News Ticker

What are the defences that will not be permitted when a prosecution is carried out under Section 138?

Point out the recent developments and changes brought out to Section 138.

Cheque dealings are very important and vital for banking purposes and also for commerce and industry and economy of the country. Since there is rise in dealings of cheques there is also rise in the practice of giving cheques without much sufficient funds in account. Section 140 states that the drawer of the cheque cannot take defence for an offence under Section 138, stating that he had no reason to believe when he had issued the cheque and had no idea that the cheque would be dishonoured when it will be presented at the bank.

Cheque should be drawn by drawer and it should be returned back and was issued towards discharge of a debt and drawer does not make payment within 15 days after receiving notice then the offence is punishable under Section 138 of the Negotiable Instruments Act. In many commercial transactions cheque bounce happens quite frequently and so legislature has added Section 138 in the Negotiable Instrument Act 1881 to prevent these kind of things happening.  Amendment to Section 138 of the Principal Act was the addition to clause (a) a term which may extend to two years is substituted to previous one where it was one year and clause (b) the words 30 days is substituted for 15 days which was there earlier in the principal Act.

If a cheque bounces it invites criminal prosecution under this section 138 of Negotiable Instruments Act 1881 and the punishment for it is imprisonment upto 2 years or fine or both and it is a bailable, compoundable and non-cognisable offence. In R. Raju Vs. K. Sivaswamy (31 October 2011) Magistrate convicted the accused and sentenced him for one year simple imprisonment and a fine of Rs 5000 and to undergo simple imprisonment for 3 months in default of payment of fine. Although insertion of penal provisions has helped to curb the issue of cheque in playful manner it also has become more secured now. But there is no proper provision in the Act that can show an alternative method of realisation of the amount which is due to the complainant.

by Sushma Javare.