Remedy for dishonoured cheque in Bangladesh
by Miss Mardhiha Chowdhury Anika
Dishonour of Cheque can be treat as a condition in which bank refuses to pay the amount of cheque to the payee. As per section 138 of the Negotiable Instrument Act, 1881, where any cheque drawn by a person on an account which were maintained by him with a banker for payment of any amount of money to another person and if from out of that account either whole or partly of any debt or other liability is returned by the bank unpaid because of the amount of money standing to the credit of that either the 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 the bank then such person shall be deemed to have committed an offence.
The first situation would arise whenever the cheque is dishonored the drawee means bank will instantly issue a ‘Cheque Return Memo’ to the payee and the banker shall specified the reasons for such either for shortage of amount or the word does not match with the figured amount or others. There is a common misconception that Cheque dishonour related proceedings can only be initiated in case of insufficiency of fund. However, in Khalilur Rahman v Md. Habibullah (57 DLR 603), the Hon’ble High Court Division in clear words opined that the parliament never intended that dishonour of cheque to be made punishable only in case of insufficiency of funds or exceeds the amount arranged to be paid since the word etc. has also been used there by the caption of the section and it can be presumed that legislature contemplated various other reasons where the cheque is dishonoured. So in effect if someone ask the bank to stop payment on a valid cheque, it can also be prosecuted under Section 138 of the NI Act.
Then after return of the cheque the payee have to serve a legal notice in writing to the drawer within thirty days from the date of receiving “Cheque Return Memo” or dishonored of cheque from the bank. The notice be served-
I. Either by delivering it to the hand of that person.
II. Or, by sending it through registered post with acknowledgement due to his usual or last known place or the place of carrying on business in Bangladesh.
III. Or, by publication in a daily Bengali national newspaper having wide circulation.
In the notice the date should specified that the amount will be paid to the payee within thirty days from the date of receipt of the notice by the drawer. If the drawer fails to make a fresh payment within thirty days of receiving the notice then the cause of action should arise and the payee will get the right to take legal action against the defaulter as per Section 138 of the Negotiable Instruments Act.
After that the payee can file a complaint registered suit to the magistrate’s court within one month of the receipt of the acknowledgment slip of such legal notice and the punishment for this offence is imprisonment for a term of one year or/with fine extend to thrice of the amount of the cheque. It is also pertinent to mention here that for each dishonoured cheque, separate case has to be filed. In Ahsan Habib Chowdhury v Multidrive Ltd. [14 BLC (2009) 66], the Hon’ble High Court Division opined that one cheque will give rise to one case.
Besides this complaint registered petition under the Negotiable Instrument Act,1881 the payee can also fill suit under the Code of Civil Procedure,1908 suits for recovery and he is not precluded to do that as both of the remedies may simultaneously be possible because a civil suit cannot debars the criminal prosecution.
On the other hand the payee can also file a suit under section 420 for cheating under the Penal Code, 1860 as same stated in the case of Abdul Khair Chandu vs. State (criminal) 65 DLR 230 (HCD) said if the drawer does not arrange the payment of the cheque money within stipulated time than such act may constitute an offence of cheating which is punishable under section 420 of the Penal Code.
It is also to be noted that by virtue of amendment of Section 138 of NI Act in 2006, it is now a pre-requisite that for filing an appeal under Section 138, the Convict-Appellant needs to deposit 50% of the judgement amount to the appeal court. It was challenged in number of writ petitions as being unconstitutional, however, the Hon’ble High Court Division has conclusively held that deposit of the pre-requisite amount is not unconstitutional.
In Feroz Uddin v Eshan Re-Rolling Mills Ltd (29 BLD 684), the Hon’ble High Court Division also accepted a settlement between the parties at the Appeal stage.
At the last it can be seen that for dishonor of cheque the payee have the above mentioned remedies and he can apply for one or all.