Section 138 of the Negotiable Instruments Act, 1881, is a legal provision that is given in the Indian Constitution that covers the dishonor of cheques. The section provides for a criminal remedy in cases of dishonorable discharge of cheques due to insufficient funds in the account of the drawer.
Under Section 138 of the Negotiable Instruments Act,
India has passed a significant law under Section 138 of the NI Act.
In India, Section 138 of the Negotiable Instruments Act, 1881, deals with cheque dishonor and gives the holder of a bounced cheque a legal remedy to reclaim the sum owed. Some of the landmark judgments related to Section 138 of the NI Act in India are:
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State of Maharashtra v. Dashrath Rupsingh Rathod, 2014
According to the Supreme Court of India, a complaint under Section 138 of the NI Act may be brought before any court that has jurisdiction over the area where the payee’s place of business is located or where the bank dishonors the cheque.
Kusum Ingots & Alloys Ltd. vs. Pennar Peterson Securities Ltd. (2000)
The Supreme Court of India held that a cheque issued as a gift or for any other purpose that does not constitute a legally enforceable debt or liability will not attract the provisions of Section 138 of the NI Act.
Modi Cements Ltd. vs. Kuchil Kumar Nandi (1998)
The Supreme Court of India ruled that Section 138 of the NI Act is self-contained and that any alternative remedy for recovering the amount owed under a bounced cheque cannot be pursued concurrently.
Sadanandan Bhadran vs. Madhavan Sunil Kumar (2011)
The Kerala High Court ruled that unless there is a legally enforceable obligation or liability, a cheque presented as a security deposit shall not be subject to the provisions of Section 138 of the NI Act.
MMTC Ltd. vs. Medchl Chemicals & Pharma P Ltd. (2002)
The Supreme Court of India ruled that the notice under Section 138 of the NI Act must be served within 30 days after obtaining information from the bank about the dishonor of the cheque, and that any delay beyond this period renders the complaint null and void.
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