CHEQUE BOUNCE
3 years ago
a Cheque deposited on 2nd june 2020 bounced due to insufficiency of funds. The 3 month period of validity expired on 8th june 2020. Has the government extended the validity of the period due to covid ? can i now give notice to the drawer of the cheque?
A.Yes, you have so much margin. All cheues delayed being looked leniently...
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https://indianlawwatch.com/cheque-bounce-cases-during-the-lockdown-extension-of-the-limitation/
Currently, the country is experiencing the world’s biggest lockdown that has let to the shutting of the majority of factories and businesses, suspending of flights and restricting of overall movement between and within the states. It has been estimated that the Indian Economy has already suffered a setback of more than Rupees 10 Lakh Crore and is expected to increase multifold and could lead to the next recession. Many Economist is predicting that a lot of business especially the ones those who were facing financial crunches even before the lockdown would not be able to sustain and are likely to go bankrupt and insolvent after it. Such a situation will have an adverse effect on the rest of the businesses as well as a direct implication of the same would be that many businesses would no longer be able to honour their Financial Commitments.
In Our Country Cheques are a crucial mode of payment especially when it comes to a commercial transaction or for giving surety of some future payment. Cheques have been ingressed deeply into the business ecosystem as people have a firm belief in the protection that the law gives in cases when these cheques have been dishonoured.
Dishonoured of Cheque is covered under section 138 of the Negotiable instruments Act which states It states that –
Section 138 in The Negotiable Instruments Act, 1881
138 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 provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend 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, 20 [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 purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]
What is important here is to note that this section is bound by the limitation period, which is the time period within which the complainant has to act in order to ascertain his right.
So whenever there is the dishonor of the cheque a person has to send a legal notice within 30 days from the date on which he had received information about the dishonour. In that Notice 15 days, time is given to discharge the liability once that is expired and no payment is made then within 30 days from that date the case has to be filed in the court.
The order
However, during the lockdown, it became almost impossible for the claimants to file their cases or even to serve the legal notice so considering these unprecedented circumstances the Supreme Court of India on 6th May 2020 has extended the limitation period for statutory provisions under Section 138 of the Negotiable Instruments Act & the Arbitration & Conciliation Act with effect from March 15 until further orders.
This would mean that if the cheque given to you was dishonoured during the lockdown or even before it, whereby your limitation of 30 days was there till 15th March then in such cases your limitation period has been extended and you can act upon it once the lockdown is lifted.
For the time being, you can intimate the opposite party through E-mail or Whatsapp regarding the same.
It is important to note that the validity of a cheque within which it needs to be deposited would still remain 3 months and there is no extension of that period as the Banks were functional even during the lockdown.
Previously the finance minister Nirmala Sitharaman had announced to increase the threshold limit to 1 crore for filing for an insolvency case against the defaulter. Thereby restricting the options available to recover the amount so it becomes very important to cautiously exercise the rights available with you.
It is expected that the functioning of the court may remain more restricted leading to delays so in case you are an MSME, you may file a parallel proceeding for recovery under MSME Act, 2006 to ensure that your amount is recovered on time. During recent times it has been seen to be an effective and efficient tool for the recovery of delayed payments.
If my answer is helpful to you then please give my FIVE STAR
=================================================
https://indianlawwatch.com/cheque-bounce-cases-during-the-lockdown-extension-of-the-limitation/
Currently, the country is experiencing the world’s biggest lockdown that has let to the shutting of the majority of factories and businesses, suspending of flights and restricting of overall movement between and within the states. It has been estimated that the Indian Economy has already suffered a setback of more than Rupees 10 Lakh Crore and is expected to increase multifold and could lead to the next recession. Many Economist is predicting that a lot of business especially the ones those who were facing financial crunches even before the lockdown would not be able to sustain and are likely to go bankrupt and insolvent after it. Such a situation will have an adverse effect on the rest of the businesses as well as a direct implication of the same would be that many businesses would no longer be able to honour their Financial Commitments.
In Our Country Cheques are a crucial mode of payment especially when it comes to a commercial transaction or for giving surety of some future payment. Cheques have been ingressed deeply into the business ecosystem as people have a firm belief in the protection that the law gives in cases when these cheques have been dishonoured.
Dishonoured of Cheque is covered under section 138 of the Negotiable instruments Act which states It states that –
Section 138 in The Negotiable Instruments Act, 1881
138 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 provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend 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, 20 [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 purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.]
What is important here is to note that this section is bound by the limitation period, which is the time period within which the complainant has to act in order to ascertain his right.
So whenever there is the dishonor of the cheque a person has to send a legal notice within 30 days from the date on which he had received information about the dishonour. In that Notice 15 days, time is given to discharge the liability once that is expired and no payment is made then within 30 days from that date the case has to be filed in the court.
The order
However, during the lockdown, it became almost impossible for the claimants to file their cases or even to serve the legal notice so considering these unprecedented circumstances the Supreme Court of India on 6th May 2020 has extended the limitation period for statutory provisions under Section 138 of the Negotiable Instruments Act & the Arbitration & Conciliation Act with effect from March 15 until further orders.
This would mean that if the cheque given to you was dishonoured during the lockdown or even before it, whereby your limitation of 30 days was there till 15th March then in such cases your limitation period has been extended and you can act upon it once the lockdown is lifted.
For the time being, you can intimate the opposite party through E-mail or Whatsapp regarding the same.
It is important to note that the validity of a cheque within which it needs to be deposited would still remain 3 months and there is no extension of that period as the Banks were functional even during the lockdown.
Previously the finance minister Nirmala Sitharaman had announced to increase the threshold limit to 1 crore for filing for an insolvency case against the defaulter. Thereby restricting the options available to recover the amount so it becomes very important to cautiously exercise the rights available with you.
It is expected that the functioning of the court may remain more restricted leading to delays so in case you are an MSME, you may file a parallel proceeding for recovery under MSME Act, 2006 to ensure that your amount is recovered on time. During recent times it has been seen to be an effective and efficient tool for the recovery of delayed payments.
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Hardik Sheth
Responded 3 years ago
A.Dear client,
It seems you have been misguided by few of my learned friends here. Let me explain you the fact in such a situation since learned friends have failed to understand the Sup moto order of the supreme court.
The court says that filing period and notice period which was extended during the beginning of the lockdown period now seems to have few update. It says that you need to send the legal notice within 30 days and not 15 days as rated by the learned advocate in the advice given by him. Since the post and courier services have now resumed you need to send the legal notice within 30 days of the date of Cheque bounce. Later, since the courts have not yet resumed, you need to wait for the courts to resume and then you can file the complaint of 138 and it is to be considered well within the limitation.
Thus since you have failed to issue a notice you need to initiate a civil proceedings and get the amount and also the interest thereupon by getting the court order in your favour.
I hope you have been provided with a detailed and satisfactory reply from my side and kindly revert if you need any more legal assistance.
Please award me with appropriate stars and obliged.
Thank you
Adv. Hardik Sheth
It seems you have been misguided by few of my learned friends here. Let me explain you the fact in such a situation since learned friends have failed to understand the Sup moto order of the supreme court.
The court says that filing period and notice period which was extended during the beginning of the lockdown period now seems to have few update. It says that you need to send the legal notice within 30 days and not 15 days as rated by the learned advocate in the advice given by him. Since the post and courier services have now resumed you need to send the legal notice within 30 days of the date of Cheque bounce. Later, since the courts have not yet resumed, you need to wait for the courts to resume and then you can file the complaint of 138 and it is to be considered well within the limitation.
Thus since you have failed to issue a notice you need to initiate a civil proceedings and get the amount and also the interest thereupon by getting the court order in your favour.
I hope you have been provided with a detailed and satisfactory reply from my side and kindly revert if you need any more legal assistance.
Please award me with appropriate stars and obliged.
Thank you
Adv. Hardik Sheth
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Naveen Nimmala
Responded 3 years ago
A.Yes you have deposited the cheque with in validity time. You have give notice with in 15 days. So dnt worry, consult an advocate and issue demand notice.
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Advocate Harshit Sharma
Responded 3 years ago
A.Yes Supreme Court extend the validity to send a legal notice
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