After each dishonor you must have to send a legal notice for cheque dishonour by an advocate. Negotiable instrument is a convenient and safe means of transferring money, and provides a permanent record and receipt for its transaction. The section, however, keeps the possibility of recovery as the holder of the cheque may be paid by the court an amount up to the cheque amount from any fine that is recovered. If you give a cheque as an advance towards supply or purchase of certain goods and subsequently that cheque is dishonoured, then it is not an offence under section 8 of the negotiable instruments act, 1881. Procedure of filing complaint timeline of a regular cheque bouncing case. In order to duly protect the interest of its payee, holder in due course, there is an attempt to discourage dishonour of a cheque by making it an offence. Accordingly, the same requirements that are essential to constitute. In place of bundle of notes a piece of cheques is much easier to carry. Both civil as well as criminal liability are imposed by different states differently.
When action is not taken against first dishonor and cheque is presented twice and. Format of notice of demand under section 8 of the ni act for dishonour of cheque. Format of complaint in section 8 cheque dishonour case. The biggest danger in accepting a cheque is that the person writing it may not have enough money in the bank to cover it. In other words, dishonour of cheque is a condition in which bank refuses to pay the amount of cheque to the payee. The negotiable instruments act, 1881 defines the cheque. Both the drawer and payee may be natural persons or legal entites. This article on dishonour of cheque section 8 of the negotiable instruments act gives a comprehensive overview about all aspects of cheque bouncing and cheque dishonour as per laws in india what is a cheque. In demand notice, 15 days time to be given to the accused for making payment from the date of. When cheque is issued dishonestly by one person to the other. A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account. The holder or payee of the cheque may present the cheque for encashment on any number of occasions within the period of its validity three months from the date of issue. A vast majority of cheques are processed and cleared by banks on daily basis.
But a cheque though a bill of exchange payable to bearer or demand can be drawn on a persons account with a banker. Dishonour of cheque law and remedies in pakistan frequently asked questions faqs on dishonour of cheque in pakistan. Section 8b of the negotiable instruments act, 1881 provides for the notice of dishonour. Part1 paper banking law block 1 introduction and social control over. Dishonour of a cheque and legal recourse ipleaders. Dishonour of negotiable instrument a promissory note, bill of exchange or cheque is said to be dishonoured by nonpayment when the maker of the note, acceptor of the bill or drawee of the cheque. Dishonour of cheques and wrongful dishonour by banks.
Cheques are order instruments, and are not in general payable simply to the bearer but must be paid to the payee. An act to define and amend the law relating to promissory notes, bills of exchange and cheques. Other remedy was to file a suit for recovery which was. What are the conditions that make dishonouring of a cheque an offence in pakistan. Cheque dishonour negotiable instruments act, 1881, section 8 dishonour of cheque appeal was pending and matter settled in lok adalat in acknowledgment of liability of. Section 8 of the negotiable instruments act, 1881 mentions the punishment for cheque bounce cases in india. Dishonour of cheque legal news in india, law firms news. Prior to the year 1988, the act of dishonour of cheque was treated as an offence under indian penal code. Penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts. It is used for making payments without any need to carry cash. A dishonoured cheque is a cheque that is not credited by the bank for numerous reasons including.
While, if the bank refuses to pay the amount to the payee, the cheque is said to be dishonoured. Part payment as such has no effect but the accused can avoid culpability by paying the entire amount including the partpayment made before dishonour of the cheque, within the. This blog post covers areas like the importance of cheque, dishonor of a cheque and its remedies and the legal recourse available with the help of certain laws in india. A cheque is said to be honoured, if the banks give the amount to the payee. A legal notice has to be sent to the defaulter within 15 days of dishonour of cheque by registered post a. A dishonoured cheque cannot be redeemed for its value and is. The article deals with dishnonour of cheque as per the ni act,amendment made in it,essentials of section 8 and other related subtopics. You will need to send this legal notice for cheque dishonor by giving a 30 days time to the cheque holder.
Section 8 makes dishonour of cheque in certain cases an offence. Cheque bouncedishonor law in pakistan pakistani law firm. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 8 for the discharge, in whole or in part, of any debt or other liability. Thus, a cheque under section 6 of the act is also a bill of exchange but. Cheque dishonour under section 8 of negotiable instruments act. Going forward, a party desirous of filing a complaint for dishonour of a cheque will only be able to file a complaint in the court having territorial jurisdiction. The rules of the common law including the law merchant that apply to cheques drawn on banks also apply by force of this subsection to cheques drawn on financial institutions other than. The cause of action to file a complaint accrues to a. The united states of americas check dishonour legislation differs from state to state. Judicial magistrate of first class and metro politian magistrate having jurisdiction to try cases of dishonour of cheque. Negotiable instruments the law relating to cheques the cheque is the most popular and common negotiable instrument known today.
Definition and essentials of a cheque a cheque is a bill of excahge drawn on a banker payable on demand section 73 bills of exchange ordinance. The negotiable instrument act, 1881 legislative department. A dishonour, whether based on a second or any successive presentation of a cheque for encashment, would be a dishonour within the meaning of section 8, msr leathers v. Dishonour of cheque in pakistan pakistani law firm.
Of course on dishonour of cheques there is a civil liability accrued. A quick guide anil chawla law associates llp, business. The dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with a monetary penalty or with both. Any demand made after the dishonour of cheque will constitute a notice.
Mithelesh ba0038 introduction a cheque as a negotiable instrument has been clearly defined under section 6 of the negotiable instrument act. Cheques are used in almost all transactions such as repayment of loan, payment of salary, bills, fees, etc. There could be many reasons for dishonour of cheque. Pdf this research paper deals with the following constellation of issues.
Defense which may not be allowed in any prosecution under section 8. The above said cheque was cheque was issued in delhi and returned unpaid from the complainants bank in delhi, hence this honble court has jurisdiction to take cognizance of the offense. The cheque should have been issued in discharge, in whole or in part, of any debt or other liability. Dishonour of postdated cheque given for advance is not. Issuing of a cheque and its dishonour is not an offence. Prerequisites and documents for filing a cheque bounce case. Part ivpresentment and dishonour 28 division 1presentment 28. Advent of cheques have give a new dimensions to the commercial. This is what was held by the supreme court in the case of indus airways pvt. If the cheque is delivered for collection through an. The law only takes cognizance of the fact that the payment has not been forthcoming and it matters little that any of the manifold reasons may have caused that situation38. Dishonour of cheque in india law, lawyers and legal. This section 8 notice format is drafted by our legal and law experts. Dishonouring of a bank cheque punjab judicial academy.
After the receipt of dishonoured cheque with return memo from bank, demand notice to be sent by registered post with ad within 30 days from the date of receipt of return memo and dishonoured cheque from bank. The person directed to pay by the drawer is called a drawee. With the advent of payment through cheques, monetary transactions became much easier. Cheque dishonour also called cheque bounce is a criminal offence.
Law on the dishonour of cheque is mentioned from section 8 to 142 of the negotiable instruments act 1881 as amended by negotiable instruments amendment act 2015 which is as follows. Section 6 of negotiable instruments act defines cheque as. In what circumstances dishonouring of cheque is not an offence. The dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both cheque dishonoured. Conclusion recapcontd thirty 30 days from date of intimation of dishonour of cheque by bank to the customer. Dishonouring of a cheque us 8 a cheque is a type of bill of exchange and is a negotiable instrument. Dishonour of cheque cheque negotiable instrument scribd. The offence is when the drawer receives a notice from the payee and he fails to pay the dishonoured cheque amount within the grace period of 15 days that constitute an offence. This decision of the court clarifies a very contentious issue pertaining to the offence of dishonour of cheques under section 8 of the act. Before 1988 there being no effective legal provision to restrain people from issuing cheques without having sufficient funds in their account or any stringent provision ot punish them in the vent of such cheque not being honoured by their bankers and returned unpaid. It is available for free download in pdf and docs format. A cheque is a bill of exchange drawn on a specified banker. A quick guide action on bouncing of cheque anil chawla law. Prosecution of companies in liquidation for bouncing of cheques krrishan singhania and darryl paul barretto introduction an economic slowdown generally brings along an increase in cases relating to insolvency and financial offences.
Dishonour of cheque presumption us 9 of ni act cant be rebutted by mere denial. Notice format under section 8 with pdf this is a suggested notice format under section 8, also called check bounce notice format. Prayer it is, therefore most humbly prayed that this honble court may be pleased to take the complaint on record and punish the accused according to law and. Cheque dishonour supreme court of india judgements. Dishonour of cheque its consequences under negotiable. Cheque is the most common mode of making the payment. A dishonoured cheque is one, which when presented is refused payment by the bank because of insufficient funds or because it is not in order, dishonestly issuing a cheque is a criminal offence in pakistan.
Once such offence is that of cheque bouncing, which is not uncommon these days. It states that the payee or 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 cheque, within thirty days. If someone wishes to recover unrealized money then he or she can file a civil suit for recovery of. If cheque delivered for collection through an account. Negotiable instruments the law relating to cheques. Dishonestly issuing a cheque is governed by section 489f of the pakistan penal code, 1860. Dishonour of cheque cases can be filed only to the court within whose local jurisdiction, the offence was committed.
1371 865 1136 424 26 269 57 125 104 1270 1118 470 724 871 226 776 635 1596 842 1269 845 615 141 23 1103 1590 258 1155 1116 993 180 1075 1429 653 800 1453 1165 105 1323 1488 435 1333 539 813 1399 1394 121 51 838