Section 138 of the Negotiable Instruments Act, 1881 is a legal provision that is given in the Indian that covers the dishonour of cheques. The section provides for a criminal remedy in case of dishonour of cheques due to insufficient funds in the account of the drawer.
Under Section 138 of the Negotiable Instruments Act
landmark law under section 138 of NI act in India
Section 138 of the Negotiable Instruments Act, 1881 in India deals with dishonour of cheques and provides a legal remedy to the holder of a bounced cheque to recover the amount due. Some of the landmark judgments related to Section 138 of NI Act in India are:
Dashrath Rupsingh Rathod vs. State of Maharashtra (2014) – The Supreme Court of India held that the complaint under Section 138 of NI Act can be filed in any court within whose jurisdiction the cheque was dishonoured by the bank, or where the payee has his place of business.
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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 which does not constitute a legally enforceable debt or liability will not attract the provisions of Section 138 of NI Act.
Modi Cements Ltd. vs. Kuchil Kumar Nandi (1998) – The Supreme Court of India held that Section 138 of NI Act is a self-contained code and any other remedy for recovery of the amount due under a bounced cheque cannot be pursued simultaneously.
Sadanandan Bhadran vs. Madhavan Sunil Kumar (2011) – The Kerala High Court held that a cheque given as a security deposit will not attract the provisions of Section 138 of NI Act, unless there is a legally enforceable debt or liability.
MMTC Ltd. vs. Medchl Chemicals & Pharma P Ltd. (2002) – The Supreme Court of India held that the notice under Section 138 of NI Act must be served within 30 days from the date of receiving the information from the bank regarding the dishonour of the cheque, and any delay beyond this period will render the complaint invalid.
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