Need Legal advice on Sec 138?

As the facts of the case not elaborated fully hence no specific legal advice can be given in this matter. However the basic requirements necessary for Section 138 Negotiable Instrument Act to be initiated in the court of law are being stated here:

1. The Cheque drawn by a person for payment of any amount of money to discharge any debt has been presented within a period of six months from the date on which it is drawn or within the period of its validity, which ever is earlier.

2.The payee or the holder of the cheque makes a demand for the payment of the said amount by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid.

3. The drawer of the cheque fails to make the payment of the said amount of money to the payee within 15 days of receipt of the notice.

The person/payee or holder of the cheque whose debts remain unpaid even after the notice period of 15 days can on fulfilment of all the above mentioned conditions file complaint against the drawer of the cheque not otherwise.

In your case first thing you have to specify whether the cheques which got bounced for insufficient funds in your account in the bank were within six months period from the date of issue, in case these were undated cheques which were taken from you by the bank as security against the debts than these cannot be used for the purpose of the liabilities under section 138 NI Act.

The giving of 15 days notice within 30 days of receipt of return of the cheques as unpaid is statutory requirement which cannot be ignored by any Magistrate in whose court the Complaint under this provision is made, before notice to the drawer of bounced cheque is sent firstly in the form of summon, such Magistrate has to be satisfied about this fact.

What I feel the summon you refer here is not actually summon of the court but notice of 15 days being given by the lawyer of the bank for payment of your debts within 15 days.

The bank may not make complaint U/S 138 NI Act as for them payment of their debts more important than sending you behind the bars, but this thing can only be confirmed after going through your complete case file to verify the facts you mention in your facts here.

EDIT: In the facts mentioned later on, I will suggest you to appear in the court on the date of appearance with all the documents with regard to settlement of the debts you got which you did in the month of January, tell the court about the settlement, show the documents wherein the debt amount was agreed by the bank as paid fully as you had surrendered the motor vehicle to them to settle the whole loan amount taken by you from them and duly acknowledged by them.

The Magistrate will decide the matter in your favor after confirming this with the bank receipt of debt amount from you.

On perusal of your query the cheque which you have issued to the Bank in order to clear your outstanding loan amount which is a legally enforceable debt has been dishonoured due to reasons known to you.Hence,the bank has invoked sec 138 of N.I.Act.Before arrival of the summons, you should have received a statutory notice from the bank which is a mandatory one U/s 138 N.I.Act .Have you given any apt reply to the notice? or you simply ignored it!!

You have not whispered anything about that in your query. However,now you have received a summon from the Competent Court which have taken cognizance (Judicial notice) of the offence which you have committed under sec 138 of N.I.Act.

DO NOT IGNORE THE SUMMONS.IF YOU , WARRANT WILL BE ISSUED AGAINST YOU.

ATTEND THE COURT ON THE HEARING DATE

Advocate,Chennai

e-mail: advocatechennai@ymail.com

138 does not apply in case the cheques are given in advance. You seem to have got a fake summon copy. As per Indian Stamp Act issueing of post dated cheques is a crime punishable with fine (small amount of fine - Rs. 100/- per instrument). You can not file cases based on illegal documents. 138 is supposed to deal with cases where you have taken goods and want to pay by cheque. In that case at the time of issue of the cheque you should have the amount in your bank. But in case of Advance cheques given that is not possible.

Moreover if you have surrender form that also says that you need not pay you do not need to worry. Normally banks charge very heavy penalty for non payment. You need not pay even that penalty. There is another act which deals with Heavy rates of Interest and penalty. The courts in Delhi and Major cities do not even entertain their cases. Recently I had a client who took a personal loan of which Rs. 16000/- was still pending. He had other accounts with them as well. Due to levy of charges he paid them all. The company closed the other one as well which was to be paid in installments. After 4 years the case was decided by consumer forum in which they were asked not to claim their Rs. 16000 and also to pay Rs. 10000/- by way of penalty.

The notice is required when they want to reposses the assets. Since they have already taken the vehicle there is no need to send a notice.

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I have filed case under section 138 NI act (cheque bounced). There was no reply to the notice which I had sent through advocate. The court had issued summons. When on the said date the accused did not appear. I got information from the court that there was no report as whether the summons had reached accused. As per advocate\\\'s advice I then I hand delivered (through police) it. The summons was handed over to the accused\\\'s wife as the accused was not available. On the said date again the accused did not turned up. The court said that handling over the summons is not considered. It is difficult to find the person as he is almost out. He is working. I stay in Mumbai and he stays in Pune. Kindly advice

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