Negotiable instrument Act,1881

The Act deals with negotiable instruments such as promissory notes, bills of
exchange, cheques etc. Chapter xvii is inculcated to bring confidence in banking
operations and bringing credibility to business transactions.
Applicability of section 138: The following ingredients must be fulfilled for
the applicability of section 138 of this act:
i) A person must have drawn a cheque in favour of another for the payment of
money in respect of debt or some other liability.
ii) The cheque must be presented before the bank within 3 month of the date of
issuance of cheque by the drawer.
iii) The cheque must be returned by the bank due to insufficiency of funds in the
account or the amount in cheque is greater than the amount that can be drawn
from that account according to the terms of the agreement between drawer and
the bank.
iv) The payee must send a legal notice in writing to the drawer, within 15 days
from the date of receipt of notice from the bank as to dishonouring of the
cheque.
v) 15 days, time is given to the drawer for making the payment. If the payment
is not made within the 15 days of receipt of notice by the drawer a legal
proceeding may be initiated against the drawer under section 138 of the
Negotiable Instrument Act,188.
Procedure that is followed in applicability of section 138 of the act:
i) A legal notice is sent to the drawer within 15 days to the drawer as to non-
payment of money from the date the payee received notice from the bank as to
the dishonouring of the cheque.
ii) The complainant or his counsel may be called in witness box with necessary
details regarding the case, if the court is satisfied and found substance in the
case, it may issue a summon against the drawer.
iii) If the accused doesn’t appear even after the summon a bailable warrant may
be issued against him and even if the accused doesn’t appear after that a non-
bailable warrant may be issued against him.
iv) On appearance the accused may furnish a bail bond to ensure his appearance
during the trial. Plea of accused is recorded on his appearance, if he pleads
guilty, the punishment may be pronounced by the court and if he doesn’t plead
guilty, a copy of complaint is served to him.
v) The complainant get a chance to present its evidences by way of affidavit and
all other documents necessary for the case. The complainant will be cross
checked by the accused or his counsel.
vi) Accused is given a chance to produce evidences and witness in his support
and they are cross checked by the complainant or his counsel.
vii) After all the above process judgement would be pronounced by the court. If
the accused is acquitted then the complainant can make an appeal to the High
Court and if the judgement is made in favour of complainant the accused can
move to the sessions court.