Cheque return due to stop payment
Amit
(Querist) 12 July 2012
This query is : Resolved
I was working as distributor of a company. I had issued company a cheque on 13.04.12. the company cancelled my distribution without any notice whereas on that date my market outstanding was very high and stock was also with me. Upon cancellation I requested stop payment to bank for the cheque. I always maintained balance more than that of issued cheque. the copany banked the cheque yesterday without any information and the cheque returned with reason "payment stopped by the drawer". I had sufficient balance in my account when cheque hit my account but after that second cheque issued to different company hit my account and the balance at the end of the day went less than the cheque amount. can there be any criminal case be against me? let me make it more clear, my bank account statement returns the cheque with sufficient balance but the next entry in my account statement clears another cheque and the balance goes less than issued cheque. Please guide. will I have to make payment if the company issues notice to me? I m not in condition to pay as I have heavy market dues and the dealer are not paying as I m nomore in that trade.
Dr J C Vashista
(Expert) 13 July 2012
Cheque has been issued against a legal liability, even stop payment shall attract penal action, on conviction.
However settle the matter amicably before institution of case against you.
ashutosh mishra
(Expert) 13 July 2012
Cheque issued against liability to pay if gets bounced even on advise of stop payment to the banker by it's drawer is actionable u/s138 of NI Act.
V R SHROFF
(Expert) 13 July 2012
u shd have issued notice , not to deposit chq.
Once dishonoured, u r liable.
R Trivedi
(Expert) 13 July 2012
There are two aspects:
1. S.138 of NI Act is applicable in your case and if you decide to contest you have to defend yourself.
2. Act of company in cancelling your distributorship without notice, without assisting you in liquidating the stock lying with you. These are the main defense and reference can be given to the agreement between the two.
No law can convict you for defending your physical or financial interest, if you can prove that your stop payment was in defense of protecting your interest due to illegal action taken by the company in cancelling the distributorship arbitrarily, then you can come out of it.
See if it is feasible to fight, cases take lot of time, you have to handle your troubled business also, discuss with company and try an amicable solution. Winning a case after 5-7 years has to be worth it.
girish shringi
(Expert) 13 July 2012
Cheque bounce is subject to litigation.
After giving notice in the stipulated time in the Law proceed.
Amit
(Querist) 13 July 2012
Dear All,
Thanks for your genuine response, before we close this qery please guide me 1 thing me what if I m not in position to pay the amount?
ajay sethi
(Expert) 13 July 2012
if you are unable to pay your debts declare yourself an insolvent .
file application for declaring your self an insolvent . however please note that you shall continue to be liable under section 138 Ni for cheque bounce
Raj Kumar Makkad
(Expert) 13 July 2012
In your case, it is better to personally meet the officials of that company and persuade them with your condition and then to make an agreement/undertaking etc. binding you to make the payment of all outstanding within a mutually agreed period. It is not good for both sides to make relations so bitter. Business relations if are discontinued, human relations should not be spoiled.
Nadeem Qureshi
(Expert) 14 July 2012
Dear Querist
you should file a case against the company for cancellation of your distributorship without prior notice or information to you, you should claim mental harassment compensation too. this will be the best defense in the case if the company filed against you u/s 138 NI Act, stop payment after issue the cheque comes under the offence u/s 138 NI Act.
Feel free to call
Dr J C Vashista
(Expert) 16 July 2012
Please seek advice/services of local lawyer
