Section 138 of Negotiable Instruments Act and Order XXXVIII Code of Civil Procedure, Cheque Return cases. Law General Knowledge for handling cases of cheques returned without fund, due to stop payment etc

Some of the Important Legal questions, General terms and Procedures related to return of cheque and handling of cheque return cases are as under:

SNo	Legal Term/Question	Answer
1	What are the type of Petitions that can be filed in case of return of cheques	1. Complaint under Section 138 of Negotiable Instruments Act 2. Summary Suit under Order XXXVII of CPC.
2	What is the difference between Complaint under Section 138 of NI Act and Summary Suit under Order 37 of CPC	Complaint under Section 138 of Negotiable Instruments Act is filing to punish the Accused whereas Recovery Suit under Order XXXVII of Negotiable Instruments Act is a summary recovery suit to recover the money in short period
3	Is Leave to defend available for the Defendant in case of summary suit under order 37	No, but the judge can allow it on the basis of facts and circumstances of the case
4	Is court fee applicable in case of Order XXXVII Petitions	Yes, Court fee of civil suit is applicable for summary suit under order 37
5	Is court fee is applicable for Complaint under Section 138 of Negotiable Instruments Act	A very small amount of normal court fee is applicable for 138 NI Case
6	What is the time limit for sending legal notice in case of return of cheque	Within 30 days from the receipt of information from the bank regarding return of cheque
7	How much time the accused get to make payment against return of cheque after receipt of legal notice	The accused will get 15 days time for payment against returned cheque. It should be mentioned in the legal notice.
8	What is the time limit for filing complaint under Section 138 of Negotiable instruments act in the court of Magistrate	The Complainant can file Complaint under section 138 of Negotiable Instruments Act with 30 days after the expiry of 15 days period given for making payment
9	What is the time limit for filing Petition under order XXXVII of CPC	For Order 37 Petition normal limitation period is applicable. It can be filed within 3 years.
10	Can Complaint under Section 138 of NI Act and Summary suit under order 37 of cpc be filed simultaneously	Yes, Complaint under Section 138 of Negotiable Instruments Act 1881 and Summary suit under order xxxvii cpc can be filed simultaneously

SNo	Legal Term/Question	Answer
11	Is original copy of documents necessary for order XXXVII Petitions	If the Petitioner has already filed Section 138 Complaint, there is no need of filing original documents along with order 37 petition. It can be mentioned in the Petition that the original documents are already filed with Complaint under Section 138 of NI Act
12	Is offence under section 138 of NI Act is compoundable	Yes
13	What are the Amendment to pay compensation pending trial	Section 143A: Under this Section, the Court trying an offence under Section 138 may order the drawer of the cheque to pay interim compensation to the complainant which shall not exceed 20% of the amount of the cheque. Section 148- An appeal by the drawer against the conviction under Section 138, the Appellate Court may order the appellant to deposit such sum which shall be minimum of 20% of the fine or compensation awarded by the trial court. The interim compensation must be paid within 60 days from the date of the order or within such further period within such period not exceeding 30 days as may be directed by the Court.
14	Can Complaint be filed against stop payment by drawer	Yes, If the drawer of a cheque stopped payment of the cheque without sufficient balance in the account, the drawee can file a complaint
15	Where to send the summons	Summons may be served at the place where the accused ordinarily resides or carries on its business or personally works for gain.
16	What is the solution, if the period to file complaint is expired	Present the cheque once again for clearing, then a fresh cause of action will arise
17	What are the conditions to file a complaint under 138 of NI Act and when the drawer commits offence under the act	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. After receiving the notice, if the drawer doesn't make the payment within 15 days from the day of receiving the notice, then he commits an offence punishable under Section 138 of the Negotiable Instruments Act.
18	What is the period of validity of cheques	Normally it is 3 months from the date of issue written on the cheque
19	Is it necessary to have a legal liability or debt to file Section 138 NI Complaint	Yes
20	What are the characteristics of a cheque	Cheque must be in writing, Cheque has to be an unconditional order, The Cheque must explicitly specify the Bank, The payment that has to be made must be directed to an identified person/ organisation, Cheque must be payable on demand, Cheque must be for a specific sum of money and Cheque must bear clear signatures of the drawer

SNo	Legal Term/Question	Answer
21	Is it necessary to send a demand notice in case of return of cheque to file Complaint under Section 138 of NI Act	Yes. The Demand notice should be send within one month of receipt information from bank regarding return of cheque
22	What are the documents required to file a case under Section138 of Negotiable Instruments Act	Original cheque returned by the bank Cheque Return memo Copy of the legal notice for demand sent to the drawer and the acknowledgment slips/ receipts Written complaint Letter of oath
23	When the court send notice to the Accused	Once the complaint is filed by the drawee (complainant), the court issues summons to the drawer (accused person) who has failed to make payment and furnished an irregular cheque.
24	What is the punishment for bounce of cheque	If the accused is found guilty, accused can be punished with a monetary penalty which can be double the cheque amount or be punished with imprisonment which may extend to 2 years or even both.
25	Is cheque issued as gift or donation comes under Section 138 of Negotiable Instruments Act	No, gift or donation or any other obligation, shall not be covered under Section- 138 of the NI Act. The cheque must carry a legal obligation.
26	What are the consequences of cheque bounce	Penalty from the bank Negative influence on the CIBIL score Civil or Criminal action against the drawer (accused)
27	What are the additional risks due to bouncing of cheque	As per Reserve Bank of India, the banks have been authorised to disallow issuance of cheque books to any of their customers who have been accused at least 4 times against dishonour of cheque for an amount exceeding Rs. 1 crore.
28	Burden of proving the due amount with whom	Supreme Court in Uttam Ram vs Devinder Singh Hudan & ANR held that the burden of proving the due amount should not be on the complainant as if he has to prove a debt before a civil court. Rather, the burden to rebut the presumption of debt in cheque bounce case (under Negotiable Instruments Act) is on the accused.
29	Is person who signs the cheque liable	The apex court said that the person who signs the cheque remains liable unless he presents evidence to prove that rebut the presumption that the cheque was issued for payment of a debt.
30	Whether blank cheque will make the accused liable	The Supreme Court said: "Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
31	Is it necessary to make Company a party in the cheque return case, when the cheque is issued on behalf of a company	Yes, It is necessary to sue the company also