Section 138 of The Negotiable Instruments Act, 1881

 THE NEGOTIABLE INSTRUMENTS ACT, 1881

Section 138 of The Negotiable Instruments Act, 1881:

Dishonour of cheque for insufficiency, etc., of funds in the account- Where any cheque

drawn by a person on an account maintained by him with a banker for payment of any

amount of money to another person from out of that account for the discharge, in whole or

in part, of any debt or other liability, is returned by the bank unpaid, either because of the

amount of money standing to the credit of that account is insufficient to honour the cheque

or that it exceeds the amount arranged to be paid from that account by an agreement made

with that bank, such person shall be deemed to have committed an offence and shall,

without prejudice to any other provision of this Act, be punished with imprisonment for [a

term which may be extended to two years], or fine which may extent to twice the amount of

the cheque, or with Both.

Provided that nothing contained in this section shall apply unless:

(a) the cheque has been presented to the bank within a period of six months from the date

on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand

for the payment of the said amount of money by giving a notice, in writing, to the drawer of

the cheque, [within thirty days] of the receipt of information by him from the bank regarding

the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the

payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of

the receipt of the said notice.

Explanation: For the purpose of this section, “debt or other liability” means a legally

enforceable debt or other liability.

Section 142 of The Negotiable Instruments Act, 1881:

Cognizance of offences – [(1)] Notwithstanding anything contained in the Code of

Criminal Procedure, 1973 (2 of 1974), —

(a) no court shall take cognizance of any offence punishable under Section 138 except

upon a complaint, in writing, made by the payee or, as the case may be, the holder

in due course of the cheque;

(b) such complaint is made within one month of the date on which the cause of

action arises under clause (c) of the proviso to Section 138:

[Provided that the cognizance of a complaint may be taken by the court after the

prescribed period, if the complainant satisfies the court that he had sufficient

cause for not making a complaint within such period.]

(c) no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of

the first class shall try any offence punishable under Section 138.

[(2) The offence under Section 138 shall be inquired into and tried only by a court within

whose local jurisdiction,—

(a) if the cheque is delivered for collection through an account, the branch of the

bank where the payee or holder in due course, as the case may be, maintains the

account, is situated; or

(b) if the cheque is presented for payment by the payee or holder in due course,

otherwise through an account, the branch of the drawee bank where the drawer

maintains the account, is situated.

Explanation. —For the purposes of clause (a), where a cheque is delivered for collection

at any branch of the bank of the payee or holder in due course, then, the cheque shall be

deemed to have been delivered to the branch of the bank in which the payee or holder in

due course, as the case may be, maintains the account.]

Section 143 of The Negotiable Instruments Act, 1881:

Power of Court to true cases summarily - (1) Notwithstanding anything contained in the

Code of Criminal Procedure, 1973 (2 of 1974), all offences under this chapter shall be tried

by a Judicial Magistrate of the first class or by a Metropolitan Magistrate and the provisions

of Sections 262 to 265 (both inclusive) of the said Code shall, as far as may be, apply to such

trials:

Provided that in the case of any conviction in a summary trial under this section, it shall

be lawful for the Magistrate to pass a sentence of imprisonment for a term not exceeding

one year and an amount of fine exceeding five thousand rupees:

Provided further that when at the commencement of, or in the course of, a summary trial

under this section, it appears to the Magistrate that the nature of the case is such that a

sentence of imprisonment for a term exceeding one year may have to be passed or that it is,

for any other reason, undesirable to try the case summarily, the Magistrate shall after hearing

the parties, record on order to that effect and thereafter recall any witness who may have

been examined and proceed to hear or rehear the case in the manner provided by the said

Code.

(2) The trial of a case under this section shall, so far as practicable, consistently with the

interests of justice, be continued from day to day until its conclusion, unless the court finds

the adjournment of the trial beyond the following day to be necessary for reasons to be

recorded in writing.

(3) Every trial under this section shall be conducted as expeditiously as possible and an

endeavour shall be made to conclude the trial within six months from the date of filing of

the complaint.