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Cheque bounce again as felony offence

Cheque bounce back as criminal offence written by Diksha Sharma student of Government Law College, Mumbai

Satin Credit Care Network vs Ashok Kumar


Satin Credit Care Network, a company engaged in the business of leasing and financing the vehicles and consumer durable goods and personal loan under installments scheme had granted a loan to Mr. Ashok Kumar of Rs. 24,480/-. It was mutually agreed to fulfill a daily installment of Rs.68x 360 days. After scrutiny, it was found that the outstanding amount was Rs. 55,790/-. However, on payment of the initial installment, the payee defaulted on the later payments, and a notice was issued against him to settle the entire transaction. The payee took cognizance of the notice and issued a cheque in favor of the company but the cheque got dishonoured on account of insufficient funds. The company sent a legal notice demanding reimbursement of the loan within 15 days. On non-compliance with the notice, a case was filed against Mr. Ashok Kumar under the offense of Negotiable Instruments Act, 1881.


Whether the accused is guilty of the offense punishable under the Negotiable Instruments Act, 1881?

Legal Provisions:

• Section 20, Negotiable Instrument Act,1881 – Inchoate stamped instruments
• Section 87, Negotiable Instruments Act,1881 – Effect of material alteration
• Section 138, Negotiable Instruments Act,1881 – Dishonour of cheque

Appellant’s Contention:

The complainant submitted that after repeated requests and issuance of a notice, the accused failed to make the payment within the stipulated time. The cheque issued by the accused was dishonored as a result of insufficient balance in the account. Therefore, he is liable to be punished under the offense of the Negotiable Instruments Act, 1881.

Respondent’s Contention:

The accused in his defense submitted that he had submitted 2-3 cheques as security at the time of disbursement of the loan, which the bank has misused. He had given that cheque as security at the time of execution of various loan documents and did not owe any debt/ liability towards the company. He assured that he had paid the entire loan as per the terms and conditions of the agreement. The company’s agent used to collect the installments and his signature, in return for which he demanded his signed blank cheques kept as security but received neither the receipt nor his cheques. He further contended that he did not receive any legal notice issued by the complainant.

Observations of the court:

The court observed that the accused contradicted in both chiefs as well as cross-examination. Taking in view the second defense put forward by the accused, it is impossible to believe that a person involved in commercial activities did not feel necessary to take collect receipt in return for his payment. The court had encountered various cases wherein, the accused has refused to receive the legal notice, and to deal with it legislation has been made under Section 27 of the General clauses Act. In this case, the accused was not able to rebut the presumption that he neither resides nor works at the same address as mentioned in the notice. Looking at the provisions of the NI Act, it does not define any difference in the handwriting to constitute it as a material alteration, on the other hand, what essential is that the cheque bears the signature of the drawer, despite details filled up any other person.


The accused failed to prove him beyond a reasonable doubt. Hence, it was ordered to complete the outstanding payment within 15 days to the company and the accused would be punishable under the offense of Negotiable Instruments Act, 1881.

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