Cases of cheque bouncing has been increasing at an alarming rate, some media suggest anywhere around 38 lakhs or more cases of cheque bouncing have been filed with indian courts under section 8 of negotiable instrument act,1881. All question related to section 8 negotiable instrument. Negotiable instruments like cheques, promissory notes, bill of exchange etc. Whether the payee or holder of a cheque can initiate prosecution for an. Legal notice format to serve to the debtor against return. Dishonour of a cheque is a criminal offence under section 8 of the negotiable instruments act, 1881, subject to certain conditions being fulfilled. The provisions of the negotiable instruments amendment act, 2015 shall be deemed to have come into force on the 15th day of june, 2015. Negotiable instruments act in favour of holder of the cheque. If the accused does not make the payments within 30 days from the receipt of the notice, we can file the complaint under section 8 of the negotiable instrument act. An offence under section 8 of the negotiable instruments act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by. Effectiveness of the s8 of the negotiable instruments. On 31052010, after about 20 months company presented the cheque for more than double amount due to them, which was returned with remarks no such a account exists. N i act, payment and collection of cheques a to z in banking. This is what was held by the supreme court in the case of indus airways pvt.
In bangladesh, chapter xxvi of the 1881 act was substituted by chapter xvii in the year 1994. I act, when the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same. This section 8 notice format is drafted by our legal and law experts. A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account.
Landmark supreme court judgment on sec 8 of negotiable. Cheques minimize the risk of carrying cash and ensure safety in making payment. Pdf on jul 19, 20, m s siddiqui and others published negotiable. Cheques are preferred over cash for making payment for goods or services in day to day business. The notice should mention that the cheque amount has to be paid to the payee within 15.
Section 8 b of the negotiable instruments act, 1881 provides for the notice of dishonour. Drawer maker of cheque the person who issue the cheque or hold the account with bank. Negotiable instruments the law relating to cheques. A promissory note, bill of exchange or cheque payable either to order or to bearer is called t negotiable instrument 2. State of gujarat and another9 has explained the law relating to territorial jurisdiction for filing a complaint for dishonor of cheques. As per the negotiable instruments amendment act, 2015 a complaint can be filed under section 8 for dishonor of cheque at a court within whose local jurisdiction. A promissory note, bill of exchange or cheque payable either to order or to bearer is called negotiable instrument how many total sections are there in the negotiable instruments act. A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.
Where any fine is realized under subsection 1, any amount. Every year, millions of cheque dishonour or cheque bouncing cases are registered in india. Ni act the negotiable instruments act, 1881 as amended up to date. In india for cases related to cheque bounce, provisions are given under section 8 of negotiable instrument act, 1881. Cheque can be dishonour on account of following reasons. Expected questions on negotiable instrument act expected mcq on negotiable instruments act with answers. Complaint us 8 of ni act download format of complaint. Negotiable instruments act 1881 linkedin slideshare. All question related to section 8 negotiable instrument act, 1881 dishonour of cheque us 8 of n. An act to reform the law relating to dishonoured cheques and similar negotiable instruments. Dishonour of cheque its consequences under negotiable instruments act as amended upto when a cheque is presented in the concerned bank by the drawee within the stipulated time, within the three months from the date of issue the drawee bank issue check return memo to the payee mentioning the reason for non payment. Definition and essentials of a cheque a cheque is a bill of excahge drawn on a banker payable on demand section 73 bills of exchange ordinance. This notice format under section 8 is specially drafted for india. Return of cheque unpaid with the advice account operation jointly, other directors signature required, amounts to dishonor of the cheque within the.
Supreme court changes ground rule under section 8 of negotiable instruments act to prosecute a person who had presented the cheque which bounced for insufficiency of funds. Source of income of complainant has to be proved in 8 ni. What is a cheque definition, types of cheques and features. Notice format under section 8 with pdf this is a suggested notice format under section 8, also called check bounce notice format. The return of cheque is itself an indication that funds are.
Legal notice under section 8 format download against return of cheque, to be served to the drawer before filing criminal complaint us 8 of of negotiable instruments act against return of cheque. Cheque must be returned unpaid due to insufficient funds or it exceeds the. The negotiable instruments amendment act, 2015 is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 8 of the negotiable instruments act, 1881. There are three parties in cheque transaction drawer, drawee and payee. Negotiable instruments dishonoured cheques act an act to reform the law relating to dishonoured cheques and similar negotiable instruments. As per negotiable instrument act 1881, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Until contrary is proved, presumption is in favour of holder of cheque that it was drawn for discharge of debt or liabilities. All material alteration must have drawers approval with his full signature not initials where the alterations are made. Instrument means, a written document by which a right is created in.
The drawer of the cheque should present the cheque within 30 days from the date of dishonoring of the cheque just to protect his rights as stated in the negotiable instrument act bouncing off the cheque is a serious issue as served to the maker of the. Subject to the provisions of section 82, clause c, payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument. Negotiable instruments act, 1881 bare acts law library. You might have heard of a cheque bouncing due to insufficient funds. Ans law relating to dishonour of cheque is mentioned from sec. The cheque was deposited in the bank just before the end of 3 months period by the complainant payee. In india, cheque bounce is a serious offense which is punishable by imprisonment and fine which is stated in the negotiable instrument act. Different stages of cheque bounce case trial negotiable. Government has amended the negotiable instruments act, 1881 which may. There might arise disputes in regard to acceptance of a negotiable instrument.
Through this judgment, sc provides relief to the holders of bounced cheques under the provisions of the negotiable instruments act. If you give a cheque as an advance towards supply or purchase of certain goods and subsequently that cheque is dishonoured, then it is not an offence under section 8 of the negotiable instruments act, 1881. Section 6 of negotiable instruments act defines cheque as. Draft format of criminal complaint against return of cheque. This act may be cited as the negotiable instruments dishonoured cheques act. Promissory notes, bills of exchange and cheques are negotiable instruments under negotiable instruments act 1881. Ordinance and is considered as a negotiable instrument. A cheque is a bill of exchange drawn on a specified banker. The act makes amendments in the negotiable instrument act 1881 on different aspects described as under. Pdf negotiable instrument act and cheque used as collateral. The negotiable instruments act, 1881 defines the cheque. New provisions for bounced cheque under negotiable. Return of cheque should be for insufficiency of funds the offence takes place only when cheque is dishonoured for insufficiency of funds or where the amount exceeds the arrangement.
However, for day to day transactions, cheque is the most widely used negotiable instrument in businesses today. If the cheque presented before the bank is bounced for insufficient fund or some other reasons, the demand notice to be send for payment within 30 days from the date of cheque bounce. Whereas it is expedient to define and amend the law relating to, promissory notes, bills of exchange and cheques. Once the cheque is bounced, the bank returns the cheque to the drawer with a return memo which mentions the reason for a bounced cheque.
Be it enacted by parliament in the sixtysixth year of the republic of india as follows. Lok sabha has passed negotiable instruments amendment bill, 2017 to reduce the number of cheque dishonour cases pending in courts. The cheque must have been drawn for discharge of existing debt or liability. If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under section 8 of the negotiable instruments act. Draft format for filing criminal complaint under section 8 of negotiable instruments act is given below to get idea to prepare the complaint. It states that the payee or holder in due course of the cheque as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of cheque, within thirty days of the receipt of information by. Any alteration in the original state of a cheque such as date, amount, payees name, changing the word order to bearer appearing after payees name or in endorsement is called material alteration. This act may be called the negotiable instruments act, 1881. It extends to the whole of india but nothing herein contained affects the indian paper currency act, 1871, 3 of 1871.
Dishonour of cheque its consequences under negotiable. Negotiable instrument according to section i a negotiable instrument means a promissory note, bill of exchange or cheque payable either on order or to bearer. The negotiable instruments act was enacted, in india, in 1881. According to section of the negotiable instruments act, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the. The negotiable instrument act, 1881 legislative department. This article on dishonour of cheque section 8 of the negotiable instruments act gives a comprehensive overview about all aspects of cheque bouncing and cheque dishonour as per laws in india. The act went through a final amendment in the year 2000. The bill amends negotiable instruments act, 1881 to primarily address issues of dishonor of cheques and deal with unnecessary delay in disposal of such cases negotiable instrument. Format notice of cheque dishonour this is a form of notice under section 8 of negotiable instrument act, 1881 for dishonour of cheque under certain grounds. Cheque truncation system sec 1 of negotiable instrument act 1881. The case of the complainant is that the accused borrowed a loan of rs. Payment and collection of cheques and other negotiable. An act to define and amend the law relating to promissory notes, bills of exchange and cheques.
The resolution of such cases involves a procedure mandated by law. Section 8 of negotiable instruments act legal helpline. Criminal complaint us 8 of of negotiable instruments act against return of cheque down load format. If the other party failed to comply the notice usually in 15 days then a complaint under section 8 of negotiable instrument should be filed in the concerned. Critical analysis of section8 of negotiable instruments act. Section 8, 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. A bill further to amend the negotiable instruments act, 1881.
Expected questions on negotiable instrument act expected. Whether demand of interest along with the cheque amount in the statutory notice under section 8 of the negotiable instruments act, 1881 would make the statutory notice faulty. Expected mcq on negotiable instruments act with answers. Negotiable instrument according to section of the negotiable instruments act, a negotiable instrument means promissory note, bill of exchange or cheque payable either to order or to bearer. In the negotiable instruments act, 1881 hereinafter referred to as the principal act, after section 143, the following section shall be inserted, namely. On the other hand, from a bankers stand point, it is a mandate the cheque issued by the banks customer requiring the bank to pay a stated amount to a stated party on or after the date of the cheque. For online services of section 8 of negotiable instruments act, send us a copy of cheque along with the cheque return memo on mail the professional charges for issuance of notice under section 8 of the negotiable instruments act are nominal with very quick services. Negotiable instruments the law relating to cheques the cheque is the most popular and common negotiable instrument known today. Mcq on negotiable instruments act with answers in pdf. Dishonour of postdated cheque given for advance is not.
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