Notice under section 138 in the negotiable instruments act

Querist : Anonymous (Querist) 28 May 2020 This query is : Resolved
Dear Experts,

I have given a loan to one of my friend via account payee cheque, Loan Agreement (Notary) is also made with terms and conditions.
He has given Post Dated Cheques, 3 payments are cleared by him, but now he is giving excuses for other pending payments.
All cheque details with cheque numbers are written in Loan Agreement.
Now I am going to submit 5 pending cheques and I am 100% sure they will be bounced.

My Question to experts, for first instance can I myself send notice under Section 138 in The Negotiable Instruments Act, for payment of dues?

If yes can you, please help me by providing a very strong wording for the notice.

He is living in different state , what are the modes for sending this legal notice , Speed Post , whatsapp and what are other modes?

Best Regards

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Rajendra K Goyal (Expert) 28 May 2020
You said:

Now I am going to submit 5 pending cheques and I am 100% sure they will be bounced.

Reply:

What is the date on these cheques? You should present these cheques on or after the date of the cheque. Notice has to be sent within 30 days from the date of cheque bounce. Thereafter within 15 days (Total 15+30=45 days) from the date of sending the legal notice, case must be filed.

You said:

My Question to experts, for first instance can I myself send notice under Section 138 in The Negotiable Instruments Act, for payment of dues?

Reply:

Being payee, you can send notice. It is better to avail the services of professional / lawyer.

Rajendra K Goyal (Expert) 28 May 2020
You said:

If yes can you, please help me by providing a very strong wording for the notice.

Reply:

Notice and wording depend on case to case, may take help of some lawyer.

You said:

He is living in different state , what are the modes for sending this legal notice , Speed Post , whatsapp and what are other modes?

Reply:

You may send the notice through Registered / speed post.

Raj Kumar Makkad (Expert) 28 May 2020
You yourself can send the said legal notice by any of the means of the communication prevalent in the world. There is no requirement of strong words rather the notice should be written in simple words understandable to a layman. You need to mention the event sequencewise from the request of your friend to advance you the loan and to the present situation of his denial to pay or avoiding to pay and then you should demand from his the value of the cheque within a period of 15 days of the receipt of the said notice failing which you shall be liable to file a criminal complaint under the provisions of section 138 NI Act before the competent court of law at his cost and expenses.

This notice shall suffice. It should neither be lengthy nor should be short enough not disclosing cause of action.

P. Venu (Expert) 29 May 2020
Yes, you yourself can send the Notice, once the cheque is dishonoured. What do you mean by strong words?

In fact, the Notice ought to be drafted with the clear understanding that, in all probability, you need to approach the court to enforce the payment and if so, the Notice constitutes a vital document. you are liable to thoroughly cross examined as to the contents of the Notice. Any contradiction or inconsistency would result in the Petition being dismissed.

Rajendra K Goyal (Expert) 30 May 2020
Still if you want to draft and send notice yourself. You can search some draft notices from internet and modify the same in accordance to your case.
Action on notice depend on the intension to comply by other party and not on strong wording.
Wording of notice should be chosen with care; case depends on contents. Contradiction in notice wording and plaint may be harmful for the case lateron.

Raj Kumar Makkad (Expert) 30 May 2020
Mr. Goyal!

What is the difference in you last reply with two already submitted?

Dr J C Vashista (Expert) 31 May 2020
Issue notice after dishonour of cheque(s) within stipulated time through any mode and obtain/maintain a record of its record of service to the drawer.

Querist : Anonymous (Querist) 31 May 2020
Dear Experts ,

Thanks a lot for your replies.
I had word with the Borrower yesterday , He want to buy 2 months more for the loan repayment due to COVID-19 Situation , and ready to provide new cheques.

His old cheques are expiring on 18th of June 2020 (3 months) that cheques numbers are mentioned on Loan Agreement.

My Questions ,.

1. Shall I receive new cheques of same amount ?
2. If yes , then Shall I receive new cheques only after dishonour of old cheques mentioned on loan agreement ? or can receive directly ?
3. Shall I issue a notice for paying of loan amount or mention issuing of new cheques ?

Regards

P. Venu (Expert) 31 May 2020
Yes, you can. It would be advantageous if a receipt is issued, under due acknowledgement, detailing the circumstances under which the cheques have been received,

Raj Kumar Makkad (Expert) 31 May 2020
In the given facts, it shall be better if the borrower write a letter to you requesting not to present the said cheques as he is unable to pay you the debt these days due to the situation arisen due to Covid-19 and seek 2/3 months more time and further to replace his old cheques by new no. (the no. of old and new should also be mentioned in that letter). He should also refer to the agreement already existing. You should accept the prayer by way of your specific reply and then the desired replacement can be made.

Querist : Anonymous (Querist) 31 May 2020
Dear Experts ,

The below I drafted , I think it would be better if first cheques are dishonoured then after issuing a notice , Borrower requested to provide new cheques mentioning reason

Please check below notice wording is correct .

To,

XYZ
Address

Subject – Legal Notice for Recovery & Dishonour of Cheque

Sir,

1. That for the purpose of your business/personal, you have from time to time taken from me (Lender name) total loan of Rs. 8,50,000/- (Rupees Eight Lakhs Fifty Thousand) only, as detailed below in the table:
All loan payments received by you via Account payee cheques only and under Loan Agreement terms and Conditions.
Table 1.1
Lender Bank Details from which Loan payments given

Borrower Bank Details where Cheque Deposits
and Loan Payments received

Table 1.2
S.No | Loan Amount in Rupees | Payment made via Cheque No | Date of Payment /Loan Agreement

2. You agreed for equally monthly instalments (EMI) to re-pay all loan amounts with principal and interest via Post Dated Cheques/Other Electronic mode of payments.
3. That since the beginning you used to make the EMI payment within a period as agreed under Terms and conditions written in Loan Agreement.
4. That as EMI, the below cheques issued by you for the re payment of loan amounts (refer Table 1.2) with interest in favor of me (Lender name)
Table 4.1
Cheque Number Date Amount in Rupees For Loan Amount

That I presented the above said cheques (Refer Table 4.1) for encashment.
5. That since the said six cheques (Refer 4.1) has been dishonoured for the reason of ‘Insufficiency of funds’.
6. That you may be held liable civilly as well as criminally particularly under section 138 of the Negotiable Instruments Act and provisions of the Code of Civil Procedure due to dishonoured cheques.
7. That I hereby call upon you to make the payment of the amount of Rs.1,92,920 - as under:
a)EMI Rs.1,92,920 (Sum of all six amounts refer 4.1)
WITHIN FIFTEEN DAYS from the receipt of this notice.
8. That failing to pay above mentioned amount within given time, which I will be constrained to take against you an appropriate legal action including filing of a criminal complaint, which please note.
9. As agreed by us under the Terms of Loan Agreement , you (Borrower) shall be liable for all costs, expenses and expenditures incurred including, without limitation, the complete legal costs of the Lender incurred by enforcing the Loan Agreement as a result of any default by the Borrower and such costs will be added to the principal then outstanding and shall be due and payable by the Borrower to the Lender immediately upon demand of the Lender.

A copy of this legal notice is retain with me for future reference and necessary action.

Yours faithfully,

Rajendra K Goyal (Expert) 31 May 2020
So many corrections are needed, you must discuss with some local lawyer before sending notice of dishonor.
Whether all six cheques were dishonored in last 30 days?
Date of cheque, check no., drawee and collecting Bank name, date of presentation, date of dishonor, date of information of dishonor to payee, reason of dishonor should be mentioned in notice.
Notice should be given in 30 days from the date of information from collecting Banker regarding dishonor.

Dr J C Vashista (Expert) 01 June 2020
It is advisable to seek professional services of a local lawyer instead of asking for
coaching on this platform.

Querist : Anonymous (Querist) 02 June 2020
Dear Experts ,

I understood , I will take a professional services from a local lawyer.

Yesterday Respondendent told me that do whatever you can , and submit cheques as he dont care for it.

My questions

1. Now from his phone call , its clear that he will not receive Notice from my Lawyer via registered post ( as all experts said ) , and will not pay the amount asked .

2. Respondent lives in different state , How court summons can be implemented ?

P. Venu (Expert) 02 June 2020
The court has a well established procedure to take care of all the aspects.

Raj Kumar Makkad (Expert) 02 June 2020
You need to hire a professional lawyer to perform the procedure in correct sense.

Rajendra K Goyal (Expert) 02 June 2020
You said:
Yesterday Respondendent told me that do whatever you can , and submit cheques as he dont care for it.
Reply:
You should proceed legally. Cheque bounce case is to be initiation is time bound. Legal notice has to be sent within 30 days of bounce.

Rajendra K Goyal (Expert) 02 June 2020
You said:
1. Now from his phone call , its clear that he will not receive Notice from my Lawyer via registered post ( as all experts said ) , and will not pay the amount asked .
Reply:
If refuse to accept legal notice, it would be treated as served. Case u/s 138 NI Act can lend him to jail.

You said:
2. Respondent lives in different state , How court summons can be implemented ?
Reply:
Case is to be filed where the collecting Bank is situated.

Raj Kumar Makkad (Expert) 02 June 2020
If notice is sent at the ordinary residence of the addressee and even if he refuses then the same shall be treated as a valid service and nowadays, the notice sent through sms, mail. whatsapp, twitter etc. is equally valid service.

Rajendra K Goyal (Expert) 03 June 2020
You have been advised time and again to take care of time in cheque bounce cases, notice should be sent and case should be filed in time otherwise there are possibility to lose benefits provided u/s 138 NI Act for cheque bounce.

Querist : Anonymous (Querist) 03 June 2020
Dear Experts ,

Yes understood that win in 30 days of cheque bounce , need to send notice to the borrower.

As I have given 3 loans with 3 Loan Agreements.

Cheque are bouncing for all 3 different loan .

Question .
1. Need to Send 3 different notice or can club all 3 loan cheques details in one notice ?

Rajendra K Goyal (Expert) 03 June 2020
It is better to send 3 notices and file 3 cases.

Raj Kumar Makkad (Expert) 03 June 2020
Separate notice and separate complaint is required for separate cheque.

Rajendra K Goyal (Expert) 04 June 2020
It is confirm that the drawer of the cheque is not in a mood to honor his commitment, legal action has to be initiated within the time frame.

P. Venu (Expert) 04 June 2020
Are we helping the author or helping ourselves? When there is only one transaction resulting in the debt, how there could be more than one case? Law and its procedure abhors multiplicity of proceedings.

An open platform such LCI gives suggestions based on the limited facts as made available by the querists. As such, it is impossible that the nitty gritty in initiating a proceeding in the court could be taken care of. It is in his best interest if the author engages an advocate to take cre of the proceedings in the court.

Rajendra K Goyal (Expert) 04 June 2020
The author has already been advised to take help of local lawyer immediately.

It is better he is clearing his doubts to be with better equipments.

P. Venu (Expert) 04 June 2020
But instead of clearing the doubts, we are confusing him.

Raj Kumar Makkad (Expert) 04 June 2020
As per provisions of Section 218 Cr.P.C. for every distinct offence, separate charge is to be framed and is to be tried separately. Section 218 Cr.P.C. is reproduced as under:-

Separate charges for distinct offences. (1) For every distinct offence of which any person is accused, there shall be a separate charge, and every such charge shall be tried separately:
Provided that where the accused person, by an application in writing, so desires and the Magistrate is of the opinion that such person is not likely to be prejudiced thereby, the Magistrate may try together all or any number of the charges framed against such person.
(2) Nothing in sub-section (1) shall affect the operation of the provisions of sections 219,220,221 and 223."

Raj Kumar Makkad (Expert) 04 June 2020
The issue for consideration in the present case is whether a single cause of action has arisen in respect of all the cheques and dishonour of eight cheques constitute a single transaction or not. It is also to be seen whether the alleged offences have been committed in the course of same transaction or not. The issue to be decided is whether to conduct separate trial in all the cases will be an illegality and would result in serious prejudice to the accused or not. The question that is to be determined herein is as to whether dishonour of cheque on each occasion of its presentation gives rise to a fresh cause of action within the meaning of Section 142 (b) of the Act. The Apex Court has held that clause (b) of Section 142 gives a restrictive meaning and, therefore, no successive cause of action would arise, as and when the cheque is represented. The POOJA SHARMA 2015.02.05 14:44 I attest to the accuracy and integrity of this document Crl. Misc. No. M-1184 of 2014 (8) word 'charge' is not defined in the Code. In Section 242 Cr.P.C. the word 'accused' is used in connection with the particulars of the offence being stated to the accused person, it is used in the same sense as the word 'charged' in the ordinary parlance. The concluding words of the section appear to contemplate that in a summons trial, there is a charge of an offence, which is not necessary to be mentioned in writing in accordance with the provisions of Sections 221,222 and 223 of the Code. The Full Bench of Madra High Court in the case of Emperor Vs. San Dun, Vol. 2 Criminal Law Journal 739 has held that Section 233 of the Code is applied to trial in summon cases under chapter XX of the Code. Section 218 of the Code speaks of distinct offence and Section 219 of the Code speaks of the offences of the same kind. However, Section 220 of the Code speaks of more offences than one committed in the course of same transaction. The expression 'distinct offence' has been interpreted by Hon'ble the Apex Court in the case of Banwarilal Vs. Union of India AIR 1963 Supreme Court 1620, wherein, it has been held as under:-

"The expression 'every distinct offence' must have a different content from the expression 'every offence' or 'each offence'. A separate charge is required for every distinct offence and not necessarily for each separate offence.
The question is, what is meant by 'every distinct offence' ? 'Distinct' means 'not identical'. It stresses characteristics that distinguish 'two things not being the same'. Two offences would be distinct if they be not in any way inter-related. If it is inter-related, there would be no distinctness and it would depend on the circumstances of the case in which the offences were committed whether there be separate charges for those offences or not."

Rajendra K Goyal (Expert) 05 June 2020
The author has mentioned that there were 3 loan agreements and 3 loans.
The notice has to be served for each bounced cheque individually and not based on loan or agreement.

Rajendra K Goyal (Expert) 05 June 2020
Section 138 NI Act deals with bouncing of cheque. If you want to proceed on the basis of loan agreement or recovery of loan civil suit has to be instituted and not cheque bounce case.

Querist : Anonymous (Querist) 11 June 2020
Dear Experts ,

I heard Finance Ministry wants to decriminalise 138 NI.
If this happens then how would we recover money from the culprit.
Is there any other provision ? Not civil it took ages.

Raj Kumar Makkad (Expert) 11 June 2020
Let the Act in this regard come. Nothing can be got anticipated as on day without having any provision before us. If you have everything then kindly post here for the relevant discussion for everybody.

Rajendra K Goyal (Expert) 13 June 2020
Nothing can be predicted before the situation actually happens.

May be proposed amendments be somewhat more favorable.

Raj Kumar Makkad (Expert) 13 June 2020
After all no Govt. can frame a law that the borrower has no liability to return the borrowed money. Lets wait for the relevant provision of relevant law.

Rajendra K Goyal (Expert) 13 June 2020
You should proceed with the facts, situation and law applicable as on today.