Section 138 of Negotiable Instrument Act in simple terms

Section 138 of Negotiable Instrument Act in simple terms

Section 138 of Negotiable Instrument Act in simple terms

NI Act, 1881 is applicable across the India inclusive of J&K, NI Act aims at fixing the criminal liability on the drawer of the Negotiable Instruments i.e. Bank Cheque , Promissory Note,  a bill of exchange etc.

Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 ammended several features in the original Negotiable Instruments Act, 1881 and also added the new sections from 143 to 147 .

Essential ingredients to file a case u/s 138 of Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 are :-

  • In case of dishonor of the cheque, the drawee of that cheque must serve upon a written demand notice to the drawer with in the period of 30 days from the date on which he received the information from the bank about the cheque’s dishonor.
  • That cheque is dishonored due to insufficiency of funds in the account of drawer.
  • The cheque has to be presented in the bank within the validity of that cheque or within the 3 months from the date of issuance whichever is earlier.
  • A drawee must draw that cheque against his own bank account
  • The issued cheque must be pertaining to some debt or liability.
  • Lastly, after receiving the written notice from the drawee, if the drawer fails to make the payment against the cheque within 15 days.

 An insight by Advocate Deepak Choudhary.