COMMERCIAL REALITY: In the realm of commercial and personal transactions, a cheque signifies more than a mere piece of paper as it embodies trust, obligation, and assurance of payment. Dealing with a dishonoured cheque is one of the most common legal issues faced in business and personal transactions.

However, when such a cheque is dishonoured upon presentation, the consequences extend beyond financial inconvenience and enter the domain of criminal liability. Section 138 of the Negotiable Instruments Act, 1881 (NI Act) provides a powerful legal remedy to the payee when a cheque bounces due to insufficient funds or other valid reasons.

ചെക്ക് ബൗൺസ് ഒരു നിയമപരമായ കുറ്റകൃത്യമായി മാറുന്നത് എങ്ങനെ?

At first glance, a bounced cheque may seem like a simple financial dispute between two parties. However, in law, it carries criminal consequences because it directly affects the credibility of financial transactions which is a foundation upon which commerce operates.

The provision states that where any cheque drawn by a person on an account maintained by him with a banker is returned by the bank unpaid, either because of the amount of money standing to the credit of that account being insufficient, or that it exceeds the arrangement made with the bank, such person shall be deemed to have committed an offence.

To restore trust, Parliament introduced Section 138 of the NI Act, ensuring that once a cheque is issued, it presupposes a legally enforceable debt or liability, and stopping payment later does not absolve the drawer of criminal responsibility, as affirmed by the Apex Court in Modi Cements Ltd. v. Kuchil Kumar Nandi (1998).