NI Act Regarding insolvent
Khaleel Ahmed Mohammed
(Querist) 19 February 2010
This query is : Resolved
My client has real estate business. During his good days he went to one temple , he offered a post dated cheque Rs.One lakh . Due to the heavy losses in the business, his living condition is miserable. The temple authorities deposited the cheque for payment.The banker returned the cheque with the endorsement insufficient balance.
My questions are
1. whether my client will be prosecuted as per section 138 NI act?
2.Whether the temple authority have any legal right to recover the amount from my client?
Guest
(Expert) 19 February 2010
mere signing a cheque and given to a person doed not made liable in section 138 NI Act. there must be Debt or Other liabilty. without that no offence is made out. in your querry whether the cheque given in gift to the temple authority or for any debt or other liabilty
138. Dishonour of cheque for insufficiency, etc., of funds in the accounts
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall without prejudice to any other provisions of this Act, be punished with imprisonment for 2["a term which may extend to two year"], or with fine which may extend to twice the amount of the cheque, or with both:
Explanation: For the purpose of this section, "debt or other liability" means a legally enforceable debt or other liability].
B K Raghavendra Rao
(Expert) 19 February 2010
Your client is not legally liable to pay that amount and hence neither there can be any cheque bounce case under NI Act nor any money recovery suit in civil courts.
Shivasurya
(Expert) 19 February 2010
The drawee of the cheque can prosecute the drawer of the cheque u/s.138 only if the drawer issued the cheque for discharge of liability. in your case there is no liability to be dischargeble to the temple, hence the temple authorities cannot prosecute the drawer of the cheque u/s.138 of NI Act. the same view applie to the charitable institutions, the charitable institutions cannot prosecute a person for dishonour of cheque if the cheque given as donation. Shivasurya, Advocate
M Ravinder Babu Advocate Parka
(Expert) 19 February 2010
Apart from the plea wether insolvent or not ,the act is very clear that FAILING DISCHARGE OF LEGALLY ENFOCEBLE DEBT OR LIABULITY THEN ONLY N I ACT 138 operates.Your cheque like that of gift only . It is not an offence .But capabulity or incapabulity GOD will see.
Sachin Bhatia
(Expert) 19 February 2010
1) Your client will not be prosecuted under section 138 NI act as there is no Debt or Other liabilty on him.
2) The temple authority do not have any legal right to recover the amount from your client.
Guest
(Expert) 19 February 2010
Mr.Khaleel Ahmed's client is quite lucky for getting unanimous view of all the experts, which is rare.
Parveen Kr. Aggarwal
(Expert) 19 February 2010
Section 25 of the Contract Act, 1872 provides that an agreement made without consideration is void, unless -
(1) ......;
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do;
(3) ......"
In view of the above, if the temple authorities have done something (like raising of construction in the name of your client or any of his family members, relatives etc. with a promise from your client that he will donate the amount to the temple) and thereupon the cheque is issued by your client, then your client will be liable under section 138 of the N. I. Act as well as for recovery of the amount. Otherwise not as suggested by learned experts.
Raj Kumar Makkad
(Expert) 19 February 2010
I think all the experts have diligently and effectively have replied your quarry and nothing remains to be added.
Raj Kumar Makkad
(Expert) 19 February 2010
I think all the experts have diligently and effectively have replied your quarry and nothing remains to be added.
A V Vishal
(Expert) 20 February 2010
It is not a fit case for 138 NI Act, since the drawer issued the cheque towards charitable/religious purpose and not in fulfillment of any debt or liablity, hence in such a case neither action under 138 or a civil suit is maintainable
