

[Monika Bhardwaj]

Dear Mr. Rengarajan,

 

I understand that under cheque bouncing cases : section 138 of Negotiable Instument act; the demand notice is crucial and it need to fulfill certain conditions. Whether it is a valid notice or not depends how it is worded. Indicating the total amound due in a notice does not make it as invalid. Having said that, the notice must only demand the amount for which the dishonoured cheque was made. If the party demands the total outstanding and merely indicate the fact that one of its cheque pertaining to the part payment was dishonored then it is good for a recovery suit but not for 138 proceedings.

 

It is a demand notice under 138 (which deals with cheque bouncing) hence the focus is on the demand of the amount for which cheque was issued. Mere mentioning of entire outstanding does not make it invalid. Material is what has been demanded in the notice and that need to be the amount of the dishonored cheque (neither less nor more).

 

Learned members views are also solicited.

 

Best Regards,

Monika Bhardwaj

[csarengarajan]

Dear Monkia

 

This is supreme court judgement. Kindly go through the same. They have dismissed the petition.  We need to hear from other members.
 We need to explore what is valid notice as mentioned by you.  Kindly go through the attachment of the judgment. Still we need to debate the same. Healthier argument is always better. In that particular case, the builder has asked entire dues that is why the case was dissmissed.

 

Let us wait for other views and conclude our argument.
 

[Monika Bhardwaj]

Dear Mr. Regarajan,

 

With due respect, I had gone through the attachment. My comments were not the concluding ones. I only highlighted and shared the practical issues we used to care while issuing notices under 138. In my earlier mail, I have also asked learned members to contribute so that I could enrich myself with the wide expertise of fellow members.

 

Best Regards,

Monika Bhardwaj

[csarengarajan]

Dear Monika

 

We are only arguihng, sorry if u take comment which hurts sorry.  My only concern is that apex court judgment, this we need to analyse and get others views. It is also an opportunity to get opinion about what is valid notice under section 138  NI Act