A cheque could have been issued for unpaid professional fees or business supplies or just lent as a friendly favour or repayment of rent, commission or money advanced under a written agreement. When bounced back by the bank, the payee generally thinks that holding the original cheque is sufficient proof of the claim. The law expects more. Filing a complaint under Section 138 NI Act is a chain of connected facts. Starting from cheque being issued for a legally enforceable debt or liability. It should be presented within its validity. A legal demand notice should have been sent within the prescribed time limit. And last but not least, Complaint should have been filed before the prescribed period in a court having territorial jurisdiction. People often approach Lawyers for Section 138 NI Act Advocate in Patiala House for redressal under pressure of two forces. Anxiety of losing money and a limitation period that is relentlessly ticking away. A bank memo delayed by a few days, failure to include all details in the notice or sending it to the address specified on the cheque instead of the address provided by the drawer, a slight variation in claimant’s name, failure to attach transaction record can become a ground to seriously challenge your case later. It is important to note that issuance of a dishonoured cheque does not amount to an offence. It only becomes punishable when certain ingredients provided by the statute are fulfilled in the prescribed order. Till then, return of cheque by the bank, although evidence of dishonour, does not complete the offence. Cheque transactions for Delhi often involve consultancy agreements, business supplies, real estate transactions, personal loans, security deposits and post dated payments agreements. The parties could be operating from anywhere in Delhi NCR and their bank branches could be anywhere in New Delhi, Noida, Gurugram, Ghaziabad or elsewhere. So jurisdiction is an instant worry. Filing the complaint in the wrong court could lead to the complaint being returned, transferred or objected for not being maintainable. By the time you figure this out, you could be dealing with the limitations running out, non-availability of documents or service of notice becoming difficult to prove. So when we say ‘ Cheque Bounce Lawyer in Patiala House Courts ‘, it has significance only when the statute involved provides jurisdiction to the courts at Patiala House in relation to the dispute. Click here to read about specific details related to a cheque bounce lawyer practicing in Patiala House Court on our website. All these periods are linked to each other. Advocate BK Singh points out that many people start computing these periods from the date of cheque instead of from the date on which bank sends the information on dishonour. This messes up your filing calendar. The underlying issue is not non-payment. It is whether the cheque, underlying liability, bank return, demand notice, service record and complaint taken together meet the statutory criteria of Section 138. The cheque could have been issued for an invoice, a loan amount, a settlement amount, a purchase order or an admitted balance due. However facts are often disputed regarding when the amount became due, whether goods were defective, whether accounts were already squared or whether the cheque was given merely as a “security” device. Advocate BK Singh points out that “security cheque” alone does not end the argument. The overall transaction and the state of the underlying liability when the cheque was due can become relevant. An undated cheque, blank signed cheque or post-dated cheque can thus lead to complex facts issues instead of a cut and dried conclusion. Cases have also involved advance payments before cheque presentation. If the legally due amount at the time of the demand differs from the cheque amount, the validity of the demand as made in the notice can be challenged. Similarly if the notice mixes the cheque amount with interest, damages and other claims it may be criticised if it does not separately specify the cheque amount as being demanded. The article on Limitation for sending legal notice discusses the statutory timing sequence. Importance of the guide is to demonstrate how quickly what seems like a simple payment dispute can become a limitation issue. A Section 138 notice is not a generic legal notice. It is a statutory demand arising out of a specific dishonoured cheque and alleged enforceable liability. Notice defects include stating the wrong cheque number, dishonour date, amount, failure to quote bank memo details or a vague demand. Incorrectly naming the drawer has serious consequences when the cheque is issued by a company, partnership firm or any other trade entity. Service adds another dimension to the dispute. The sender may have a postal receipt but no evidence that the notice was properly addressed. The envelope may be returned with endorsements like “left”, “unclaimed”, “insufficient address” or “refused”. Each of these can give rise to a different set of facts relating to dispatch, delivery and knowledge of the drawer. Electronic messaging can corroborate the surrounding paperwork, but sending a WhatsApp message or email casually will not instantly eliminate challenges to statutory notice. Advocate BK Singh treats the copy of notice, postal receipt, tracking report, returned envelope and address documents as independent evidence because each can be challenged at a later stage. Incorrect. Merely because an advocate practicing from Patiala House is involved doesn’t confer territorial jurisdiction on its own. Pursuant to Section 142(2), place of collection (when cheque is presented through account) would prima facie be place where the payee or holder in due course has the account with the branch. Or if presented otherwise than through account, place where drawer has his account with branch of drawee bank. It is not as cut cut as it used to be. A person can drop the cheque in a branch which is a service branch/drop box/any other branch of the same bank. The ‘account’ may have a different ‘home branch’. BK Singh Advocate believes details of bank and account, and manner of presentation would therefore be important in determining territorial jurisdiction of Patiala House Courts. Commentators refer to plaintiff’s place of business, place of drawing of the agreement, residence of drawer, etc. as part of the facts of the case. They are not to be regarded as de facto alternates to the territorial jurisdiction rule which applies specifically to Section 138 suits. Cheque and return memo are only evidence of possession. Facts of transaction continue to remain relevant. Accused can plead failure of consideration, misappropriation of signed cheque, non-delivery of goods or that account was already squared up. Typical file of evidence may have: Minute books identifying persons responsible for conduct of business of the company Documents may contradict each other. Invoice may show one amount and cheque for different amount. There could be subsequent credits in the ledger. Messages/emails may state that cheque was only for security but complaint alleges it to be final settlement. BK Singh, an advocate points out “All these contradictions come to notice only after service of summons when accused interrogates the complainant”. These can have an impact on cross-examination, presumptions under Sections 118 & 139 and credibility of the book of accounts. Section 141 applies where a cheque is issued by the company. Director’s cannot simply be liable because someone’s name is reflected in the companies records. The complaint should make legally relevant statements regarding the company and the persons alleged to be in charge of the company’s business at the relevant time. Leaving out the company’s name, mis-describing the authorised signatory or making blanket assertions against all directors will lead to maintainability challenges. Past directors, non-executive directors and those who say they had no operating role can challenge their inclusion. Authorisation on behalf of the complainant company is another factor. If a complaint is filed by an employee who does not clearly have authority, questions of competence, personal knowledge and the admissibility of records may be raised. Legal expert Advocate BK Singh views corporate cheque complaints as pleading heavily documents. Board resolutions, master data, authorised signatory details, agreements, invoices and account statements can all narrate different stories. Often the legal challenge is caused by these being inconsistent. Once the complaint and material annexed is considered by the court, summons can be issued if cause appears. Service gets delayed when accused change their address, company shifts its registered office or address on cheque varies from what is on record. Persistent return of non-service can prolong proceedings. Erroneous pin codes, half-complete floors and shut showcause premises are some specific issues faced in Delhi. Residence of accused from where court has no jurisdiction can also pose added procedural challenges at this stage. Post service of summons, technical default can attract coercive processes of court. However, issuance of summons itself does not imply guilt. Allegations, statutory presumptions, evidence of defence and the primary liability are questions which are yet to be answered. Writes Advocate BK Singh, delays due to service and summons issues in cheque bounce cases should be treated as an independent ground of delay because till these issues are decided the case doesn’t even reach to stage of evidence on transaction itself. Section 138 contains penalties of imprisonment for up to two years or fine that extends to twice the amount of the cheque or both. This is on conviction. These are maximum statutory punishments but they are not mandatory sentences. Delay in the proceedings affects the complainant as well as the accused. Cash-flow issues are exacerbated for the complainant and access to witnesses and company records may be diminished. Employees move on, computer messages are deleted, account platforms may alter and original documents can become more difficult to locate. Summonses create anxiety for the accused and often involve travel time and negative peer pressure. Company officials can find themselves dealing with proceedings while a larger commercial dispute, arbitration, civil recovery claim or insolvency process is ongoing. Section 143A compensation orders may be sought by the complainant after the accused has entered a plea of not guilty in the specific situation outlined in this provision. Keep in mind that this order is at the discretion of the court and cannot be termed as a guaranteed amount. Instances of urgency are easy to spot. When the 30 days are on and ticking away, when the notice is returned unserved, when the drawer’s address is doubtful or when the date for filing a complaint is approaching. Cheques issued by corporates, part-payments, multiple presentments and security cheques also require special scrutiny. An intimation of proposed Patiala House filing warrants extra attention where the payee’s bank branch, collection branch and place of deposit are all different. Senior Advocate BK Singh says courts should beware of jurisdictional presumptions because mention of a court’s name on the draft complaint cannot heal want of local connection. Analysis of the legal position would also become necessary where the drawer raises defenses such as signature being denied, cheque got lost, cheque was altered, transaction is denied or there was no enforceable liability as on the date of presentation. These issues go beyond fine points of drafting. They go to the root of the proceeding. Basic guidelines for Section 138 complaint drafting are discussed on the Cheque Bounce Lawyer website. Whether any particular case would succeed or is maintainable would depend upon its own facts, documents and chronological sequence along with jurisdictional truths. No. Cheque should be issued for discharge of a legally enforceable debt or liability and also satisfy all technical requirements such as time of presentation, demand notice, non-payment etc. Generally speaking, the payee has to send the statutory notice in writing within 30 days of receiving information from bank about dishonour. However, date of bank memo and communication cannot be treated lightly as the same date, says Advocate BK Singh. Drawer gets 15 days of receiving statutory notice to make good on his cheque. Only if he fails to pay within 15 days does cause of action arise against him. No. Can’t lose sleep over jurisdiction if complaint has been filed in competent court. Patiala House Courts have time and again observed that territorial jurisdiction will have to be tested from the provisions of Section 142(2) keeping in mind the mode of presentation and bank branch etc. No. Nature of transaction leading to execution of the cheque can be disputed. Cheque may still represent a legally enforceable debt when it became payable. Read Advocate BK Singh’s view on deciphering such agreement and entries in payment record. Returned notice doesn’t have same effect in all situations. Adequately addressing the notice, Post Office endorsement, proof of dispatch and other facts will be relevant to determine effect of service, says Advocate BK Singh. No person becomes an accused merely because he is designated as a director. Whether other conditions of Section 141 are satisfied, he had responsibility for conduct of company affairs or directly involved as alleged in the complaint are relevant questions of fact. Cheque is the primary evidence in the case. If it is lost, destroyed or you are unable to produce the same, you may face problems, but all is not lost. Scrutinise the banking and secondary evidence available with you. No. Section 138 merely provides for a criminal remedy against the offender. Such filing will not guarantee conviction or payment/recovery of your money. Criminal liability and compensation/settlement/civil recovery are different issues altogether, clarifies Advocate BK Singh. Yes, if you can show sufficient cause for delay. Section 142 allows condonation of delay but the same is not automatic and would be at the discretion of the court. Don’t assume that since the amount in question is large, your delay would be condoned. It seems a simple Section 138 matter. Issued a cheque. Cheque was returned. Money was not paid. But the matter turns on the date of liability becoming legally enforceable, date of demand, genuineness of service and proof, territorial jurisdiction of competent court and consistent document timeline. You enter Patiala House Courts when legally the competent court has jurisdiction over the complaint filed. “Speedy” is relative to limitation period and preservation of evidence- says Advocate BK Singh. Don’t hurry just because you can type out a notice or complainant in 2 hours.Section 138 NI Act Advocate in Patiala House for Fast Legal Notice and Filing
Why Does a Cheque Bounce Matter in Delhi and Patiala House Courts?
Quick Facts About Section 138 NI Act Proceedings
What Is the Core Legal Problem After a Cheque Is Dishonoured?
Why Can a Fast Legal Notice Still Become Defective?
Does Every Case Belong Before Patiala House Courts?
Which Evidence Problems Commonly Weaken a Complaint?
Why Are Company Cheques More Complicated?
What Happens When Summons or Service Becomes Disputed?
What Consequences Can the Parties Face?
When Does the Need for Legal Review Become Urgent?
Frequently Asked Questions
1. Will every dishonoured cheque invite Section 138?
2. What is the time limit for sending cheque bounce notice?
3. What time does the drawer get after getting notice?
4. Can I file a complaint at Patiala House only because transaction took place in New Delhi?
5. Are security cheques exempted from Section 138?
6. What happens if the notice is returned by the post office unclaimed?
7. Can all directors of a company be made accused?
8. Do I have to produce the original cheque?
9. Does filing of Section 138 case ensure that I will recover my money?
10. Can delay in filing be condoned?
Final Thoughts
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