Legal Question in Banking Law in Bangladesh

Re: Regarding Regarding Negotiable instruments Act 138

Please find our answer in chronology as follows:

1. Section 141 of the Negotiable Isntruments Act, 1881 (the Act)makes it evident that where the person committing the office under S.138 of the Act is a company, then in addition to the company, every person who at the time of the offence was in charge of and was responsible to the company for conducting its business, shall be deemed to be guilty. As such, both the company and the person in charge of and responsible to the company shall be proceeded against. However, there is a proviso to this Section which allows a person who proves that the offence was committed without his knowledge or proves that he exercised due diligence to prevent commission of the offence would not be liable for punishment.

Therefore, your short answer to question 1 is that both the company and person in charge of and responsible for the conduct of business of the company may be proceeded againt.

2. Please refer to answer 1 above.

3. Section 138 of the Act will be applicable only where all the following procedures have been met: (i) the cheque is presented for payment within a period of 6 months from the date on which it is drawn or within the period of its validity, which ever is earlier; (2) Bank C has made a demand for payment by registered notice after the cheque is returned unpaid (this demand is to be made within 30 days of receipt of information from the bank that the cheque has been returned unpaid); (3) X and/or the company has failed to pay the amount demanded within 30 days of the receipt of the notice.

Re: Regarding Regarding Negotiable instruments Act 138

1. If the MD acted in his capacity as a Director representing the company, then the company as a legal entity would be liable generally.

2. However, both civil and criminal liability can arise. The precise nature of the complaint must be seen. In certain cases the Director could also be held personally liable.

3. Once the cheque bounces, notice would be served and time would be given to pay. After that proceedings could be instituted.

Re: Regarding Regarding Negotiable instruments Act 138

1. Proceeding under section 138 and 140 of the Negotiable Instrument Act will initiated against the company as well as the persons who are in charge of responsible to the company for the conduct of business of the company.

2. Under the provision of the Negotiable Instrument Act both X and the company are liable for issuance of those cheques.

3.the following conditions must be met: a) cheque must be dishonoured due to insufficiency of fund

b) cheque must be presented to the bank within six months from the date of issuance

c) A legal notice must be sent to the drawer of the cheque or published in any daily newspaper within one month from the date of dishonour

d)If the drawer does not pay the amount within one month from date of receipt/publish of notice the payee will file a case within next one month