The main object of this piece of legislation is to inculcate faith in the efficacy of banking operations and credibility in transacting business on negotiable instruments. Section 138,of The Negotiable Instruments Act 1881 is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. The dishonour of cheque is now a criminal offence punishable by imprisonment up to one year or with fine up to the double the amount of dishonouredcheque or with both.

Scope

Section 138 creates statutory offence in the matter of dishonour of cheques on
the ground of insufficiency of funds in the account maintained by a person with the banker. Section 138 of the Act can be said to be falling either in the acts which are not criminal in real sense, but are acts which in public interest are prohibited under the penalty or those where although the proceeding may be in criminal form, they are really only a summary mode of enforcing a civil right. Normally in criminal law existence of guilty intent is an essential ingredient of a crime. However the Legislature can always create an offence of absolute liability or strict liability where ‘mensrea’ is not at all necessary.

Five ingredients of the offence under s. 138

The offence under Sec. 138 of the Act can be completed only with the concatenation of a number of acts. Following are the acts, which are components of the said offence:

• Drawing of the cheque.
• Presentation of the cheque to the bank.
• Returning the cheque unpaid by the drawee bank.
• Giving notice in writing to the drawer of the cheque demanding payment of thecheque amount.

• Failure of the drawer to make payment within 15 days of the receipt of the notice. Limitation

• Cheque should be presented to the bank for encashment within its validity period. Within fifteen days from the receipt of return memo indicating reason of dishonour, a notice should be sent demanding the amount of dishonoured cheque.

• If the drawer does not pay the amount of dishonouredcheque within the grace period, a complaint thereafter should be filed within one month in the relevant court of Metropolitan Magistrate/Judicial Magistrate as the case may be, having jurisdiction.

By LawZ Bureau,