• Question regarding Section 138 of the Negotiable Instruments Act

Due to COVID-19 earnings of most of the business are affected because most of the businesses were forced to close due to lock down (force majeure). When the business takes the loan from the bank then they take post dated cheques. Now even when the EMI is 10 days late they are threatening to file cheque bounce case under Section 138 of the Negotiable Instruments Act. I have the following questions. Firstly, can a bank or NBFC file cheque bounce case 1000 km away from some remote place even if bank has 50 branches in city of borrower and loan was originated in the city of borrower. Moreover, can bank take post dated cheques since now Positive Pay system is in force.
Asked 1 year ago in Criminal Law
Religion: Sikh

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9 Answers

  1. Technically it can file cases from five location, place of transaction, place of payee’s bank, place of payer’s bank, place of accused, place of issuing notice. But when there are fifty branches in a city, bank cannot file a case from 1000 km away. The drawer can approach High Court and seek quash with liberty to bank to file case locally.
  2. The post dated cheques are by way security and toward discharge of debt. Cheques issued for security cannot be used to file 138 case.  

Ravi Shinde
Advocate, Hyderabad
3806 Answers
42 Consultations

5.0 on 5.0

A complaint under section  138 NI act can be filed within the jurisdiction of the court where the cheque was presented.   Your cheque can be presented in the bank where from you took the loan.  Secondly, in case the payment of emi is made 10 days late, the liability against the cheque can be proved. The bank has to prove its case first.  Hence, keep making the payments ithough it is 10 days late because to file  a complain it takes 45 days.

Dalip Singh
Advocate, New Delhi
1065 Answers
36 Consultations

5.0 on 5.0

In this case, cheque has to be deposited in the city where loan was applied.

Post dated cheques are asked as security purposes only.

But has the bank served any official Notice or something?

Harshad Joshi
Advocate, Ahmedabad
55 Answers

Not rated

If you have already deposited the post dated cheques with the bank for the purpose of security, they can very well proceed with the legal action for recovery of defaulted loan repayment amount. 

The bank can very well file the cheque bounce case from a centralized bank jurisdiction also. 

T Kalaiselvan
Advocate, Vellore
81456 Answers
1826 Consultations

5.0 on 5.0

Bank can take post dated cheques from borrower 


bank cannot file case from remote place 

Ajay Sethi
Advocate, Mumbai
91274 Answers
6807 Consultations

5.0 on 5.0

- Since the post dated cheque was issued in respect of future liabilities then the bank can recover the amount after filing a complaint under section 138

- If the banks branches are in the place of borrower ,  then the bank cannot file a case from 1000 km away from some remote place. 

Mohammed Shahzad
Advocate, Delhi
11181 Answers
149 Consultations

5.0 on 5.0

Yes they can file case anywhere their bank account is that's the law. Yes if they have taken they can use it against you if you default

Prashant Nayak
Advocate, Mumbai
29605 Answers
121 Consultations

4.1 on 5.0

Hi, Banker can present the cheque where ever they have maintained there account. There is no bar under law. If you issued the Post dated cheque then you can sent a request to your bank for stop payment of the post dated cheque. 

Pradeep Bharathipura
Advocate, Bangalore
5497 Answers
323 Consultations

4.5 on 5.0

Dear clients, 
  An offence under section-138 of the Negotiable instruments Act 1881 is committed no sooner a cheque drawn by accused on an account bring maintained by him in a bank for discharge of debt/liability is returned unpaid for insufficiency or funds or for reason that the amount exceeds the arrangements.

Anik Miu
Advocate, Bangalore
6694 Answers
74 Consultations

4.9 on 5.0

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