Sec 138 and 139 under NI act

Sec 138 and 139 under NI act

Section 138: Dishonour of Cheque for Insufficiency, etc., of Funds

This section deals with the criminal offense of cheque dishonour (bouncing). If a cheque is returned unpaid due to insufficient funds in the drawer's account or for other specified reasons, the drawer can face legal action.


Punishment for Section 138:


If a person is found guilty of an offence under Section 138, they can be punished with:


Imprisonment: A term of imprisonment which may extend to two years, or Fine: A fine which may extend to twice the amount of the cheque, or Both: Both imprisonment and fine.


Key points related to Section 138:


Criminal Offence: Cheque bounce under Section 138 is a criminal offense, providing a strong deterrent.


Conditions for Offence: For an offence to be made out, certain conditions must be met:


The cheque must have been issued for the discharge of a legally enforceable debt or liability.


The cheque must be presented to the bank within its period of validity (currently 3 months from the date of issue).


The cheque must be dishonoured.


The payee must issue a demand notice in writing to the drawer within 30 days of receiving information about the dishonour from the bank.


The drawer fails to make the payment within 15 days of receiving the demand notice.


A complaint must be filed before a Magistrate within one month of the expiry of the 15-day notice period.


Interim Compensation: Under Section 143A of the NI Act, courts can order the drawer to pay interim compensation of up to 20% of the cheque amount to the complainant at the time of framing charges.


Compounding: Offenses under Section 138 are compoundable, meaning the parties can settle the case outside of court, even after the complaint has been filed, with the court's permission.


Section 139: Presumption in Favour of Holder


Section 139 does not prescribe a punishment directly, but it plays a crucial role in the prosecution of an offence under Section 138. It establishes a statutory presumption.


What Section 139 states:


"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability."


Impact of Section 139:


Shift in Burden of Proof: This section shifts the initial burden of proof onto the accused (the drawer of the cheque). Once the complainant proves that the cheque was issued and dishonoured, and the procedural requirements (like notice) were followed, the court shall presume that the cheque was issued for a legally enforceable debt or liability.


Rebuttable Presumption: The presumption under Section 139 is a "rebuttable presumption." This means the accused has the opportunity to prove the contrary – that the cheque was not issued for a legally enforceable debt or liability.


Standard of Proof for Rebuttal: The standard of proof required for the accused to rebut this presumption is that of preponderance of probabilities, not "beyond reasonable doubt" (which is the standard for the prosecution to prove guilt). The accused can rely on the evidence led by the complainant or bring their own evidence to show a probable defense.


Facilitates Prosecution: Section 139 significantly helps the complainant in cheque bounce cases by not requiring them to initially prove the existence of the debt, as it is presumed by law.


In essence, Section 138 defines the offense and its punishment, while Section 139 provides a crucial legal tool that aids in the prosecution of such offenses by creating a presumption of liability.


BharathAditya

Advocate

High court of Karnataka, Bangalore

9844734166

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