Section 138 Negotiable Instrument Act deals with the dishonour of cheques for insufficiency of funds in the account. There are two remedies available to the drawee i.e., civil and criminal. The civil remedy is the filing of a civil suit for the recovery of damages and the criminal remedy available under Section 138 of the NI Act does not preclude the institution of a civil suit. Section 138 of the NI Act is a penal provision that deals with the punishment of dishonour of cheques. Dishonour of cheque is not an offence in itself but to become an offence, the following ingredients should be there: • The drawer should draw the cheque. • The cheque drawn should be in discharge of some liability. • Presentation of the cheque by the drawer to the drawee bank. • Due to the insufficiency of funds, the cheque was returned by the bank unpaid. • Presentation of the cheque within six months from the date on which it was drawn or within the period of its validity, whichever is earlier. • Thirty days after receiving a memo of return from the bank, a notice should be served to demand the payment of the said money. • The drawer fails to pay the debt within 15 days of the receipt of the said notice. It is to be noted here that if the drawer pays the debt within 15 days, there would be no offence. The offence is said to be committed under Section 138 of the NI Act, only when he fails to pay the debt within 15 days and such person shall be punishable with imprisonment for a term which may be extended to two years, or with a fine which may extend to twice the amount of the cheque, or with both. Filing of the complaint- Within 30 days of the following day on which the 15th day of notice period expires i.e., excluding the 15th day.
