• Cheque Bounce Case

My brother had given me a gift of Rs.15 lakhs dated 10/10/2019 via post dated Cheque dated 01/06/2020.

I have registered gift deed dated 10/10/2019 with cheque number written in it, where by my bother is gifting me with post dated cheque and its irrevocable.

however, the when i deposited the cheque, it bounced due to lack of money in his account.

my brother is now refusing to give me the money

can i legally enforce my brother to pay the money ? if yes, how much time it will be taken by court to decide my case ?
Asked 13 days ago in Civil Law

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21 Answers

Yes you can.

issue a legal notice and then file a case.

 

Regards

Anilesh Tewari
Advocate, New Delhi
17725 Answers
290 Consultations

5.0 on 5.0

Cheque bouncing cases take over 6 years to be disposed of 

 

2)money was to be given to you as gift 

 

3) there is no debt due and payable 

Ajay Sethi
Advocate, Mumbai
75800 Answers
4532 Consultations

5.0 on 5.0

Hi,it is advisable to issue a legal notice urgently ,as there is a limitation of filing a complaint under section 138 of negotiable instrument act ..As per the act ,the legal notice has to be issued within a month after the dishonour of cheque ..If he fails to pay the amount a complaint has to be filed accordingly..Also you can file for the cancellation of gift deed in court as the consideration has failed ..I can assist you for the notice ..Thank you 

Hemant Chaudhary
Advocate, Gurgaon
4553 Answers
37 Consultations

4.9 on 5.0

 - As per Section 122 of the Transfer of Property Act, Gift is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called the donor, to another person called the doner, and accepted by or on behalf of the donee.

- Hence, for a Gift deed, Acceptance is mandatory by the donee , and such acceptance must be made during the lifetime of the donor , and if the donee dies before acceptance, the gift becomes invalid. 

- Further, after the acceptance by the donee , gift deed cannot be cancelled unless it is a conditional gift.

- And further, a Conditional gift is one that is subject to or dependent on a condition.

- Further, a Conditional gift can be revoked if the recipient does not fulfil the conditions attached to the gift.

- Further, a gift is a conditional gift and it is not final until some future event occurs and if the particular event does not occur, the person making the gift has the right to get back the gift.

- Since your brother has given the cheque by way of a registered gift deed , hence before its encashment , it can be called a conditional gift deed, as the main object of the gift deed not transferred to the person in favour of whom gift deed was given. 

- Hence, this gift deed can be revoked by the doner of the gift , and hence this amount cannot be recover after filing a case before the court, due to absence of liability to pay . 

Mohammed Shahzad
Advocate, Delhi
3303 Answers
39 Consultations

5.0 on 5.0

1. Since it is settled position kn law that ' no consideration no sale ', its imperative this sale is ineffective and void.

2. However to hold this its UK be found whether these cheques have been mentioned in the sale deed.

3. I'd not then your money od property is gone. Otherwise ic you file a suit for declaration and mandatory injunction the court is likely to invalidate the sale and return your property. 

Devajyoti Barman
Advocate, Kolkata
20197 Answers
286 Consultations

5.0 on 5.0

No, you definitely can't take action against him under  Criminal Charges for dishonored cheque because there is no legal debt as per N I Act 1988 and as per  A P High Court rulings. 

Under section 138 a of N I Act clearly mention about legal debt which is not in your case.

 

You have certainly civil rights to enforce your Brother before Civil Court of Law for performance of Contract entered into between you and him termed as Gift Deed duly registered and irrevocable. Hence it is binding upon your Brother to perform his specific performance under Gift deed to pay you as he agreed vide Gift deed dated and registered on 10/10/2019 .

Ramesh Pandey
Advocate, Mumbai
514 Answers
1 Consultation

5.0 on 5.0

You can't enforce it under negotiable instruments Act as liability because the same is not enforceable liability in eyes of law

Prashant Nayak
Advocate, Mumbai
19636 Answers
35 Consultations

4.4 on 5.0

Yes you can file a cheque bounce case and it would take something around 2 years to complete 

Rahul Jatain
Advocate, Rohtak
3287 Answers
4 Consultations

4.9 on 5.0

Dear Sir,

Yes you can. It will take 6 12 months in lower court and another 12 months in Sessions Court and anther 12 months in High Court.

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Cheque bounce FAQs

LATEST AMENDMENTS

The Supreme Court on May 8, 2019, in the case of Birendra Prasad Sah v. State of Bihar has observed that cognizance of a complaint filed under Section 138 of the Negotiable Instrument Act, 1881, can be taken by the court after the prescribed period, if the complainant satisfies the Court that he had sufficient cause for not making a complaint within such period.

Section 143A of the NI Act states the court can order interim compensation to the complainant during the pendency of the case. This section was inserted after the amendment to the NI Act in 2018. It was, however, provisioned that the compensation amount shall not exceed 20% of the amount of the cheque.

FAQs

  1. In which court do I need to file the complaint case under Section 138 N.I. Act in case drawer did not pay after receiving notice? 

    A complaint case under Section 138 N.I. Act can be filed in any competent court in whose jurisdiction any of the following acts have occurred:
    a) Place of drawing of the cheque,
    b) Address of bank where cheque was presented (holders bank address),
    c) Address of bank where cheque is payable (drawers bank address)
    d) Place from where notice was received by drawer of cheque

    a. It is possible that each of these four acts could have occurred at different localities. The complainant can choose any one the above places to determine jurisdiction of court where they wish to file complaint.

    2. What can I do if it has been more than 30 days since I received information of dishonour of cheque?

    If the cheque is still valid i.e. 3 months (currently) have not passed from the date of its issue, you can represent the cheque again to your banker as there is no restriction regarding the number of times a cheque can be presented and that every subsequent representation and dishonour gives rise to fresh cause of action for filing complaint. It may be noted that once a notice for payment is given then the holder must file a complaint under Section 138 N.I. Act within 30 days from expiry of notice period as a fresh cause of action will not arise if the cheque is presented again and it is dishonoured and failure to file complaint will lead to loss of remedy available under Section 138 N.I. Act.

    3. How long after notice has been served can I file a case against the drawer?

    After giving notice you need to file a complaint case against drawer under Section 138 N.I. Act within 30 days from the expiry of notice period i.e. 15 days. In other words you need to file complaint case against drawer within 45 days (15+30) from the date of issue of notice. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque.

    4. What can I do if I do not have the drawer's address?
    You need the address of the drawer of cheque to issue notice as contemplated under provisions of N.I. Act; also the address is necessary if you wish to avail other legal remedies available to you. You can send the notice to the last known address. In case the address of the drawer has changed and the drawer has not left a forwarding address and the notice is returned with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then you need to file a complaint case after 15 days (notice period) of receipt of such information or returned notice and within 30 days from expiry of notice period. Failure to do so will lead to loss of remedy under Section 138 N.I. Act; however, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque

    5. What should I do if the notice was returned and could not be served to the drawer?

    When a notice is returned to the sender as unclaimed or with the noting that addressee is not available at the address or addressee has left without leaving a forwarding address then the date of receipt of such information or returned notice would be the commencing date for the notice period of 15 days. Complaint case under Section 138 N.I. Act must be filed within 30 days from expiry of notice period. Such reckoning would be without prejudice to the right of the drawer of the cheque to show that he had no knowledge that the notice was brought to his address or previous address.

    6. Can Mohan Law Chambers assist in drafting of legal notice as required by Section 138 of N.I. Act.?

    Yes, Mohan law Chambers offers assistance in drafting of legal notice as required by Section 138 of N.I. Act.

    7. How long after receiving information of dishonour of cheque do I have to serve notice to the drawer?

    You need to serve a legal notice to drawer of cheque demanding payment of cheque amount within 30 days of the receipt of information from your banker regarding dishonour of cheque under Section 138 N.I. Act.

    8. What if the cheque was given for a reason other than to discharge a legally enforceable debt or other liability?

    In cases where cheque was given for a reason other than to discharge a legally enforceable debt or other liability, the provisions of Section 138 N.I. Act are not applicable e.g. Cheque given as Gift, in charity, donation etc.

    9. Can a cheque issued in security attract offence under Section 138 N.I. Act?

    With respect to the dishonour of cheques given as security, legal position is not very clear. It is subject to presumption and proof thereof that may be given by either party in support of their case. High Court of Delhi in the case of M/s Datt Enterprises ltd. vs. V.K.Dua held that the security cheque does not attract the provisions of Section 138 N.I. Act., if cheques were given as a security cheque as per past practice and pending reconciliation of accounts and not towards discharge of any liability.

    10. What is a legally enforceable debt or other liability?

    Legally enforceable debt or other liability should be such which is contracted in accordance with law and which is not opposed to public policy viz., wagering contracts, debt obtained for running brothel or gambling house etc.

    11. What is Section 138 N.I. Act and why is remedy available under it preferable to remedy available under other laws?

    a. Section 138 N.I. Act was made to provide an additional criminal remedy over and above the civil remedies available; to provide a speedy and effective remedy to holder of dishonoured cheque.
    b. Summary suit for recovery of money takes time (approximately 3 to 5 years) and criminal proceedings under Section 420 I.P.C. does not provide any provision for recovery of money and is meant only for prosecution of the drawer of the cheque who entertains dishonest intention to cheat. 

    12. What is a summary suit for recovery of money?

 
Summary suit is a civil legal proceeding initiated for recovery of money due under any written agreement, cheque etc. These proceedings are different from normal recovery suit, as here the liability to prove that petitioner is not liable to recover any amount is on defendant for which he needs to obtain leave to defend from the court.

13. What is the validity of the cheque in day to day business?

The current validity of cheques is 6 months. However, please note that from April 1, 2012. The validity will change to three months as per recent directive of RBI (under Sec. 35A, Banking Regulation Act, 1949)

14. What can I do if a cheque given to me has been dishonoured?

a. The holder of a cheque that has been dishonoured can seek remedy in the following manner:
i) Action under Section 138 Negotiable Instruments Act (N.I. Act): Give notice under within 30 days of receipt of information of dishonour from the bank. In case of non- payment by the drawer within the notice period of 15 days, then the holder must institute a complaint case for prosecuting drawer within 30 days of expiry of notice period.

ii) Civil Action as Summary Suit: Issue notice within 3 years from issue date of cheque and institute a summary suit for recovery of cheque amount along with interest and legal expenses. The notice can also be used while filing summary suit for recovery of money.

iii) Criminal Action: Initiate criminal proceedings by filing complaint under Section 420 Indian Penal Code (I.P.C.) within 3 years from issue date of cheque. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque when dishonest intent to cheat in inferred.

15. What documents / evidences do I need at the time of filing complaint case under Section 138 N.I. Act?

You will need at the minimum, the following:
a) Proof of service of notice - receipt of postal department / courier
b) Copy of notice
c) Cheque in original

16. What can I do if I do not file a complaint within 30 days from expiry of notice period?
If you have not filed a complaint case within 30 days after expiry of notice period, you can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from the date of issue of cheque.

17. What can I do if it has been more than 30 days since I received information of dishonour of cheque and 6 months has passed from the date of issue of cheque?

a. Other remedies are also available to recover the cheque amount. You can file a summary suit for recovery of money and initiate criminal proceedings under Section 420 I.P.C. within 3 years from date of issue of cheque. In case the cheque was never presented during its validity period then a summary suit is the only available remedy for recovery of money. 

(Notice can be given to drawer up to 3 years from date of issue of cheque for instituting a summary suit for recovery of money. Criminal proceedings for prosecution of drawer can also be instituted within 3 years from date of issue of cheque under Section 420 I.P.C.)

18. The drawer is asking me to settle the claim at a reduced value. What should I do?

Its up to you to settle the claim at a reduced value as the same will save your precious time, as well as legal hassle. Now-a-days courts are also encouraging amicable settlement between the parties. However, if you settle the dishonoured cheque amount at a reduced value, you will lose all remedies available under law.

19. What remedy do I have if the drawer delays in settling after conviction?

In a recent 2010 judgement, Supreme Court has laid strict rules to deal with such delaying tactics. Delay in settling cheques bounced will cost up to 20% of the cheque amount post-conviction. This is detailed as: 10% at District Court level; 15% at the High Court level; and up to 20% at the Supreme Court level. For e.g., Defaulter going for settlement will have to pay 10% of the cheque amount to avoid going to the jail.

20. Can I recover interest and legal expenses from the drawer of the dishonoured cheque?

Yes, you can recover interest and legal expenses from the drawer of the dishonoured cheque in a summary suit for recovery of money, but not in the proceedings initiated under Section 138 N.I. Act. However, under Section 138 N.I. Act the award maybe higher than the cheque amount.

21. What should I do if the drawer does not make payment upon receipt of notice?
You can adopt either or any of the remedies available to you:

a) Can file a criminal complaint against drawer of cheque under Section 138 of N.I. Act.

b) Can file a summary suit for recovery of money, interest and legal expenses.

c) Can file a criminal complaint against drawer of cheque under Section 420 of I.P.C. Please note that there is no provision for recovery of money under Section 420 I.P.C. and this section is meant only for prosecution of the drawer of the cheque.

In case a person has filed suit for recovery, then he is not precluded from filing a complaint under Section 138 of the Negotiable Instruments Act and Section 420 of the Indian Penal Code. The pendency of criminal matters would not be an impediment to proceeding with the civil suits.

 

Kishan Dutt Kalaskar
Advocate, BENGALURU
5462 Answers
185 Consultations

4.8 on 5.0

Was the money there on the date of execution of gift deed? 
As the law is settled once the donor gifts anything to the donee, the donee becomes the absolute owner and the same can be enforced.

However, it is important to know whether the money was there on the date of execution of the gift deed.

Nirmit Srivastav
Advocate, Lucknow
56 Answers

Not rated

The gift  money given by the post dated cheque has no legal liability.

It is a voluntary act.

Hence you cannot force the donor to fulfill his obligation.

Since it is not a legally liable debt, cheque bounce case or money recovery suit is not maintainable.

I am afraid that yo may not be able to take any action against your brother , at least legally for this.

A gift deed is a document that records the act of giving a gift and is executed between the donor (the person giving the gift) and the donee (person receiving the gift).

Though it is not compulsory to execute a gift deed while gifting any asset, it does create a valid documentary record.

 

T Kalaiselvan
Advocate, Vellore
65774 Answers
859 Consultations

5.0 on 5.0

The promise made by your brother is not a debt, but offered to pay you out of love and affection.

The case does not fall under purview of N.I.Act.

You cannot file case under provisions of N.I. Act. 

Even if you file case, it may take between 3 to 5 years, subject to pending cases in court.

 

S Srinivasa Prasad
Advocate, Hyderabad
2291 Answers
7 Consultations

5.0 on 5.0

Case under negotiable instrument Act for dishonour of cheque can only be filed if the cheque is bounced in payment of some debt. As the same was a gift without any consideration, no case would be made out under NI act.

However, you can file a suit for recovery, but the chances is success are also very less.

Siddharth Jain
Advocate, New Delhi
5489 Answers
61 Consultations

5.0 on 5.0

Dear Questionnaire

 

My reply to the aforesaid question is that you are not legally entitled to enfore this against your brother, because of the following facts:

 

As per section 122 of Transfer of Property Act, 1882 , Gift is the is the transfer of certain existing moveable or immoveable property made voluntarily and without consideration, by one person, called

the donor, to another, called the donee, and accepted by or on behalf of the donee.

 

As per section 138 of  the Negotiable Instruments Act, 1881, where any cheque drawn by a person for payment of any amount of money to another person for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, then  such person shall be deemed to have committed an offence under this Act.

 

Section 138 of  the Negotiable Instruments Act, 1881 is reproduced below :

 

  1. Dishonour of cheque for insufficiency, etc., of funds in the account.—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 provision of this Act, be punished with imprisonment for 4[a term which may be extended to two years’], 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) thecheque 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 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 the cheque, 5[within thirty days] of the receipt of information by him from the bank regarding the return of the cheque 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 purposes of this section, “debt of other liability” means a legally enforceable debt or other liability.

 

 

Thus from aforesaid analysis it is clear that aforesaid cheque is issued without any consideration that it is not issued for the discharge, in whole or in part, of any debt or other liability . To constitute an offence for the dishonor of cheque under the aforesaid act , it is mandatory that cheque which is dishonourd must have been issued for the discharge of liability . As in this case , cheque is issued by your brother as a gift and not  for discharge of any liability so, you cannot force this liability against your brother .

 

Krishan Singla
Advocate, Ludhiana
5 Answers

Not rated

Dear Sir,

Sec 139 of NI Act has the presumption that there is a liability on the drawee of the cheque. If you can succeed on this said presumption naturally you claim gets maintainability.

Anand Shukla
Advocate, New Delhi
600 Answers
13 Consultations

4.9 on 5.0

No, Legally you cannot claim that amount by cheque as he is not under any legally enforceable liability against you.

but in case that Gift was a condition and reciprocally you handed over anything to him then you may claim.

Nadeem Qureshi
Advocate, New Delhi
5719 Answers
266 Consultations

4.9 on 5.0

NO. Gift is done by free will and own choice which can be withdrawn before it completes. Cheque bounced, so gift not completed and gift amount is not legal enforceable debt. - No case of cheque bounce.

Yogendra Singh Rajawat
Advocate, Jaipur
19328 Answers
25 Consultations

4.5 on 5.0

To file cas u/s 138 of NI Act there should be legally payable debt, chances are bleak. 

Mohammed Mujeeb
Advocate, Hyderabad
16464 Answers
11 Consultations

4.5 on 5.0

No you cannot force your brother to gift you money through cheque bounce case because it's not his liability.

Mohit Kapoor
Advocate, Rohtak
8662 Answers
3 Consultations

5.0 on 5.0

1. Under Section 138 of Negotiable Instruments Act any cheque issued in discharge of a legally enforceable debt, on being dishonoured due to insufficiency of funds in the account of the drawer, makes the drawer liable under the provision which carries an imprisonment of up to 2 years. The condition is that cheque should have been issued to discharge a debt which is legally enforceable.

2. Your brother gave you the cheque as a gift. The only consideration in case of gift is love and affection by the donor for donee, and not a debt much less a legally enforceable debt. Hence, you have no cause of action to file a criminal complaint under Section 138 of NI Act against your brother.

3. Even a suit for recovery of money will not be maintainable in the given scenario.

Ashish Davessar
Advocate, Jaipur
29496 Answers
847 Consultations

5.0 on 5.0

If it was a gift then you can't file a case against him. The cheque bounce cases can only be filed if the cheque was issued due to any outstanding debt.

Rahul Mishra
Advocate, Lucknow
8970 Answers
15 Consultations

5.0 on 5.0

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