Applicability Of Section 138 Of N.I Act On Post Dated Cheques
At the very outset, it must be understood that the nature of post-dated cheques is such that it acts as a two-fold weapon in the hands of the lenders by means of which they pressurise the borrowers as well as create a deterrent impact on all the other borrowers or debtors so that there is no room for default on repayment of outstanding debt to the creditors. The major penal consequences of dishonour of cheques have been codified in section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred as the “Act, 1881”) which has created a sense of fear and anxiety in the minds of the borrowers.
The impact of Section 138 of the Act, 1882 operates differently on the borrowers on one hand and the lenders on the other. In other words, this provision of law is hailed by the lenders whereas the borrowers dread it the most as the dishonour of cheques may lead to months of imprisonment. The text of the said section is reproduced below
“Dishonour of cheque for insufficiency, etc., of funds in the account
138. Dishonour of cheque for insufficiency, etc., of funds in the account. Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid either because of the amount of money standing to the credit of that 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 that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year, or with fine which may extend to twice the amount of the cheque, or with both:
Provided that nothing contained in this section shall apply unless
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