- By Tanjina Rahman Priti (Associate)
The most common form of bills of exchange in Bangladesh is the issuance of cheques regardless of commercial and private matters. Generally, it is one of the most convenient ways for payment of bills or to transfer large sums. However, there has also been an increase in cases of bounced and dishonored cheques.
The provisions mentioned in the Negotiable Instruments Act, of 1881 are the principal legal instrument to adjudicate such offenses involving allegations of bounced cheques. The law was enacted during the British reign and ever since there were many amendments and interpretations through the case laws given by the judiciary of the country. So, it can be said that the legal provisions regarding the dishonor of cheques are consistently evolving to give protection from misuse of the law.
When a cheque is dishonored or bounced by a bank then there are some primary steps the cheque holder should take without any delay. In cases of bounced cheques, time is a crucial factor that might deprive the aggrieved party of obtaining their rightful remedies.
As per section 138 (1) of the Negotiable Instruments Act, 1881 if a cheque is returned unpaid from the bank due to insufficient of a fund or any other reasons falling under the ambit of section 138, then an offense shall have been deemed to be committed. The cheque has to be presented to the bank within a period of six months or within the period of its validity for encashment. If the cheque is bounced, the cheque holder has to obtain a dishonor slip from the concerned bank manager with reasons of dishonor and the date of dishonor stated therein. Then the next step as per Clause (b) of section 138 is to send a notice in writing by registered post within 30 days from the date of receipt of the information of dishonor which is usually the date on the dishonor slip.
The law does not explicitly guide the number of times the concerned cheque has to be dishonored but the notice has to be sent once as there is a limitation of 30 days prescribed by the law. In Ahsan Habib Chowdhury VS Multidrive Ltd. [14 BLC (2009) 66], a division bench of the High Court Division of the Supreme Court has commented that “Law permits presenting of the cheque for as many times as the complainant desires, but the notice should be served only for once as per law, repeated notices can’t be served…”
In case the offense is committed by a company, section 140 of the Negotiable Instruments Act, of 1881 states that every person who was in charge of the company at the time offense was committed shall be deemed to be guilty of the offense as well. Here, the company means any body corporate and includes a firm or other association of individuals. So, while sending legal notice the Company has to be made a recipient along with the offenders who committed the offense in the name of the company.
If the cheque issuer fails to make payment of the said amount within 30 days of the receipt of such notice, then the holder can lodge a complaint as CR case in the Senior Judicial Magistrate Court or Metropolitan Magistrate Court having jurisdiction within 30 days from the date of expiry of 30 days of receipt of the notice. The forum for seeking legal redress has to be chosen by the complainant. Regarding this the recent judgment of the apex court in the case of Md. Golam Mowla vs. The state and the another is relevant and it states dishonor of cheque is a distinct action of an offense and if any suit is pending under Artha Rin Adalat there is no bar to proceed with the criminal proceedings.
Often the accused try to evade the legal proceeding by not receiving the legal notice. However, if the notice is served by registered post with acknowledgment in the last known place of the accused then the notice shall be deemed to be served.
The most recent development of the cases regarding bounced or dishonored cheques includes the existence of consideration for which the cheque was issued in the first place. The apex court in the Criminal Appeal No. 63-66 of 2017 (19 ALR 2020 (AD) 56) straightened out the importance of the reasons behind the issuance of the cheque and the onus is upon the complainant to prove that there was a consideration.
Amidst the soaring misuse of the provisions of the law of cheque dishonor, the author inclines to advise that whenever a cheque is used as a mode of transaction, a written legal instrument should be in place which will include the considerations, establish a relationship between the parties and mode of transaction in details. This awareness can protect the parties from potential harassment and aid the aggrieved to access proper legal remedies.