Presented by: Asif Shaikh Ankita Maniar Mariya Shaikh Namrata Raghuwanshi

The Negotiable Instruments Act, 1881 was amended in the year 1988 to add Chapter XVII which pertains to penalties in case of dishonor of certain cheques for insufficiency of funds in the accounts and contains sections 138 to 147. Section 138 reads: Where 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 for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor 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 and shall without prejudice to any other provisions of this Act, be punished with imprisonment for 2["a term which may extend to two year"], or with fine which may extend to twice the amount of the cheque, or with both.

Here the complainant demanded the payment of 80,000 that was stopped before the post dated cheque became payable.
Before the due date the instruments were merely bills of exchange and not cheques. The issue is regarding payment of a post-dated cheque being countermanded before the date mentioned on the face of the cheque.

A blank cheque is issued by the drawer without putting date and amount in the cheque and the payee fills up the amount and the date, and presents the same for encashment and that no evidence is adduced whether the cheque authorized the payee to fill in the blanks. The Andhra Pradesh High Court, in the case of M/s. Avon Organics . M/s Poiner Products Ltd. & Ors., 2004 (1) RCR (criminal) 1014,had to deal with the dishonor of such a cheque vis--vis S. 138 of Negotiable Instruments Act. Ordinarily, such things are happening and people are taking blank cheques in discharge of their dues at a future date. Unfortunately, there is no Apex court verdict touching this point.

The holding of Andhra Pradesh High Court is that a cheque without Putting the amount is not a cheque at all and filling the amount, etc. in the cheque without consent and authorization of the drawer constitutes material alteration of the cheque. The logic before the Andhra Pradesh High Court case was that issuing of post-dated cheque and cheque without putting the date Was different, and if the cheque is not drawn for a specified amount, it does not fall under the definition of bill of exchange. It cannot be called a cheque within the meaning of S. 5 and S. 6 of the N. I. Act.

Sunil Chavan, proprietor of Technet Infosys, had supplied 20 computers at a rate of Rs 18,000 each to the businessman Sudhir Sharma as per an agreement between the two in April last year. As per the agreement, Sharma had agreed to make payment in parts on April 19 and May 3, 2010."The businessman appeared to be a very sophisticated person. Till the time of the first payment, it did not look like he would cheat on me. When he deposited a cheque of Rs 1.87 lakh he gave me, it bounced. On realization of the same, I conveyed the same to Sharma and he assured me to clear the payments within two week's time

the cheques Sharma issued later too bounced leading Chavan to approach the court. "Prior to moving court, I tried to recover the total money Rs 3.74 lakh. He spoke to Sharma several times, however, in vain. When I used to visit his office, He could get to see few others as well whom he had not paid money for different works. It was only after my patience took toll on me, I decided to move the court in June," The Judicial Magistrate First Class (JMFC) has sentenced simple imprisonment of six months and a fine of Rs 55,000 to a Sudhir Sharma for failing to make payments to Technet Infosys.

Prakash Shivshankar v/s Canara Bank Prakash Shivashankar issued a cheque for Rs.730/- to an internet service provider for an internet connection. Cheque was bounced. Internet service provider demanded that he should pay the amount Rs. 730 by cash and also pay the cheque return charges of Rs.112/ Internet service provider threatened to take action against him under section 138 of the Negotiable Instruments Act which has the facility of arresting the one who has issued the cheque that has been dishonored due to "insufficient funds".

He was shocked to find that the bank had mentioned "Insufficient Funds" as a reason for returning the cheque. He sent a legal notice to the Branch Manager, Canara Bank, Arumbakkam branch which was ignored by the Branch Manager. He filed a case in the Consumer Court in Mylapore. Consumer Court ordered that Canara Bank, Arumbakkam branch should pay him a compensation of Rs. 50,000/- for the damages they have caused by their wrongful dishonor of Shivshankars cheque as well as to pay his legal expenses.