Significant Aspects of Cheque Bounce under Section 138

The endless saga of cheque bounce has also resulted various hidden aspects with Section 138 of Negotiable Instrument Act,1881 as below :

i ) Where cheque was presented on second time during its validity period,but no action was initiated on first bounce , then  the prosecution will be permissible  for the second and/or last time the cheque bounced and not for both the time it bounced.

iii)  Where the cheque is returned on the ground of “closure of the account” , then also it will be treated as an  offence in terms of section 138 of the act.

iv ) Where a cheque is returned due to its payment being stopped by the drawer, then the drawer had to prove that it had sufficient funds in his account at the time of return of cheque but the payment was stopped due to some other reason .

v) Where a cheque gets dishonoured for the want of “account operation jointly, other Director’s signature required”, it will be an offence under Section 138 . In such a case , the complaint can be filed against only that person who has signed and not for the other person whose signature was required.

v) Where a cheque is returned with an advice “Refer to drawer” , then it has to be proved that the drawer had sufficient funds at the time of return of cheque but the bank had returned the cheque for a reason other than lack of funds.

vi) Where a notice is sent within 30days , it will be considered proper compliance and there is no further requirement about its receipt date .The Kerela High court in the matter of Ravi v. Kuttappan, 2007(3) Civil Court Cases 337 (Kerala) : 2007(3) Criminal Court Cases 071 (Kerala) held that  that the dispatch of notice within 30 days is the requirement of law and that the date of receipt of notice is not crucial or relevant .

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