Tax4india ›› Indian Law ›› Business / Commercial Law ›› Dishonour Of Cheque
Period For Payment
- If payment is not made within 15 days of the receipt of the notice then the offence shall be deemed to have been committed.
- The cause of action for filing complaint would arise after the completion of 15 days from the date the drawer receives the notice and fails to pay the amount within that period.
- The court cannot take cognizance prior to the lapse of the period of 15 days even if there was a denial of the liability earlier, even after denial liability to pay the amount, the accused can at any time change his mind within 15 days of receipt of notice, make payment and avoid prosecution.
- The offence shall be deemed to be committed only from the date when notice period expired.
The drawer cannot take the excuse that he had no reason to believe when he issued the cheque that the cheque may be dishonoured on presentation for the reasons stated above.
Remedies
- To file a civil suit
- To file a complaint under section 138 of the Negotiable Instruments Act, 1881
- To file complaint under section 420 for cheating under the Indian Penal Code
In case a person has filed suits for recovery, he is not precluded from filing a complaint under section 138 of the Negotiable Instruments Act and section 420 of the Indian Penal Code. Both remedies may be simultaneously possible. A civil suit cannot debars the criminal prosecution.
Filing Of A Complaint
The court will not take cognizance of any offence unless
- The payee or holder in due course of the cheque makes a complaint in writing.
- The payee cannot lodge a complaint after the completion of one month from the date on which the cause of action arose.
- A complaint can be filed through Power of Attorney, agents of the payee or holder in due course
- A complaint has to be filed in writing alongwith the list of witnesses and the list of documents.
Where To File The Complaint
A complaint can be filed in a court within the jurisdiction of which-
- The cheque has been drawn
- The place where the cheque is presented for collection
- The place where it is received after endorsement
- The place where cheque is dishonoured.
The offence shall not be triable by any court inferior to that of a Metropolitan Magistrate or Judicial Magistrate of the first class.
Limitation
A complaint has to be filed within one month of the date on which the cause of action arise i.e. within 45 days of the offender receiving the notice to make payment.
Procedure On Receipt Of The Complaint
- If the magistrate is of the opinion that there are sufficient grounds for proceeding he shall call the complainant for pre summoning evidence and the necessary documents are exhibited.
- Thereafter summons are issued for the attendance of the accused and the witnesses.
- The evidence of the witnesses is recorded.
- The particulars of the offence are stated to the accused, and he shall be asked whether he pleads guilty or has any defence to make.
- If he accused pleads guilty, the magistrate shall record the plea and convict him.
- If the accused does not plead guilty the Magistrate shall proceed to hear the complainant and the accused and take all the evidence as may be produced by both.
- On the hearing and evidence the Magistrate shall pass the order of conviction or acquittal.
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