Explain the consequence of wrongful dishonour of cheque
Answers
Answer:
wrongful dishonor ➡️ Failure of a bank to honor a valid and payable bill of exchange or negotiable instrument within a statutory period If the bank's customer suffers provable harm, the bank may be liable for damages.
Explanation:
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Answer:
Punishment for dishonour of cheque – two recourses are there for such offence-
In Civil- Payee may initiate recovery procedure in a jurisdictional court apart from criminal proceedings.
In Criminal- Dishonour of cheque attracts section 138 of Negotiable Instrument Act which provides imprisonment which may extend up to 2 years or fine which may extend up to twice of the cheque amount or both. This offence is bailable, compoundable and non cognizable.
Procedure-
Issuance of cheque for Discharge of any debt or any other liability
Presentation of Cheque
Dishonour of cheque
Notice to the drawer
Failure to pay by drawer
Filing of complaint
Jurisdiction –
The court where the bank in which the payee has his account is located.
Where more than one case against one drawer by different payees, all cases will be tried at one court
Filing of complaint
Punishment
Section 139 of Negotiable Instrument Act says that it will always be presumed that the holder must be bonafide person holding the check for any whole or partial payment of any debt or liability.
Section 140 of Negotiable Instrument Act says that a drawer cannot take the defence that he has no idea actually that the cheque drawn by him may get dishonoured for the reason given in section 138.
Section 141 of Negotiable Instrument Act says that in case that the offence is committed by some company, every person who was in-charge for the company’s conduct at the time of committing the offence will be liable to punished.
Provided if the person proves that he had no knowledge of such offence or he exercised all his due diligence to prevent the offence, he shall not be liable for punishment.
Provided further that a person who was nominated as the director of a company because he was associated with state or central government in the past he cannot be made liable under this section.
It further provides that if it is proved that the offence was committed with the consent, neglect or knowledge of high officials like manager, director, secretary or other officers, they also be deemed to be guilty and shall be liable to be punished under this section.
Company means anybody corporate and includes a firm or other association of individuals.
Director means a partner in a firm.
Section 142 of Negotiable Instrument Act says that for taking the cognizance by court under section 138 it is important that written complaint to be made by payee or the holder within one month from the date on which cause of action arise. No inferior court to that of magistrate or judicial magistrate first class can try the offence punishable under section 138 of this Act.
Section 142 of Negotiable Instrument Act talks about the power of courts to try cases summarily.