Cheque bounce due to the closure of account

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Question asked on: 26/07/2019

I have given 28000 to my friend after some time he gave me a cheque. When I presented that cheque to the bank for its encashment, it became dishonoured due to the closure of the account. However, I have his bike ok and RTO papers and want to recover that amount by selling it. 

Advised by: Shivendra Pratap Singh,

Your friend has committed an offence under section 138 of the Negotiable Instrument Act. Where you received information from the bank about dishonour of cheque, thereupon you should send a demand notice. You cannot initiate proceeding under the Negotiable Instrument Act unless and until you send a demand notice and he refused to pay the amount within 15 days.

It would be best if you did not sell his bike because he has not pledged his motorcycle to sell in default of payment. If you sell his motorcycle without his consent, then you will commit the offence of breach of Trust. Consequently, he can lodge FIR against you for the said offence. It would be right for you to proceed under the Negotiable Instrument Act because he has committed a crime under the NI Act.

You should immediately send a demand notice to pay the 28000 rupees. If your friend does not pay the amount within 15 days from the date of receipt of the notice, then you can file a complaint under section 138 of the Negotiable Instrument Act. You will have 30 days to file such a complaint because the negotiable instrument itself fixed a limitation for filing a complaint.

If you do not file the complaint within the time prescribed under the Negotiable Instrument Act, then you have to adduce evidence for such delay. However, the court has the power to condone the delay, but inordinate delay may take away your right to file a complaint.

Section 142 of the Negotiable Instrument Act provides sufficient punishment for the dishonour of cheque therefore, no need to sell his bike and commit an offence. You should refrain from doing such a thing and proceed legally under the Negotiable Instrument Act. You should not give him a chance to file a cross-case against you.

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Shivendra Pratap Singh

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