Proviso to Section 138 is all important and stipulates three distinct conditions precedent, which must be satisfied before the dishonor of a cheque can constitute and offence and become punishable. The first condition is that the cheque ought to have been presented to the Bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier. The second condition is that the payee or the holder in due course of the cheque, as the case may be, ought to make 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 of the receipt of information by him from the bank regarding the return of the cheque as unpaid. The third condition is that the drawer of such a cheque should have failed to make payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice. It is only upon the satisfaction of all the three conditions mentioned above and enumerated under the proviso to Section 138 as clauses (a), (b) and (c) thereof that an offence under Section 138 can be said to have been committed by the person issuing the cheque. Virendra Kumar Gupta v. State of U.P., 2016 (96) ACC 729.
Tag Archives: notice
For the purposes of limitation, in so far as legal notice is concerned, it is to be served within 30 days of the receipt of information by the drawee from the bank regarding the return of the cheque as unpaid. Therefore after the cheque is returned unpaid, notice has to be issued within 30 days of the receipt of information in this behalf. That is the period of limitation provided for issuance of legal notice calling upon the drawer of the cheque to make the payment. After the sending of this notice 15 days time is to be given to the notice, from the date of receipt of the said notice to make the payment, the offence can be said to have been committed and in that event cause of action for filing the complaint would accrue to the complainant and he is given one month time from the date of cause of action to file the complaint. Kamlesh Kumar v. State of Bihar, 2014 (84) ACC 311.
The issue of territorial jurisdiction under Section 138 Negotiable Instruments Act was considered by the Hon’ble Supreme Court in K. Bhaskaran v. Shankaran Vaidhyan Balan, (1999) 7 SCC 510. The Hon’ble Supreme Court observed that the following five acts are essential to constitute an offence under Section 138 of the NI Act and if these five different acts were done in five different localities, any one of the Courts exercising jurisdiction in one of the five local areas can become the place of trial for offence under Section 138 of the Act:
“(1) Drawing of the cheque;
(2) Presentation of the Cheque to the Bank;
(3) Return of the Cheque unpaid by the Drawee Bank;
(4) Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount; and
(5) Failure of the drawer to make payment within 15 days of the receipt of notice.” Ram Chandra Agarwal v. State of U.P., 2013 (82) ACC 886.