Dinesh Joshi
Asked June 15, 2016

concurrent proceedings under S.420 IPC and S. 138 Negotiable Instrument Act

  • 1 Answer

for a busines transaction cheque is issued among the known parties and due to shortcoming in the supply the the payment is denied and cheq is returned can a seller take a course to 420 IPc and get arrested the buyer and simultaneously initiate the proceeding under 138 negotiable instrument act.

Answer 1

Yes, both the complaints can be filed simultaneously.

The Supreme Court has held[1] that simultaneous proceedings against a person, under Section 138 of Negotiable Instruments Act and Section 420 of the Indian Penal Code, for a cheque bounce, is permissible, because the requirements under the two sections are different, the most significant of which is that in the prosecution under Section 138 N.I. Act, the mens rea, meaning fraudulent or dishonest intention, at the time of issuance of cheque is not required to be proved, but in the case under IPC involved herein, the issue of mens rea/intention is relevant.


Procedure after the cheque returns unpaid:

  • Bearer should collect the returned cheque and cheque return memo from the Bank
  • A notice needs to be served to the drawer within 30 days of the return of the cheque informing him about the dishonour of the cheque, and demand the amount to be paid within 15 days
  • If the drawer refuses to pay within 15 days of receiving the notice, the drawer can file a criminal complaint under section 138 of the Negotiable Instruments Act

    Certain conditions have to be fulfilled under Section 138: 

  • The cheque should have been drawn by the drawer on an account maintained by him.
  • The cheque should have been returned or dishonoured because of insufficient funds in the drawer's account.
  • The cheque is issued towards discharge of a debt or legal liability. (That is, liability should be contracted in accordance with law and not opposed to public policy viz., wagering contracts, debt obtained for running brothel or gambling house etc.) 


    Under S 420 of the IPC, you have to prove that the seller had an intention to cheat you. If there be no intention to, cheat at the time when promise of payment is made, subsequent inability to pay or perform the promise will not amount to any offence. There should be circumstances showing in a clear way that the accused had such a dishonest intention at the initial stage.

    There have been several judgments where the court was not satisfied that the intention to cheat existed, and hence quashed the case. Hence, you have to be sure that you have enough evidence to show that the intention to cheat existed.

    Also note that criminal proceedings under Section 420 I.P.C. does not provide any provision for recovery of money and is meant only for prosecution of the drawer of the cheque who has the dishonest intention to cheat.



    [1] Sangeetaben Mahendrabhai Patel Vs. State of Gujarat and another, 2012 (4) Scale 549

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