Author: Mayur Vinod Faria

This is Advocate Mayur Faria. I hope you found my information useful.

Important Timelines

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The Negotiable Instruments Act (NIA) is the primary legislation governing negotiable instruments in India. It was enacted in 1881 and has been amended several times since then. The NIA lays down the timelines for various aspects of negotiable instruments, such as:

  • Negotiation: A negotiable instrument can be negotiated within six months of its date of issue or within such longer period as may be specified in the instrument itself.
  • Presentment: A negotiable instrument must be presented for payment within a reasonable time after its date of issue or within such shorter or longer period as may be specified in the instrument itself.
  • Dishonor: A negotiable instrument is dishonored if it is not paid on presentation. The dishonor of a negotiable instrument must be communicated to the drawer and the indorsers within a reasonable time after the date of dishonor.
  • Notice of dishonor: The notice of dishonor must be given in writing and must state the date of dishonor and the reason for dishonor. The notice of dishonor must be sent to the drawer and the indorsers by registered post or by any other means that is reasonably likely to bring the notice to their attention.
  • Filing of a complaint: A complaint under Section 138 of the NIA must be filed within 30 days of receiving the cheque bounce memo from the bank.

It is important to note that these are just the general timelines prescribed by the NIA. There may be specific timelines for certain types of negotiable instruments or for certain situations. For example, the timeline for presentment of a bill of exchange is different from the timeline for presentment of a cheque.

File Criminal Complaint for Cheque Bounce

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You can file a cheque bounce complaint after the expiry of 15 days from the date of receipt of the cheque bounce notice by the drawer. The complaint must be filed within 30 days of receiving the cheque bounce notice from the bank. If the complaint is not filed within 30 days, you will lose your right to file a cheque bounce case against the drawer.

To file a cheque bounce complaint, you need to visit the magistrate’s court in the jurisdiction where the cheque was dishonored or where the drawer resides. You will need to fill out a complaint form and provide the following documents:

  • Cheque bounce memo from the bank
  • Demand notice sent to the drawer
  • Proof of payment of court fees

Once you have filed the complaint, the court will issue a summons to the drawer. The drawer will be required to appear in court on the date of the hearing. If the drawer is found guilty, the court can punish them with imprisonment for up to two years, or a fine that can extend to twice the amount of the cheque, or both.

Send a Cheque Bounce Notice

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According to Section 138 of the Negotiable Instruments Act, 1881, the payee must send a demand notice to the drawer within 30 days of receiving the cheque bounce memo from the bank. The demand notice must be in writing and must clearly state the amount of the cheque, the date on which the cheque was dishonored, and the reason for the dishonor. The demand notice must also give the drawer 15 days to pay the amount of the cheque.

If the drawer fails to pay the amount of the cheque within 15 days of receiving the demand notice, the payee can file a complaint with the magistrate’s court.

It is important to note that the demand notice must be sent within 30 days of receiving the cheque bounce memo from the bank. If the payee fails to send the demand notice within 30 days, they will lose their right to file a cheque bounce case against the drawer.

If you have received a cheque bounce memo from the bank, it is important to consult with a lawyer to understand your legal rights and options.

The provisions prevailing in a cheque bounce case in India are as follows:

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  • Section 138 of the Negotiable Instruments Act, 1881 – This section makes it a criminal offense to dishonor a cheque for insufficiency of funds.
  • Demand notice – Before filing a complaint with the magistrate’s court, the payee must send a demand notice to the drawer asking them to pay the amount of the cheque within 15 days.
  • Complaint – If the drawer fails to pay the amount within 15 days of receiving the demand notice, the payee can file a complaint with the magistrate’s court.
  • Summons – Once the complaint is filed, the court will issue a summons to the drawer.
  • Trial – If the drawer appears in court and pleads not guilty, the court will hold a trial.
  • Punishment – If the drawer is found guilty, the court can punish them with imprisonment for up to two years, or a fine that can extend to twice the amount of the cheque, or both.

In addition to the above provisions, there are a few other things that you need to know about cheque bounce cases:

  • The complaint must be filed within 30 days of receiving the cheque bounce notice.
  • The complaint can be filed with the magistrate’s court in the jurisdiction where the cheque was dishonored or where the drawer resides.
  • The drawer can file a petition for compromise with the payee at any stage of the case.
  • If the drawer and payee reach a compromise, the court will dismiss the case.
  • If the drawer is convicted and sentenced to imprisonment, they can apply for bail.

Cheque bounce cases in India: What you need to know

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A cheque bounce case in India is a legal proceeding against a person who has issued a cheque that has been dishonored by the bank due to insufficient funds in the account. Cheque bounce is a criminal offense under Section 138 of the Negotiable Instruments Act, 1881.

What to do if you receive a cheque bounce notice

If you receive a cheque bounce notice, the first thing you should do is to send a demand notice to the drawer (the person who issued the cheque) asking them to pay the amount of the cheque within 15 days. If the drawer fails to pay the amount within 15 days, you can file a complaint with the magistrate’s court.

What happens in a cheque bounce case

Once you have filed a complaint with the magistrate’s court, the court will issue a summons to the drawer. If the drawer appears in court and pleads guilty, the court can convict them and pass a sentence. If the drawer pleads not guilty, the court will hold a trial. If the drawer is found guilty, the court can punish them with imprisonment for up to two years, or a fine that can extend to twice the amount of the cheque, or both.

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Alpha G184 Owners Association vs M/S Magnum International Trading Company Pvt. Ltd.

The Supreme Court of India has held that the National Consumer Disputes Redressal Commission (NCDRC) erred in adjourning sine die the complaints filed by the Alpha G184 Owners Association against M/S Magnum International Trading Company Pvt. Ltd. The Court held that the pendency of a writ petition before the High Court of Punjab and Haryana challenging the registration of the Association under the Haryana Registration and Regulation of Societies Act, 2012, did not make the complaints not maintainable before the NCDRC.

The Association had filed the complaints alleging that the respondent had failed to construct and complete the promised flats within the timeline agreed upon, and had failed to pay compensation for the delay caused. The respondent had challenged the registration of the Association before the High Court, alleging that the Association’s aims and objectives were not in conformity with the HRRS Act. The High Court had stayed the proceedings before the NCDRC, but had not stayed the operation of the Association’s registration.

The Supreme Court held that the NCDRC had erred in adjourning the complaints sine die. The Court held that the pendency of the writ petition before the High Court did not make the complaints not maintainable before the NCDRC. The Court also held that the NCDRC could have proceeded with the complaints even if the Association’s registration was eventually cancelled.

The Supreme Court’s decision is a victory for the Association and for consumers in general. The decision sends a clear message that the NCDRC will not be deterred from hearing complaints against builders who have failed to deliver on their promises. The decision also reaffirms the importance of the Consumer Protection Act, 2019, in protecting the interests of consumers.

The Supreme Court’s decision is a welcome development for consumers in India. The decision will help to ensure that builders who fail to deliver on their promises are held accountable. The decision will also help to protect the interests of consumers and to promote consumerism in India.

Damayanti Jhunjhunwala Ordered to Pay Rs. 5 Lakh Fine and Cease and Desist from Illiquid Stock Options Trading

The Securities and Exchange Board of India (SEBI) recently imposed a fine of Rs. 5 lakh on Damayanti Jhunjhunwala for engaging in manipulative and deceptive trading in illiquid stock options. This case is a reminder of the risks associated with illiquid stock options and the importance of investors being aware of these risks before trading in these instruments.

Illiquid stock options are those that have low trading volume. This means that there are fewer buyers and sellers in the market, which can make it difficult to buy or sell these options at a fair price. Additionally, illiquid stock options are more susceptible to manipulation by unscrupulous traders.

In the Damayanti Jhunjhunwala case, SEBI found that the individual had engaged in a number of activities that were designed to create artificial volume and price movement in illiquid stock options. These activities included:

  • Reversing trades shortly after execution
  • Placing orders that were unlikely to be executed
  • Trading in illiquid stock options with the intent to manipulate prices

These activities created a false and misleading impression of market activity in illiquid stock options. This had the potential to mislead investors and affect the orderly functioning of the market.

SEBI’s action against Damayanti Jhunjhunwala is a reminder that the regulator is committed to protecting investors from fraudulent and manipulative trading practices. Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.

Here are some tips for investors who are considering trading in illiquid stock options:

  • Do your research. Before you trade in illiquid stock options, make sure you understand the risks involved.
  • Use a reputable broker. When you are trading in illiquid stock options, it is important to use a reputable broker who has experience in this area.
  • Be patient. Illiquid stock options can be volatile, so be patient and don’t expect to make a quick profit.

By following these tips, you can help protect yourself from the risks of trading in illiquid stock options.

SEBI Fines Chitrabai Vasantrao Nikam Rs. 1 Lakh for Illiquid Stock Options Trading

The Securities and Exchange Board of India (SEBI) has imposed a fine of Rs. 1 lakh on Chitrabai Vasantrao Nikam for engaging in manipulative and deceptive trading in illiquid stock options.

The order, dated May 16, 2023, found that Chitrabai Vasantrao Nikam had indulged in a number of activities that were designed to create artificial volume and price movement in illiquid stock options. These activities included:

  • Reversing trades shortly after execution
  • Placing orders that were unlikely to be executed
  • Trading in illiquid stock options with the intent to manipulate prices

SEBI found that these activities had created a false and misleading impression of market activity in illiquid stock options. This had the potential to mislead investors and affect the orderly functioning of the market.

As a result of these findings, SEBI has imposed a fine of Rs. 1 lakh on Chitrabai Vasantrao Nikam and ordered the individual to cease and desist from engaging in such manipulative and deceptive trading.

SEBI’s action against Chitrabai Vasantrao Nikam is a reminder that the regulator is committed to protecting investors from fraudulent and manipulative trading practices. Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.

Here are some additional details about the case:

  • SEBI’s investigation into Chitrabai Vasantrao Nikam’s trading activities was initiated in 2015.
  • The investigation found that Chitrabai Vasantrao Nikam had engaged in manipulative and deceptive trading in illiquid stock options for a period of over one year.
  • SEBI’s order against Chitrabai Vasantrao Nikam is the latest in a series of actions taken by the regulator to crack down on fraudulent and manipulative trading practices.
  • Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.

Unique Article

In addition to the headlines and article above, here is a unique article about the SEBI order against Chitrabai Vasantrao Nikam:

The Chitrabai Vasantrao Nikam Case: A Reminder of the Risks of Illiquid Stock Options

The Securities and Exchange Board of India (SEBI) recently imposed a fine of Rs. 1 lakh on Chitrabai Vasantrao Nikam for engaging in manipulative and deceptive trading in illiquid stock options. This case is a reminder of the risks associated with illiquid stock options and the importance of investors being aware of these risks before trading in these instruments.

Illiquid stock options are those that have low trading volume. This means that there are fewer buyers and sellers in the market, which can make it difficult to buy or sell these options at a fair price. Additionally, illiquid stock options are more susceptible to manipulation by unscrupulous traders.

In the Chitrabai Vasantrao Nikam case, SEBI found that the individual had engaged in a number of activities that were designed to create artificial volume and price movement in illiquid stock options. These activities included:

  • Reversing trades shortly after execution
  • Placing orders that were unlikely to be executed
  • Trading in illiquid stock options with the intent to manipulate prices

These activities created a false and misleading impression of market activity in illiquid stock options. This had the potential to mislead investors and affect the orderly functioning of the market.

SEBI’s action against Chitrabai Vasantrao Nikam is a reminder that the regulator is committed to protecting investors from fraudulent and manipulative trading practices. Investors should be aware of the risks associated with illiquid stock options and should only trade in these instruments with caution.

Here are some tips for investors who are considering trading in illiquid stock options:

  • Do your research. Before you trade in illiquid stock options, make sure you understand the risks involved.
  • Use a reputable broker. When you are trading in illiquid stock options, it is important to use a reputable broker who has experience in this area.
  • Be patient. Illiquid stock options can be volatile, so be patient and don’t expect to make a quick profit.

By following these tips, you can help protect yourself from the risks of trading in illiquid stock options.