Hi, thank you for writing to us. Here's our response.
A cheque is a negotiable instrument and to claim money in relation to dishonoured cheque, you can seek remedy from either under Negotiable Instruments Act, 1881 or Code of Civil Procedure, 1908.
Option 1 - Under Negotiable Instruments Act 1881
Before filing a suit under this Act, one has to fulfill three stipulated conditions for claiming money against the dishonoured cheque.
First, the cheque acquired by the petititoner/payee must be submitted to the bank within 3 months or before the expiry of the date of the cheque whichsoever is before.
Second, If the cheque is bounced then the bank of the petitioner/payee gives "Return Cheque Memo" and the cheque back to the petitioner/payee telling him/her the reason of non-payment. The petitioner/payee can submit the cheque for the second time believing that it will honoured. The payee shall give a formal notice to the defendant/drawer within 30 days after receiving such memo.
Third, the defendant/drawer has failed to pay the mentioned amount within 15 days of the notice.
If these three conditions are fulfilled then the petitioner/payee can prosecute the defendant/drawer by registering a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. (The complaint need to be registered in a magistrate's court within a month of the expiry of the notice period under the appropriate jurisdiction). This is criminal offence for which the punishment is two year imprisonment or monetary penalty or both.
Option 2 - Under Code of Civil Procedure, 1908
You can file a summary suit under Order 37 of Code of Civil Procedure, 1908 to claim money against dishonoured cheque. It is different from other suits as this suit does not allow the drawer to defend its case unless the judge gives its permission.
In your case, you are unable to seek remedy under the criminal law (i.e., Negotiable Instruments Act, 1881) because of the limitation period but you can seek remedy under Code of Civil Procedure, 1908 which have 3 years limitation period from the date of dishonour.
Please write to us for further queries, thank you.
Book a phone consultation with a top-rated lawyer on Lawfarm.