Section 138 of NI Act 1881 - Dishonored of chques.

Querist : Anonymous (Querist) 01 April 2011 This query is : Resolved
Dear Sir,

Despite of repeated reminders & follow up our one client is not releasing our outstanding payment since long back. Meantime he has given us one blank cheque duly signed by him as security. Can we utilize that blank cheque to recover our money & in case of dishonoring of the same can we file the case U/s.138. Will it be maintainable?

If it is NOT maintainable then please guide me other option?

Waiting for your earliest feedback.

rgds,

Mohan.

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M.Sheik Mohammed Ali (Expert) 01 April 2011
you can inform and encashed the cheque if the cheque dishonoured then you can file NI act, you dont tell this check was given for security. your case maintainable.

Amit Minocha (Expert) 01 April 2011
YOU CAN FILL CHQ WITH THE AMT AND CALL IT TOWARDS DISCHARGE OF YOUR OUTSTANDING DEBT AND NOT SECURITY , THE CASE WOULD HOLD BETTER.

Advocate Bhartesh goyal (Expert) 01 April 2011
Even if cheque is issued as security yet it comes under ambit of sec.138 of N.I Act after dishonour.

R.Ramachandran (Expert) 01 April 2011
Cheque issued as security cannot be termed as issued in discharge of any legally enforceable debt, and therefore any dishonour of such a cheque cannot attract the provisions of Sec. 138 N.I. Act.

adv. rajeev ( rajoo ) (Expert) 01 April 2011
Yes-you can use that cheque. If cheque is bounced then it is mandatory to issue the notice within the specified time and it should drafted carefully.

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