A Section 138 Complaint and a Request for a 'Certificate'
Sharma Traders, a hardware supplier in Meerut, supplied goods worth ₹4,85,000 to Verma Enterprises, a proprietorship. Suresh Verma, the proprietor, issued a cheque dated 10 March 2025 for the full amount on his account at your branch. Sharma deposited it on 14 March at his own bank, and it was returned on 18 March with the memo "insufficient funds". Your branch debited Verma's account with the return charges and informed him by telephone on 19 March. Sharma's advocate issued a demand notice dated 3 April by speed post and by email. The email was delivered on 4 April; the speed post was returned on 10 April marked "refused". On 20 April Verma paid ₹1,00,000 by NEFT and asked for three months' time. Sharma filed a complaint under Section 138 of the Negotiable Instruments Act on 15 May 2025. Verma's advocate now writes to your branch asking for a certificate that the cheque was "not validly presented".
1. Is the complaint within limitation? Work through the dates and deal with the part payment.
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Return memo 18 March 2025. The payee must give the demand notice within 30 days of receiving information of dishonour - i.e. by 17 April. The notice dated 3 April is well within time.
Service. The email was delivered on 4 April. The speed post was refused on 10 April, and refusal is treated as good service. The drawer therefore had 15 days from receipt to pay, that is until 19 April, and he did not pay.
Cause of action arose on 20 April, when the 15-day period expired without payment. The complaint must be filed within one month of that date - by 20 May 2025. Filed on 15 May, it is within limitation.
The part payment of ₹1,00,000 on 20 April changes none of this. It does not extend the limitation period, does not condone the dishonour and does not extinguish the offence, which was complete when the 15 days ran out. Its effect is on the amount the court may direct to be paid and on sentencing or compounding. The drawer's request for three months' time is worth a good deal less than it looks: a request for time after the cause of action has arisen is not the same as payment within the statutory window.
One further point in the bank's own file: the cheque was dated 10 March and presented on 14 March, comfortably inside its three-month validity, so there is no answer on that ground either.
2. Suppose the cheque had instead been returned because Verma had issued a stop-payment instruction. Would that change the outcome?
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No, it would not help the drawer. Section 138 is not confined to "insufficient funds". It also covers a cheque returned unpaid because the amount exceeds the arrangement to pay, and the courts have consistently held that dishonour following a stop-payment instruction attracts the provision, provided the cheque was issued for a legally enforceable debt or liability and the other conditions - presentation within validity, notice within 30 days, 15 days to pay, complaint within a month - are met. The offence is the dishonest return of a cheque given in discharge of a debt, and a drawer cannot escape it by instructing his bank to stop payment on his own cheque.
A stop-payment instruction given before the cheque is presented and communicated to the payee could alter the character of the transaction - for instance, where the underlying supply was never made, or where the cheque was issued as security and not in discharge of a debt. Those are defences on the debt itself, decided by the criminal court on evidence.
The branch's task in either case is the same and purely factual: record the reason for return accurately at the time, retain the cheque image with the reason code, and issue a return memo that says exactly what the system said. If the drawer now asks the bank to describe the presentation as invalid, or to characterise a stop-payment return as something other than what it was, the answer is no - the bank records facts, it does not endorse a litigant's theory.
3. How should the branch respond to the request for a certificate, and what must it preserve?
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Refuse the certificate; provide facts only under legal process.
A request from the drawer's advocate is not a legal process. The branch should reply, in writing and courteously, that it cannot issue characterisations such as "not validly presented" - that is a question of law for the court - and that it will furnish factual records to the customer or to a court of competent jurisdiction as required by law. If Verma himself asks for his own account statement and a copy of the return memo, those are his records and can be given to him on proper identification and with the applicable charges.
The governing points are the banker's duty of secrecy and the Bankers' Books Evidence Act, 1891: certified copies of entries, the cheque and the return memo may be given when a court summons or orders them, and an authorised officer should be nominated to produce them and, if required, to appear.
Preserve, now:
- The original cheque or its scanned image, with the clearing schedule and the return reason code.
- The return memo and the proof of despatch to the collecting bank.
- CBS entries for the presentation, the dishonour and the return charges, with timestamps and the user IDs.
- The telephone note of 19 March and the call log.
- The account statement from the date of the cheque to date.
Finally, confirm that the return charges debited were those in the bank's published service-charge schedule; a charge outside the schedule would be a small but avoidable embarrassment in a case where the bank is otherwise only a witness.