In India, the punishment for cheque dishonour is primarily governed by Section 138 of the Negotiable Instruments Act, 1881. To hold someone criminally liable under Section 138, the following conditions must be met:
- Dishonor of Cheque: The cheque must be dishonoured due to reasons such as insufficient funds or exceeding the amount covered by the drawer’s account.
- Presentation within Validity: The cheque must be presented within its validity period of three months from the date of issuance.
- Notice: The payee or holder of the cheque must issue a notice to the drawer within 30 days of receiving information about the dishonour.
- Failure to Pay: The drawer must fail to make the payment within 15 days of receiving the legal notice.
PUNISHMENT UNDER SECTION 138
- Imprisonment: The drawer can face imprisonment for a term which may extend to TWO years.
- Fine: The drawer may also be fined, which can be TWICE the amount of the dishonoured cheque or the actual amount of the cheque, whichever is higher..
LEGAL PROCEEDINGS
- Criminal Complaint: A criminal complaint is filed in the court by the payee or holder of the dishonoured cheque.
- Trial: The case is tried in a Magistrate’s Court, and the drawer is given an opportunity to defend themselves.
- Possible Defences: Defences might include claims of the cheque being post dated, lacking consideration, or arguing that the cheque was issued as Security or without valid consideration.
LEGAL ADVICE
Due to the complexity of legal proceedings and the serious nature of criminal charges, it is crucial for individuals facing such issues to consult with a legal professional who can provide specific advice based on the facts of the case. Our experienced team of Cheque Bounce Advisor [CBA] are available round the clock for best possible advice with most suitable actions at very nominal costs. Call CBA’s 24 x 7 Helpline Number/WhatsApp: +91-9891188400
In summary, the punishment for cheque dishonour in India can include imprisonment for up to two years and/or a fine, depending on the specifics of the case and the failure to meet legal requirements for repayment after a dishonoured cheque.
