The resolution of such cases involves a procedure mandated by law. Section 8, the negotiable instruments act 1881 is intended to prevent dishonesty on the part of the drawer of negotiable instrument to draw a cheque without sufficient funds in his account maintained by him in a bank and induces the payee or holder in due course to act upon it. This act may be called the negotiable instruments act, 1881. Any alteration in the original state of a cheque such as date, amount, payees name, changing the word order to bearer appearing after payees name or in endorsement is called material alteration.
Government has amended the negotiable instruments act, 1881 which may. The format can be also downloaded for free in pdf version from the link provided after the format. On the other hand, from a bankers stand point, it is a mandate the cheque issued by the banks customer requiring the bank to pay a stated amount to a stated party on or after the date of the cheque. Every year, millions of cheque dishonour or cheque bouncing cases are registered in india.
Instrument means, a written document by which a right is created in. Payment and collection of cheques and other negotiable. A major share of all pending criminal cases in india is comprised of these cheque bounce cases. Drawer maker of cheque the person who issue the cheque or hold the account with bank. A promissory note, bill of exchange or cheque payable either to order or to bearer is called t negotiable instrument 2.
The act makes amendments in the negotiable instrument act 1881 on different aspects described as under. All question related to section 8 negotiable instrument act, 1881 dishonour of cheque us 8 of n. A cheque is a bill of exchange drawn on a specified banker. There might arise disputes in regard to acceptance of a negotiable instrument.
Return of cheque unpaid with the advice account operation jointly, other directors signature required, amounts to dishonor of the cheque within the. It extends to the whole of india but nothing herein contained affects the indian paper currency act, 1871, 3 of 1871. Negotiable instruments amendment act, 2015 to amend ni. What is the meaning of material alteration in a cheque. Whether the payee or holder of a cheque can initiate prosecution for an. Cheque bounce laws, negotiable instruments, banking laws. Draft format of criminal complaint against return of cheque. Draft format for filing criminal complaint under section 8 of negotiable instruments act is given below to get idea to prepare the complaint. For online services of section 8 of negotiable instruments act, send us a copy of cheque along with the cheque return memo on mail the professional charges for issuance of notice under section 8 of the negotiable instruments act are nominal with very quick services.
Dishonour of a cheque is a criminal offence under section 8 of the negotiable instruments act, 1881, subject to certain conditions being fulfilled. The bill amends negotiable instruments act, 1881 to primarily address issues of dishonor of cheques and deal with unnecessary delay in disposal of such cases negotiable instrument. Different stages of cheque bounce case trial negotiable. Source of income of complainant has to be proved in 8 ni. Cheques are preferred over cash for making payment for goods or services in day to day business. Dishonour of cheque its consequences under negotiable.
As per negotiable instrument act 1881, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Expected questions on negotiable instrument act expected mcq on negotiable instruments act with answers. All material alteration must have drawers approval with his full signature not initials where the alterations are made. Cheque must be returned unpaid due to insufficient funds or it exceeds the. In india for cases related to cheque bounce, provisions are given under section 8 of negotiable instrument act, 1881. Be it enacted by parliament in the sixtysixth year of the republic of india as follows. N i act, payment and collection of cheques a to z in banking.
Legal notice format to serve to the debtor against return. Promissory notes, bills of exchange and cheques are negotiable instruments under negotiable instruments act 1881. Negotiable instruments act 1881 linkedin slideshare. Pdf negotiable instrument act and cheque used as collateral. You might have heard of a cheque bouncing due to insufficient funds. Through this judgment, sc provides relief to the holders of bounced cheques under the provisions of the negotiable instruments act. This notice format under section 8 is specially drafted for india. Whereas it is expedient to define and amend the law relating to, promissory notes, bills of exchange and cheques. A bill further to amend the negotiable instruments act, 1881. There are three parties in cheque transaction drawer, drawee and payee. Expected mcq on negotiable instruments act with answers. Complaint us 8 of ni act download format of complaint. Cheque bounce notice format negotiable instrument act. The negotiable instrument act, 1881 legislative department.
State of gujarat and another9 has explained the law relating to territorial jurisdiction for filing a complaint for dishonor of cheques. The notice should mention that the cheque amount has to be paid to the payee within 15. Negotiable instruments the law relating to cheques the cheque is the most popular and common negotiable instrument known today. I act, when the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiation, on the back or face thereof or on a slip of paper annexed thereto, he is said to endorse the same. If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under section 8 of the negotiable instruments act. Supreme court changes ground rule under section 8 of negotiable instruments act to prosecute a person who had presented the cheque which bounced for insufficiency of funds. If the accused does not make the payments within 30 days from the receipt of the notice, we can file the complaint under section 8 of the negotiable instrument act. Dishonour of cheque its consequences under negotiable instruments act as amended upto when a cheque is presented in the concerned bank by the drawee within the stipulated time, within the three months from the date of issue the drawee bank issue check return memo to the payee mentioning the reason for non payment. Section of the negotiable instruments act states that a negotiable instrument is a promissory note, bill of exchange or a cheque payable either to order or to bearer. A person must have drawn a cheque on an account maintained by him in a bank for payment of a certain amount of money to another person from out of that account. Negotiable instrument according to section i a negotiable instrument means a promissory note, bill of exchange or cheque payable either on order or to bearer. The negotiable instruments act, 1881 defines the cheque. In the negotiable instruments act, 1881 hereinafter referred to as the principal act, after section 143, the following section shall be inserted, namely. Negotiable instruments like cheques, promissory notes, bill of exchange etc.
The return of cheque is itself an indication that funds are. Cheque can be dishonour on account of following reasons. A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Negotiable instrument according to section of the negotiable instruments act, a negotiable instrument means promissory note, bill of exchange or cheque payable either to order or to bearer. According to section of the negotiable instruments act, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. Section 8 b of the negotiable instruments act, 1881 provides for the notice of dishonour. This is what was held by the supreme court in the case of indus airways pvt. 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. Criminal complaint us 8 of of negotiable instruments act against return of cheque down load format. Notice format under section 8 with pdf this is a suggested notice format under section 8, also called check bounce notice format. Lok sabha has passed negotiable instruments amendment bill, 2017 to reduce the number of cheque dishonour cases pending in courts. Section 8 of negotiable instruments act legal helpline. Format notice of cheque dishonour this is a form of notice under section 8 of negotiable instrument act, 1881 for dishonour of cheque under certain grounds.
Negotiable instruments the law relating to cheques. Pdf on jul 19, 20, m s siddiqui and others published negotiable. Legal notice under section 8 format download against return of cheque, to be served to the drawer before filing criminal complaint us 8 of of negotiable instruments act against return of cheque. All question related to section 8 negotiable instrument. Expected questions on negotiable instrument act expected.
Ni act the negotiable instruments act, 1881 as amended up to date. Negotiable instruments dishonoured cheques act an act to reform the law relating to dishonoured cheques and similar negotiable instruments. Landmark supreme court judgment on sec 8 of negotiable. Cheque truncation system sec 1 of negotiable instrument act 1881. Return of cheque should be for insufficiency of funds the offence takes place only when cheque is dishonoured for insufficiency of funds or where the amount exceeds the arrangement. In bangladesh, chapter xxvi of the 1881 act was substituted by chapter xvii in the year 1994. It states that the payee or holder in due course of the cheque as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of cheque, within thirty days of the receipt of information by. The provisions of the negotiable instruments amendment act, 2015 shall be deemed to have come into force on the 15th day of june, 2015. If the cheque presented before the bank is bounced for insufficient fund or some other reasons, the demand notice to be send for payment within 30 days from the date of cheque bounce. Once the cheque is bounced, the bank returns the cheque to the drawer with a return memo which mentions the reason for a bounced cheque. If the other party failed to comply the notice usually in 15 days then a complaint under section 8 of negotiable instrument should be filed in the concerned. Dishonour of postdated cheque given for advance is not. I act the payee has to send the notice to the drawer within 30 days from the date of receiving cheque return memo from the bank. What is a cheque definition, types of cheques and features.
The act went through a final amendment in the year 2000. An offence under section 8 of the negotiable instruments act, 1881 is committed no sooner a cheque drawn by the accused on an account being maintained by. The negotiable instruments act was enacted, in india, in 1881. It is available for free download in pdf and docs format. Critical analysis of section8 of negotiable instruments act. The cheque was deposited in the bank just before the end of 3 months period by the complainant payee. If you give a cheque as an advance towards supply or purchase of certain goods and subsequently that cheque is dishonoured, then it is not an offence under section 8 of the negotiable instruments act, 1881. Where any fine is realized under subsection 1, any amount. Ordinance and is considered as a negotiable instrument.
As per the negotiable instruments amendment act, 2015 a complaint can be filed under section 8 for dishonor of cheque at a court within whose local jurisdiction. A promissory note, bill of exchange or cheque payable either to order or to bearer is called negotiable instrument how many total sections are there in the negotiable instruments act. The cheque must have been drawn for discharge of existing debt or liability. However, for day to day transactions, cheque is the most widely used negotiable instrument in businesses today. This article on dishonour of cheque section 8 of the negotiable instruments act gives a comprehensive overview about all aspects of cheque bouncing and cheque dishonour as per laws in india.
This section 8 notice format is drafted by our legal and law experts. Until contrary is proved, presumption is in favour of holder of cheque that it was drawn for discharge of debt or liabilities. How many total sections are there in the negotiable instruments act. The drawer of the cheque should present the cheque within 30 days from the date of dishonoring of the cheque just to protect his rights as stated in the negotiable instrument act bouncing off the cheque is a serious issue as served to the maker of the. Subject to the provisions of section 82, clause c, payment of the amount due on a promissory note, bill of exchange or cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument.
An act to define and amend the law relating to promissory notes, bills of exchange and cheques. Whether demand of interest along with the cheque amount in the statutory notice under section 8 of the negotiable instruments act, 1881 would make the statutory notice faulty. Section 6 of negotiable instruments act defines cheque as. Cases of cheque bouncing has been increasing at an alarming rate, some media suggest anywhere around 38 lakhs or more cases of cheque bouncing have been filed with indian courts under section 8 of negotiable instrument act,1881. Cheques minimize the risk of carrying cash and ensure safety in making payment. Ans law relating to dishonour of cheque is mentioned from sec. An act to reform the law relating to dishonoured cheques and similar negotiable instruments. Negotiable instruments act in favour of holder of the cheque. The case of the complainant is that the accused borrowed a loan of rs. Definition and essentials of a cheque a cheque is a bill of excahge drawn on a banker payable on demand section 73 bills of exchange ordinance. Mcq on negotiable instruments act with answers in pdf.
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