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anil bhargava (prop)     27 December 2010

Section 138 applicability

Dear Sir,   CHEQUE BOUNCING CASE- A SITUATION

Please throw light on the following situation:

 

There are two parties 'A' a small supplier and 'B' a large group of varied businesses.

 

1.  'A' supplies material to 'B'.

2. Payment becomes over due, 'B' does not pay even after repeated reminders.

3. During a meeting 'B' gives to 'A', approx. 50% of the amount by cheque without date and mentions on the covering letter that the cheques should not be presented in bank without the written consent by letter or e-mail; thereafter ‘A’ requests for the money, then ‘B’ by a e-mail states that the cheques will be cleared for presenting shortly. Nine months have since passed the cheques are still in the possession of ‘A’ and ‘B’ has not given clearance to present the same..

4. For continuance of business, 'B' request 'A' to supply material for which 100% advance will be for the supplies to be made and some portion will be adjusted against old dues.

4.1 For continuance of supplies 'B' also issues cheques of 25% of the amount due to 'A' with dates mentioned on the same and also mentions that in case payment for this amount is made by RTGS, then the cheques amounting to 25% amount will be returned by 'A' to 'B', however, as the meeting concludes, the MD of 'B' verbally states that 'A' need not return the cheques as more amount is to be paid to 'A'.

4.2. 'A' starts receiving payment in parts by RTGS up to approx. 25% of the amount as was discussed but not as per the dates/days as promised.

4.3 'B' asks 'A' to return the cheques by e-mail, 'A' does not return the cheques instead informs the verbal communication of MD of 'B' for holding the cheques by 'A'.

4.4 No reply is received from 'B', thus 'A' holds on for the cheques.

5. 'B 'does not respond to 'A's many mails and on telephone, say he will pay when he is able to pay.

6. Can 'A' deposit both, dated cheques of 25% amount and also undated cheques of 50% of the amount by putting current dates on it as 'B' is not responding, so that 'A' can sue 'B' under section 138 if the cheques bounce. (It is 9 months since the undated cheques were issued by ‘B’ to ‘A’)

7. Statement of account from ‘B’ has been received on mail by ‘A’, all sales tax forms have also been received by ‘A’.

Thanks

 

Anil



Learning

 7 Replies

adv. rajeev ( rajoo ) (practicing advocate)     28 December 2010

It is very difficult to answer, because cheques issued by B is long back and there is letter from him that not to present the cheques without writen information.  I think to deceive A ,B has done like this.  If A bounced the cheque and filed 138 Of NI Act B may take the benefit of the letter which he has already issued to A.  So it is better to recover the amount wisely.

Let me know whether cheque numbers are written in the letter issued by B to A?

anil bhargava (prop)     28 December 2010

Dear Sir,

Yes, the cheque nos are on the letter.

However, even after issue of the cheques, 'B' has cited financial difficulty in writing and has informed that he will pay against the dues and some very small amount has been paid also after that.

The last payment made by 'B' to 'A' is 2 months back.

'B' is a large group of company and wish to again buy material on the advance payment and to adjust part payment of the old dues.

The amount is very large, it is to the extent that 'A' has to take loans and pay to his principal, now the situation is such that 'A' has to mortgage his house and take loan to pay to the principal.

'A' has started business after investing all his 30 years of earnings when he was an employee.

What is the remedey, 'B' is large group having media also as one of his businesses and has invested in various projects thereby financial crunch and is paying only when he needs the material.

The market reputaion of 'B' is not bad, howver, delay in payment is known to all.

'B' can arrange funds if necessary.

Thanks

 

 

 

anil bhargava (prop)     28 December 2010

Also please note "a" is a private Ltd company and 'B' is a imited company.

N.R.Kaushik (practicing Advocate)     28 December 2010

cheques given as security cannot be sued under 138 NI act but you can sue him under 406,420 IPC by giving complaint to police as clear case f deception and breach of trust made out

sultan (owner)     28 December 2010

what will happen if a person do not appear in the court after receiving summons for a cheque bounce case

N.R.Kaushik (practicing Advocate)     28 December 2010

Mr. Sultan you are not clear whether that person did not appear after repeated summons or once if it is once the court will issue process again but not appearing even after three times the court issue warrant and apprehend arrest

anil bhargava (prop)     28 December 2010

Dear Adv.Rajeev(Rajoo),

Yes, the cheque nos are on the letter.

However, even after issue of the cheques, 'B' has cited financial difficulty in writing and has informed that he will pay against the dues and some very small amount has been paid also after that.

The last payment made by 'B' to 'A' is 2 months back.

'B' is a large group of company and wish to again buy material on the advance payment and to adjust part payment of the old dues.

The amount is very large, it is to the extent that 'A' has to take loans and pay to his principal, now the situation is such that 'A' has to mortgage his house and take loan to pay to the principal.

'A' has started business after investing all his 30 years of earnings when he was an employee.

What is the remedey, 'B' is large group having media also as one of his businesses and has invested in various projects thereby financial crunch and is paying only when he needs the material.

The market reputaion of 'B' is not bad, howver, delay in payment is known to all.

'B' can arrange funds if necessary.

Thanks

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