A cheque gets dishonoured. Then, a legal notice is sent. Followed by calls from the other side. And then, perhaps, a summons from court. For the accused, it can all seem like a lot of noise – particularly when the cheque in question was given during a bona fide business dispute; a loan agreement gone bad or a family transaction/settlement that has fallen through. While a cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881 is not a reason for panic for the accused, neither should it be ignored completely. On the other hand, just because a person has received a notice or summons, it does not automatically mean that the complainant’s version and allegations are proved. Advocate BK Singh analyses each situation by firstly reviewing the cheque itself, the underlying transaction, bank record, statutory notice and documents supporting the alleged liability. That is an important distinction to make. Any defence strategy has to be focussed on evidence and based on the facts surrounding the transaction, rather than relying solely on the statement that the accused denies liability. If someone is looking for a lawyer to help with a cheque bounce case in Lucknow, their immediate questions are likely to be more basic: What next after receiving a notice? Can I settle? What if I don’t have the full amount in the cheque to pay? Does giving a security cheque help me get a defence? Does the complainant have to prove underlying debt? What happens after I receive a summons, and so on. All of these questions cannot be answered by looking at the cheque and drafting what Mr Singh calls an ‘arrogant’ reply. The scope for a defence can include the underlying liability, the circumstances of issuance of the cheque, statutory notice, jurisdiction, limitation, evidence in possession of the parties and whether a compromise is commercially viable. One thing that a person going through such proceedings should keep in mind is this: while cheque dishonour is a criminally enforceable offence under Section 138 of the NI Act, the statute also allows parties to compound the offence under Section 147. Settlement, therefore, can be relevant even after proceedings are initiated. There’s almost no locality in Lucknow where a cheque bounce matter cannot occur. Private loan among friends, supplier payment, transaction linked to real estate, business advance or repayment plan. Where the offender resides is only one factor in deciding where a Section 138 complaint might be initiated. There are detailed territorial-jurisdiction provisions within Section 142(2) of the NI Act. If a cheque is sent to a bank branch for collection by means of an account, jurisdiction usually lies with the State and District where the payee or holder has an account with that branch. The Supreme Court has consistently been applying this statutory language as well. This is why it's a good idea to look at bank statements and transaction history before assuming a case filed in a certain court is actually in the right place. The real concern for someone in Lucknow is often availability to attend court. Business owners do not want their work interrupted constantly. A salaryman may not want to face ridicule at work. Families are concerned a cheque problem will turn into a larger money or personal issue. Advocate BK Singh can go over the case paperwork at the outset and point out what needs to be done right away, what timelines apply and what issues are truly pending. Quick Facts Essentially, a cheque bounce case under Section 138 involves dishonour of a cheque issued for the discharge of a legally enforceable debt or other liability, followed by the requisite presentment, notice and failure to make payment. To put it simply: dishonour is only half the offence of Section 138. The conditions prescribed by statute in terms of presentation, notice and failure to pay must also be met. When viewed from the perspective of the accused, however, the issue often turns on whether the complainant’s account of the underlying transaction is capable of being sustained both legally and factually. Defense can arise out of the very nature of liability (did it exist? For how much? ), the circumstances of issuance, the consideration or transaction itself, payment made, accounts being disputed, allegations of misuse, authority to issue the cheque, etc. or any other evidence which will rebut the presumption. The Supreme Court has gone on to acknowledge time and again that the presumption under Section 139 is rebuttable. Some recent judgments have also shed light on why this defence has to be judged on the facts instead of following a hit and trial formula. The main Act is the Negotiable Instruments Act, 1881. Sections which would become applicable are Sections 138, 139, 141, 142, 143, 143A, 145, 146, 147 and 148, as the case may be. Section 138. This section lays down the substantive offence and the statutory requirements. The punishment prescribed in the section is imprisonment for a term which may extend to two years or with fine which may extend to twice the amount of the cheque or with both. Section 139. This section raises a presumption in favour of the holder that the cheque was received for discharge of any debt or other liability. This does not render the hands of the accused completely dry. The holder’s presumption is a rebuttable one which can be fought with a probable defence along with the matrix of facts and evidence available. Once disproved, the scope for settlement becomes viable. Section 142. This section deals with cognizance as well as laying down important procedural requirements including time limitation in statutory language. Section 143 deals with powers to try summarily. Section 143A. This section deals with interim compensation in certain cases. Section 147 This section is very important in the context of settlement as it declares offences under NI Act compoundable. It has been recently settled by the Supreme Court that both voluntary settlement and compounding are always available at any stage subject to the facts and circumstances of the case and the orders of the Court. This article would be useful to that person who has got a Section 138 Notice, has been served with summons, has already appeared in front of the Magistrate, or wants to settle after cheque dispute. It may even interest Directors and Business representatives. Since there is a separate provision dealing with offences by companies i.e. Section 141, one cannot take liability of the person beyond/Kesleyarawen to the said section's mandate and requirements and his participation in the company's acts. If somebody issued a cheque for his business receivable, loan advanced, security given, instalments or even for any disputed amount, he should keep a copy of entire transaction documents. Advocate BK Singh usually tries to focus on the original documents in the first meeting rather than the heat of Section 138 Notice. First, preserve the notice and the envelop in which it was sent or the record of delivery. Do not destroy the bank statement, cheque counterfoil, return memo, agreement, invoices, receipts or messages relating to the transaction. Second, reconstruct the transaction by chronology. When was the cheque issued? Why was it issued? How much was legitimately due on the date of presentation? Were subsequent payments made? Was there an earlier settlement? Was the cheque purportedly given as an advance against goods as security? Did the parties correspond in writing? The response to the statutory notice must be consistent with the facts. Just to avoid an awkward interview an accused should not make a convenient admission. Similarly, the response should not make allegations that cannot be proved later. Advocate BK Singh can go through the notice, documents relating to transaction and the defence material available before you finalise your response. If a complaint has been lodged already, the analysis is slightly different. The summons, complaint, affidavit evidence and court record have to be read together. Yes. Settlement and compounding is still possible because offences under the NI Act are compoundable under Section 147. The settlement could be for the amount of the cheque or a lesser amount agreed to by the parties payable in lump sum or instalments, or for withdrawal or disposal of terms favourable to the complainant or any other condition that the parties may agree to. The settlement will depend on the facts of each case and what the parties negotiate. Ideally the settlement should be in writing. Otherwise the promise to pay can be refused at a later date. The terms of the compromise must mention the amount to be paid, dates of payment, what will happen in case of default, pending complaint (what to do with it?) and what each party needs to do at the end of fulfilment of terms. In recent times the Supreme Court has heard cases related to settlement agreements in cheque bounce proceedings. The court has underlined the importance of voluntary compromise and adherence to agreed terms. Advocate BK Singh can help evaluate any settlement offer and advise you as to the legal effect of what is being proposed so that you do not pay money and get cheated. Simply Because the parties have settled, does not mean you will get automatic acquittal. The proper procedure in the court that is hearing the matter must be followed depending on what stage the case is at. Preserve the entire file/details, rather than only the cheque in question. Even if a document seems irrelevant now, it can prove to be important evidence in future. Maintain original documents and do not delete/edit any messages, screenshots or electronic documents. If someone sends you a statutory notice, files a complaint, issues summons, the amount involved is large, there are multiple transactions or there are settlement discussions going on. These are the times when legal advice becomes important. Legal advice at an earlier stage may also be helpful if the person accused of cheating believes that the cheque was misused; the amount being asked for is incorrect; payment has already been made against that cheque; that cheque was given for a disputed transaction; or if he believes that the complaint is filed in the wrong jurisdiction or is barred by limitation. The above are just some of the situations in which Advocate BK Singh can go through the record available with you and help identify the real legal issues from what may be conjecture or bluster. Click here for visitors to this website who require help. Please read our detailed Cheque Bounce Lawyer website on our services. The first step towards a helpful legal consultation is swapping documents instead of making promises about the outcome. In Lucknow, for the accused, this work could involve looking at the Section 138 notice, evaluating the underlying transaction, drafting or reviewing the response to the notice, reviewing the complaint, advising on appearances / procedural steps, analyzing settlement offers and representing the accused if necessary. The firm has also written related content about picking between cheque litigation and civil recovery. If you’re wondering why the underlying transaction is relevant to evaluating a dispute, you may find this Cheque Bounce vs Civil Recovery article educational. Advocate BK Singh can assist you determine what documents you should gather before your consultation. That exercise alone can make the first legal consultation worthwhile as you’ll walk away with advice based on the transaction instead of a verbal overview. Note: These are just general ideas about common problems in cheque bounce cases. Please speak to Advocate BK Singh for advice on your specific situation. Ans. Yes. Offences under NI Act are compoundable under section 147 of NI Act. The procedure depends on the stage of the proceedings and the court in which the matter is pending. Ans. No. A statutory notice is simply part of the Section 138 procedure. Conviction is a separate judicial order which cannot be assumed from the fact that a notice has been received. Ans. There is no default defence to a cheque lawsuit. The issues in any particular case will depend on the facts. Issues may arise concerning the existence of a legally enforceable liability, the amount payable, the circumstances of the cheque issuance, payments made prior to or at the time of issuance, supporting transaction documents, compliance with statutory requirements, or rebuttal of the statutory presumption of Section 139. Ans. No. Merely describing a cheque as a “security cheque” does not by itself determine liability. The underlying transaction would need to be analysed to determine if a legally enforceable liability existed at the time the cheque was presented. Ans. The accused should see if he can negotiate a settlement or instalment payment plan with the complainant. Any compromise should be well documented and preserved through the proper court process. Ans. The complainant’s total claim may include causes of action beyond the cheque amount, depending upon the underlying transaction and legal theory for the claim. The accused should review the complaint and supporting documents and not assume that every demand made by the complainant is legally payable. Ans. No. Section 139 raises a rebuttable presumption. The accused should fight the complaint if there is a probable defence and supporting evidence. The exact evidentiary situation will depend on the facts and stage of the case. Ans. Section 142(2) provides the statutory framework for jurisdiction. Jurisdiction is usually tied to the bank branch where the payee/depositor maintained an account if the cheque was deposited into an account. Verify the facts before filing a complaint or challenging jurisdiction. Ans. Compounding may still be legally available at later stages depending on the facts and the appellate court. The Supreme Court has upheld settlements at appellate stages in suitable cases. Ans. The sooner the notice, cheque, transaction documents, evidence of payments, jurisdiction and compromise position are reviewed the better. Avoiding procedural mistakes and gaining a better understanding of whether a matter should be contested, compromised or dealt with another way are good reasons to contact Advocate BK Singh early. On the surface a cheque bounce case may look daunting. But for the accused the logical first step isn’t panic or an unconsidered denial. It’s a thorough review of the cheque, the underlying liability, statutory notice, bank records, court documents and whatever evidence may be available. The statute does provide the holder with statutory protections and presumptions including under Section 139. But those can be rebutted. Additionally settlement and compounding are always options under Section 147. If you have received a cheque bounce notice or complaint in Lucknow, BK Singh can help you understand the paperwork, procedural posture, defenses and possible settlement before you decide on your next course of action. Advocate BK Singh works with Cheque Bounce Lawyer, India. He handles cases related to cheque dishonour, 138 cases, defence side cases, compromise and recovery related issues. Advocate Singh guides his clients, businessmen and professionals on practical importance of legal notice, bank statements, transaction evidence, legal proceedings and compromises. If you have a case related to cheque bounce case in Lucknow or any other city in India, he focuses on review of documents, following of procedure and settlement discussions which are legal and feasible instead of assuring results which are unreliable. He simplifies complex legal communications and proceedings for his clients.Cheque Bounce Case Lawyer in Lucknow for Accused Defence and Settlement
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Frequently Asked Questions
Q1. Can the accused person compromise a cheque bounce case in Lucknow?
Q2. I have received a legal notice. Does this mean I have already been convicted?
Q3. What is the default defence to a cheque bounce lawsuit?
Q4. Does marking a cheque as "security cheque" take it outside the scope of Section 138?
Q5. I cannot afford to pay the cheque amount. What should I do?
Q6. The cheque amount is only ? 20,000 but the complainant is asking for more. Can he do that?
Q7. What about Section 139? Doesn’t that guarantee the complainant will win?
Q8. Which court has jurisdiction over cheque bounce cases?
Q9. Can I compromise a conviction in cheque bounce case during appeal?
Q10. Why should the accused speak to Advocate BK Singh as soon as possible?
Conclusion
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