Cheque Bounce, Cheque Dishonour and Law under Negotiable Instruments Act, 1881

Cheque Bounce, Cheque Dishonour and Law under Negotiable Instruments Act, 1881

In case of  Sushil Kumar Churiwala v. Akshay Bansal [2024] GCtR 3453 (Karnataka) it was held that "it is settled principles of law and requires no emphasis that prime object of enacting the provision under S.138 of the Negotiable Instruments Act, 1881 is to recover the amount covered under the dishonored cheque at the earliest point of time rather than penalizing the accused."

"Reasons are obvious inasmuch as if a cheque gets dishonored, the payee will suffer hardship in meeting his financial commitments. Therefore, the framers of legislation in Section 138 itself accorded the discretion for the learned Trial Magistrate to impose double the cheque amount as the fine or imprisonment for maximum period of two years or both."

Perhaps when the legislature incorporated Section 138 into the Negotiable Instruments Act, it did not envisage that enormous amount of litigation would mount over a period of time wherein Courts are burdened with the pendency of private complaints filed under Section 138 of the Negotiable Instruments Act. 

The accused who is the drawer of the cheque which got bounced should not be equated as an accused with any other penal provision.