The perils of dishonouring a cheque could be too many. Apart from the social stigma attaches to the person or the entities issuing, the legal consequences could be pretty serious. As we know a dishonour of a cheque can take place under a variety of circumstances but in a judgement given by the Bombay High Court it has been held that the circumstances surrounding a case of dishonour need not be taken into account while deciding the guilt of a person and in fact it is worth quoting in this context:” A clear reading of Section 138 leaves no doubt in our mind that the circumstances under which such a dishonour takes place are required to be totally ignored. In such case, 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 situation.” The reference to Section 138 is to the provisions of Section of 138 of the Negotiable Instruments Act, 1881.

The provisions of the aforementioned legislations contains provisions for stiff punishment for the offenders and it is extremely important to be aware of the provisions just not to be caught on the wrong side of it. With the coming into effect of the new chapter from 1^st April which has increased the acceptability of cheques in settlement of liabilities by making the drawer liable for penalties in case of bouncing of cheques due to insufficiency of the funds or for the reason it exceeds the arrangements.

Material Ingredients of the Offense

The main ingredients of the offenses contemplated under the Negotiable Instruments Act are the drawing of the cheque, its presentation to the bank, return of the instrument as unpaid by the drawee bank, service of a notice in writing upon the drawer demanding payment of the cheque amount and the failure on the part of the drawer to make payment within 15 days of the receipt of such notice

Given to the rigorous nature of the punishment which is provided under the amended provisions of the negotiable Instruments Act, It is very advisable to be very cautious in this regard. Under the amended provisions if the cheques are dishonoured for want of balance, the drawer of the cheque is liable for imprisonment for one year or a fine which may be upto two times the amount of the cheque or both.

• Written by chinmoymukherjee.
• In category Commerce.
• 14 years ago.

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