Legal Question in Banking Law in India

cheque bouncing

I have deposited 3 cheques issued to me, which was issued to me onbeahlf the firm signed by the managing director, as security for the amount received from me by the firm, which has running business. The cheque deposited through my bank which was return with the remarks that signatory no more ( chairman died due to illness). I have presented the cheque within six months validity period. At the time there was no sufficient cash in the firms account, with the help of the Bank manager they had sent with the remarks that signatory no more.

Could you kindly clarify whether this is covered under the banking law?


Asked on 3/25/08, 10:20 am

4 Answers from Attorneys
Aniruddha Pawse Aniruddha.P.Pawse Advocates

Re: cheque bouncing

Can you prove in court that the real reason is funds insufficient if you can proceed u/s 138 of ni act otherwise take a replacement of cheque from the firm.

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Answered on 3/26/08, 6:18 am

Re: cheque bouncing

if the cheque was issued by the company through its director the dishonouring of the same is liable to be prosected u/s.138 N.I.Act.

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Answered on 3/26/08, 2:00 pm
Homi Maratha N.N. Maratha & Co.-Advocates

Re: cheque bouncing

If the director of the company hs issued the dishonoured cheque then he is liable to prosecuted under section 138 of Negotiable Instruments Act.

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Answered on 3/26/08, 2:15 pm
J. Radhakrishnan independent Practice

Re: cheque bouncing

If the cheque is drawn in the name of the company, the death of the authorized signatory does not make the cheque as issued by a dead person as the company/firm is still in existence notwithstanding the death of the authorized signatory. You can proceed against the firm/company represented by its director/present controlling partner under Sec.138 of the N.I.Act, if by directing the Bank to produce the account to show that the real reason for return of the cheque is not the death of the signatory but insufficiency of funds. As proceedings under Sec.138 of N.I.Act are long winding, it is better to proceed against the company by way of civil suit for recovery of te amount

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Answered on 3/25/08, 2:42 pm


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