Question 1

What are the prerequisites for filing a case under Section 138 of the NI Act?

Accepted Answer

The cheque must have been presented to the bank within its validity period; it must be returned unpaid due to insufficient funds or exceeding arrangements; a legal demand notice must be issued to the drawer within 30 days of receiving the return memo; and the drawer must fail to make payment within 15 days of receiving the notice.

Question 2

Is there a presumption of liability in cheque bounce cases?

Accepted Answer

Yes, Section 139 of the Negotiable Instruments Act raises a statutory presumption in favor of the holder that the cheque was issued in discharge of a legally enforceable debt or liability. The burden is on the accused to rebut this presumption during the trial.

Question 3

Can an accused seek interim compensation during the pendency of a Section 138 trial?

Accepted Answer

Under Section 143A of the NI Act, the trial court can direct the accused to pay interim compensation to the complainant (up to 20% of the cheque amount) if the accused pleads not guilty. If acquitted, the complainant must repay it with interest.

Cheque Bounce & Financial Fraud

Overview

Frequently Asked Questions