cheque bounce: In an important decision, the Allahabad High Court has said that dishonour of cheques of banks which have been merged with another bank will not constitute an offence under Section 138 of the NI Act.
Check bounce case: In an important decision, the Allahabad High Court has said that dishonour of cheques of banks which have merged with another bank will not constitute a crime under Section 138 of the NI Act. If the cheque bounces, the person who issued it will not be prosecuted under Section 138 of the NI Act. Justice Arun Singh Deshwal has given this order while accepting the petition of Archana Singh Gautam of Banda in the case of dishonour of cheques of a bank which has merged with Indian Bank.
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The petitioner issued a cheque to the opposite party on 21 August 2023 which he presented to the bank on 25 August 2023. The bank declared it invalid and returned the cheque. On which the opposite party filed a complaint of cheque bounce against the petitioner under 138 NI Act. The petitioner challenged the summons order issued by the court in the High Court.
The court said that according to section 138 of the NI Act, if a voided cheque is presented to the bank and is rejected by the bank, then the offence under section 138 is not constituted. Allahabad Bank merged with Indian Bank on 1 April 2020 and its cheques were valid till 30 September 2021. After this, if the bank invalidates the cheque presented, then a case of cheque bounce is not made. The court said that according to the NI Act, the cheque issued should be valid, only then a crime is constituted when it bounces.
