Section 138 of Negotiable Instruments Act deal with the dishonour of Cheques etc and Order 37 of Civil Procedure Code deals with summary suits in relation to recovery.

Click here to read more about Sec. 138 NI Act & Recovery >>


  Corporate Laws
4Corporate Litigations
4Labor Laws
  4Sec.138 NI Act & Recovery
4Industrial Disputes Act
4Agreements and Contracts
4Intellectual Property
4FEMA
4Immigration
4Arbitration and Mediation
 

 

 

 


.

Section 138 of Negotiable Instruments Act 

 PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS

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 amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for 2["a term which may extend to two year"], or with fine which may extend to twice the amount of the cheque, or with both:

Provided that nothing contained in this section shall apply unless-

(a) The cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.

(b) The payee or the holder induce 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 the cheque, 3["within thirty days"] of the receipt of information by him from the bank regarding the return of the cheques as unpaid, and

(c) The drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability].

OBJECTS AND REASONS OF AMENDING ACT OF 2002

The Negotiable Instruments Act, 1881 was amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 wherein a new Chapter XVII was incorporated for penalties in case of dishonour of cheques due fo insufficiency of funds in the account of the drawer of the cheque. These provisions were incorporated with a view to encourage the culture of use of cheques and enhancing the credibility of the instrument. The existing provisions in the Negotiable Instruments Act, 1881, namely, sections 138 to 142 in Chapter XVII have been found deficient in dealing with dishonour of cheques, Not only the punishment provided in the Act has proved to be inadequate, the procedure prescribed for the Courts to deal with such matters has been found to be cumbersome. The Courts are unable to dispose of such cases expeditiously in a time bound manner in view of the procedure contained in the Act- (Para 1)

Keeping in view the recommendations of the Standing Committee on Finance and other representations, it has been decided to bring out, inter alia, the following amendments in the Negotiable Instruments, Act, 1881, namely:-

(i) to increase the punishment as prescribed under the Act from one year to two years;

(ii) to increase the period for issue of notice by the payee to the drawer from 15 days to 30 days; (Para 4)

 

1. Inserted by Act 66 of 1988, , sec. 4 (w.e.f. 1-4-1989). Earlier Chapter XVII relating to " Notaries Public" Inserted by Act 2 of 1985, sec. 10, was replaced by the Notaries Act, 1952 (53 of 1952), sec. 16 (w.e.f. 14-2-1956).

2. Substituted by Act 55 0f 2002, sec. 7 for "a term which may extended to one year" (w.e.f. 6-2-2003).

3. Substituted by Act 55 of 2002, sec. 7, for "within Fifteen days" (w.e.f. 6-2-2003).

142. Cognizance of offences. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974 ),-
(a) no court shall take cognizance of any offence punishable under section 138 except upon a complaint, in writing, made by the payee or, as the case may be, the holder in due course of the cheque;
(b)  such complaint is made within one month of the date on which the cause of action arises under clause (c) of the proviso to section 138;
(c)  no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under section 138.]

ORDER XXXVII. Order 37 of CPC- Summary Suit for Recovery 

[1. Courts and classes of suits to which the Order is to apply

(1) This Order shall apply to the following Court, namely:-

(a) High Courts, City Civil Courts and Courts of Small Causes; and

(b) other Courts;

Provided that in respect of the Courts referred to in clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper.

(2) Subject to the provisions of sub-rule (1) the Order applies to the following classes of suits, namely:-

(a) suits upon bills of exchange, hundies and promissory notes;

(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,-

(i) on a written contract, or

(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or

(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.]

1. Subs. by Act No. 104 of 1976 for rule 1 (w.e.f. 1-2-1977).

HIGH COURT AMENDMENTS

Bombay.-(1) In Order XXXVII, in rule 1, for sub-rule (1), substitute the following sub-rule, namely:-

"1. This order shall apply to the following Courts, namely:-

(a) High Courts, City Civil Courts and Courts of Small Causes; and

(b) such other Courts as may be specifically empowered in this behalf by the High Court from time to time by a Notification in the Official Gazette: Provided that in respect of the Courts referred to in clause (b), the High Court may, by notification in the Official Gazette, restrict the operation of this Order only to such categories or suits as it deems proper and may also from time to time, as the circumstances of the use may require, by subsequent notification in the Official Gazette, further restrict, enlarge, or vary, the categories of suits to be brought under the operation of this Order as it deems proper." (w.e.f. 1-10-1983)

Kerala.-Omit Order XXXVII. (w.e.f. 9-6-1959)

1[2. Institution of summary suits

(1) A suit, to which this Order applies, may if the plaintiff desires to proceed hereunder, be instituted by presenting a plaint which shall contain,-

(a) a specific averment to the effect that the suit is filed under this Order;

(b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint;

(c) the following inscription, immediately below the number of the suit in the title of the suit, namely:-

"(Under Order XXXVII of the Code of Civil Procedure, 1907)."

(2) the summons of the suit shall be in Form No. 4 in Appendix B or in such other form as may, from time to time, be prescribed.

(3) The defendant shall not defend the suit referred to in sub-rule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made in that behalf and such decree may be executed forthwith.]

1. Subs. by Act No. 104 of 1976 for rule 2 (w.e.f. 1-2-1977).

1[3. Procedure for the appearance of defendant

(1) In a suit to which this Order applies, the plaintiff shall, together with the summons under rule 2, serve on the defendant a copy of the plaint and annexures thereto and the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him.

(2) Unless otherwise order, all summonses, notices and other judicial processes required to be served on the defendant, shall deemed to have been duly served on him if they are left at the address given by him for such service.

(3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiffs pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by pre-said letter directed to the address of the plaintiffs pleader or of the plaintiff, as the case may be.

(4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4A in Appendix B for such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit.

(5) The defendant may, at any time within ten days from service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:

Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:

Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.

(6) At the hearing of such summons for judgment,-

(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or

(b) if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security with the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or judge, the plaintiff shall be entitled to judgment forthwith.

(7) The Court or Judge may, for sufficient cause shown by the defendant, execute the delay of the defendant in entering an appearance or in applying for leave to defend the suit.]

1. Subs, by Act No. 104 of 1976 for rule 3 (w.e.f. 1-2-1977).

HIGH COURT AMENDMENTS

Delhi.-Same as in Punjab.

Himachal Pradesh.-Same as in Punjab.

Punjab.-In Order XXXVII, in rule 3, for sub-rule (3), substitute (he following sub-rule, namely:-

"(3) The provisions of section 5 of the Indian Limitation Act, 1908, shall apply to applications under sub-section (1)."

4. Power to set aside decree

After decree for the Court may, under special circumstances set aside the decree, and if necessary stay or set aside execution, and may give leave to the defendant to appear to the summons and to defend the suit, if it seems reasonable to the Court so to do, and on such terms as the Court thinks fit.

5. Power to order bill, etc., to be deposited with officer of Court

In any proceeding under this Order the Court may order the bill, hundi or note on which the suit is founded to be forthwith deposited with an officer of the Court, and may further order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof.

6. Recovery of cost of noting non-acceptance of dishonoured bill or note-

The holder of every dishonoured bill of exchange or promissory note shall have the same remedies for the recovery of the expenses incurred in noting the same for non-acceptance or non-payment otherwise, by reason of such dishonour, as he has under this Order for the recovery of the amount of such bill or note.

7. Procedure in suits

Save as provided by this Order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner.

HIGH COURT AMENDMENT

Karnataka.-After Order XXXVII, insert the following Order, namely:-

"ORDER XXXVIIA 
INTERLOCUTORY APPLICATIONS


Applications

1. An interlocutory application means an application to the Court in any suit, appeal or proceeding already instituted in such Court other than an application for execution of a decree or order or for review of judgment or for leave to appeal.

2. Except where otherwise prescribed by rules or otherwise provided by any law for the time being in force, an interlocutory application shall state only the order prayed for and shall not contain any statement of facts or argumentative matter. Every application in contravention of this rule shall be returned for amendment or rejected.

3. Every interlocutory application shall be supported by an affidavit. Where, however, the facts on which the application is based appear from the records in Court or relate to any act or conduct of the applicant's pleader himself, the Court may permit memorandum of facts signed by the applicant's pleader to be filed instead of an affidavit.

4. Any fact required to be proved upon an interlocutory proceeding shall, unless otherwise prescribed by rule or ordered by Court, be proved by affidavit, but the Judge may in any case direct evidence to be given orally, and thereupon the evidence shall be recorded and exhibits marked in the same manner as in a suit." (w.e.f. 30-3-1967)

 





 
  Corporate Laws
Corporate Litigations
Labor Laws
  Sec.138 NI Act & Recovery
Industrial Disputes Act
Agreements/Contracts
Intellectual Property
FEMA
Immigration
 



  Know Your Rights!!
Divorce Laws
Dowry Laws
  The Domestic Violence Act *
Adoption/Maintenance/Alimony
Stay and status quo
Anticipatory and regular bail
Property related issues
Criminal & I.T. Laws
 

  Our Practicing Courts
District Courts of Delhi
High Court of Delhi
Supreme Court of India
 
  District & High Courts of Various States in India

Karvai handles litigations and arbitration matters both at national and internation level. Karvai has a number of clients from United States, UK, Canada and various Gulf Nations. We, at Karvai have successfully completed the legal work assigned to us, both at national and international level.


 

  DisclaimerPrivacy Policy

© karvai.in 2013, All Rights Reserved