Tax4india ›› Indian Law ›› Business / Commercial Law ›› Dishonour Of Cheque
Presentation Of Cheques Any Number Of Times
- There is no embargo upon the payee to successively present a dishonoured cheque during the period of its validity.
- There is no restriction regarding the no of times a cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing complaint.
- In the course of business transactions it is not uncommon for a cheque being returned due to insufficient funds or similar such reason and being presented again by the payee after sometime, on his own volition or at the request of the drawer, in expectation that it would be encashed.
- For dishonour of one cheque there can be only one offence and such offence is committed by the drawer immediately on his failure to make the payment within 15 days of the receipt of the notice served.
- On each presentation of the cheque and its dishonour, a fresh right and not cause of action accrues. Therefore the payee without taking pre-emptory action in exercise of his right may, go on presenting the cheque so as to enable him to exercise such right at any point of time during the validity of the cheque.
- Cause of action would arise only on failure to pay after notice.
- Once a notice for payment is given a fresh cause of action will not arise if the cheque is presented again and it is dishonoured.
Effect Of stop Payment
- Stop payment instructions cannot obviate the offence.
- Even if stop payment instructions are given and notice of the same is given to the payee or holder in due course liability cannot be avoided.
- The position will not be different even if the drawer had instructed the bank to stop payment prior to the presentation of the cheque for encashment.
- Once the cheque is issued there is a presumption, that the holder received the cheque for the discharge, of any debt or liability and merely because the drawer issues a notice to the drawee or to the bank for stoppage of the payment it will not preclude an action under the Act.
Notice In Case Of Dishonour
- The requirement of giving of notice is mandatory. If no notice making a demand for payment is served upon the drawer within 30 days from the date of dishonour of cheque, a complaint is not maintainable unless the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.
- Notice means a notice in writing.
- A postal acknowledgement due containing the signature of the accused is proper proof of service of the notice on the addressee shown in the postal acknowledgement.
- When a notice is returned by the sender as unclaimed such date would be the commencing date in reckoning the period of 15 days. Such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address.
- The notice need not necessarily be by registered post only. It can be sent by a telegram, fax or by a letter as well.
However it is preferable to send the notice by registered post, as that is clear evidence of service.
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