Negotiable instruments
cutesmile
(Querist) 07 May 2013
This query is : Resolved
Hi,
My client had issued four hundis favouring a private company against PDCS, of which 2 PDCs got bounced in the month of January and 2 in april.For 2 PDCs which got bounced in April, I can file 138 suit under negotiable instrument act.. pl advice for the other 2 pdcs whether i can file a recovery suit.
Pl advice for the matter as whole.
Advocate M.Bhadra
(Expert) 07 May 2013
Information from advocatekhoj:--
A Cheque bounce case normally takes an average of one year to complete the proceedings before trial court. The following are the important stages in a cheque bounce case.
1) Filing of complaint: The complaint needs to be filed before the jurisdictional magistrate within 30 days from the accrual of the cause of action. The complainant needs to be present before the magistrate at the time of filing. The original documents need to be shown to the magistrate. If prima-facie a case is made out, the magistrate will post the matter for sworn statement.
2) Sworn Statement: At this stage, the complainant needs to enter the witness box and give further details regarding the case. If the magistrate is satisfied that there is some substance in the case of the complainant, then he will issue a summons to the accused.
3) Appearance of Accused: On receipt of summons, the accused need to appear in the court. If he does not appear in the court, the court will issue an arrest warrant against him. After appearance, the accused is supposed to take a bail from the court with or without sureties. If the accused is unable to furnish a surety then he can deposit a cash security, instead of surety. This cash security is refundable to the accused after the conclusion of the case.
4) Recording of Plea: In the next stage, the court will ask the accused as to whether he has committed the offence or not. If the accused admits the guilt, the court will immediately give him punishment. If he pleads innocence, the court will post the matter for evidence.
5) Evidence: The Complainant has to furnish his evidence, normally by way of affidavit; this is known as examination-in-chief. He needs to produce all documents in support of his case like bounced cheque, dishonor memo, copy of notice etc. Later complainant will be cross examined by the accused. If there are other witnesses in support of the complainant, then their evidence also has to be recorded.
6) Statement of the Accused: After the Complainant side evidence is over, the court will put some questions to the accused regarding his guilt. An accused needs to give his version to the same.
7) Defence Evidence: After the Accused statement the court will give an opportunity to the accused to leave his evidence. The accused can also produce documents in support of his case, as well as witnesses in his support. Accused and his witnesses will be cross examined by the complainant. After this, the case is posted for arguments.
8) Arguments: Both the Complainant and the accused will submit their arguments before the court. They can also furnish judgments of high courts and Supreme Court in support of their case. Normally a written argument containing a gist of the oral argument is also furnished to the court.
9) Judgement: After the arguments, case is posted for judgement. If the court finds that the accused has committed offence, he will be punished with fine or imprisonment. If he is innocent, the court will acquit him. If the accused is convicted, he can file an appeal before the sessions’ court within 30 days.
Information from moneylife;--
The Bombay High Court has held that if a blank post-dated cheque -- which has been issued only as a "collateral security" for a loan -- bounces, the debtor cannot be prosecuted under the Negotiable Instruments (NI) Act.
Very often banks accept blank post-dated cheques from borrower as a security for repayment. Criminal case under NI Act can not be lodged if such cheques bounced, Justice PR Borkar held in his judgment last week.
The judgment was passed on a petition filed by Ramkrishna Urban Cooperative Credit Society (RUCCS) in Ahmednagar district.
RUCCS had given a loan of Rs 2 lakh to a person named Rajendra Varma in 2000. Varma had issued 10 blank post-dated cheques at the time as a security for repayment.
One of these cheques, dated January 2008, bounced following which RUCCS filed criminal complaint against Varma.
However, the magistrate's court held that Varma was not guilty under the NI Act and acquitted him. The Society filed an application in Aurangabad bench of High Court seeking its permission to file appeal in sessions court.
The High Court noted that NI Act was intended to give more credibility to cheque as a financial instrument; "however, the object was not to provide effective and speedy remedy for recovery of loans," it said.
"Law makers must not have intended or imagined that money lenders or banks would obtain blank or post dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of NI Act," Justice Borkar held dismissing the application.
"It is doubtful if provisions of Section 138 attracted to a case in which a blank or post dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan," the judge said.
"In this case the accused respondent issued the cheque in question as security for loan before loan amount was disbursed. So, cheque was not towards any existing debt or liability (which is a requirement under section 138)," the High Court observed confirming the order of acquittal.
cutesmile
(Querist) 08 May 2013
thanks a lot..
the private company from which money is recoverable, is in very bad shape and owner has gone to usa since past few months and they have taken money from various parties. amount involvved in this case is also more than 50 lakhs. in this scenario, a company winding up petition would be necessary in my opinion.
pl give your views.
ajay sethi
(Expert) 08 May 2013
file summary suit for recovery of dues and also winding up petition .
cutesmile
(Querist) 16 May 2013
thanks a lot.. pl clarify on the foll points:
1. will the high court entertain the petition of winding up as there is only a debt of more than 50 lacs.
2. there is no other reason for winding up petition.
ajay sethi
(Expert) 16 May 2013
yes high court will entertain WP petition . take the plea that company is unable to pay its debts
V R SHROFF
(Expert) 26 December 2013
NO MORE TO ADD
