Negotiable Instrument Act (NI Act)

Cheque dishonour case and its consequences in Bangladesh is regulated by the provisions of the Negotiable Instruments Act, 1881. Dishonor of a cheque means rejection or negligence to pay the money at maturity.

 Cheque Dishonour

In accordance with the Negotiable Instruments Act 1881, it is stated that if 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 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.

 Offense under Cheque Dishonour in Bangladeshi Act

If the person committing an offence under section 138 is a company every person who at the time the offence is committed was in charge of and was responsible to the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. However, the person shall not be liable to punishment if he proves that the offence was committed without his knowledge or that he had exercised all due delegate to prevent the commission of such offense.

It is worth noting that offence of dishonour of cheque under section 138 is considered as a criminal offence in Bangladesh. The section keeps the possibility of recovery the money as the holder of the cheque may be paid by the court an amount up to the cheque amount from any fine that is recovered. Please note that filing a criminal proceeding under S.138 of the N.I Act has been the most effective form of recovery of money.

 Procedures That Need To Be Followed Before Filing A Case Under NI Act

There are certain procedures that need to be followed before filing a case under NI Act.

Firstly, it is necessary to present the cheque before the bank for encashment within the validity of the cheque which is 6 months from the date of the cheque.

In a situation when, the cheque is dishonoured, the payee/holder will receive a bank memo stating the reason for return of the cheque such as “insufficient fund. Thereafter, the payee/holder can start the process under the NI Act.

The payee/holder needs to send a Legal notice, within 30 days from the date he has received such information from the bank, to the issuer requesting payment allowing him to pay within 30 days of the receipt of the notice. Such notice shall be served by personal delivery, by registered post with A/D or may be by publication in the widely circulated newspaper.

 

If the drawer fails to pay within this period, then a cause of action will arise against him. In such scenario, the payee/holder must file a case before the Court within the next 30 days from the date when such cause of action arose.

Case filing process

 If, the giver of the cheque fails to make the payment of the said amount of money within 30 days of the receipt of the said Legal notice, the receiver of the cheque shall file a case under the provisions of section- 138 of the Negotiable Instruments Act, 1881.

 When File A Case

When the holder presents the cheque to a bank for encashment, he can file the case for cheque dishonour in the Court which has the local jurisdiction over that bank.

The offence of cheque dishonour can be completed with the focus of some specifics which are as follows-

 1. Drawing of the cheque,

2. Presentation of the cheque,

3. Returning of the cheque unpaid by the drawee bank,

4. Giving notice in writing to the drawer of the cheque demanding payment of the cheque amount,

5. Failure of the drawer to make payment within 30 days of receipt of the Legal notice.

Now, if the abovementioned five different acts were done in five different localities, any of the Courts exercising jurisdiction in one of the five local areas can become the place of trial for the offence of cheque dishonour. The complainant can choose any one of the courts in whose jurisdiction any of the five components of the said offence was done.

 Necessary Documents For Filing A Case

Before proceeding to file a case, a complainant must keep some essential requirements in mind which are as follows:

Ø  The dishonoured cheque

Ø  Bank slip regarding cheque dishonour

Ø  Copy of legal notice

Ø  Postal receipt and acknowledgment letter of legal notice

Ø  Copy of newspaper where legal notice is published, if any

Ø  Authorization letter or power of attorney if ‘Authorized Agent’ files the case

Ø  List of witnesses

Ø  Costs of the case such as Court fee, lawyer’s fee etc.

Ø  Government or private legal aid if unable to bear the costs of the case.

Ø  Intention to go for settlement with the offender to get the money.