Deliberate cheque dishonour — misdemeanour or serious crime?

At present, even a business organisation cannot operate its daily activities without maintaining a bank account. Despite the massive development of alternative delivery channels like Internet Banking, BEFTN (Bangladesh Electronic Funds Transfer Network), RTGS (Real Time Gross Settlement) and many other different aspects of digital banking in the recent past in Bangladesh, people are still comfortable enough to use cheques for their personal and business transactions. In case of large business transaction, using cheque is obviously the best way in context of our country due to security issues. Besides, introduction of Automated Clearing House reduces the time for interbank balance transfer via cheques.

Due to the high number of transactions via this mode, the possibility of a cheque being dishonoured is significantly high. As such, the receiver of cheques must have adequate and effective legal recourse, which they can entertain when they do face this situation. Recently, a famous film actor has been accused in a case of dishonouring cheque and filing of such cases are almost regular happenings with various judicial courts across our country. Because of a lack of honesty and ethical practice, people deliberately issue cheques without having funds available in their bank accounts. It may seem to be a misdemeanour only, it is, in fact, a serious crime in practical judgement.

Bangladesh government as well as the Bangladesh Bank has taken a number of steps to provide sufficient legal remedy in order to protect and pull in this state. The following discussion will be focused on prevailing cheque dishonour law in our country:

n The most vital law that has been enacted to provide legal remedy against such situation is called Negotiable Instruments Act, 1881 (Act No. XXVI of 1881). Section 6 of this Act has defined what comprises as cheque, which states that "a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand". Furthermore, a cheque has also been defined in case of laws as an order upon a debtor by a creditor to pay to another person the complete or portion of a due. When a cheque does not get cleared due to insufficient fund or if the debtor who issued the cheque to the creditor instructed his bank to dishonour the said cheque or for any other reason, than the redress will lie under Section 138 of the afore-mentioned Act.

n Section 138 of the Negotiable Instrument Act, 1881 makes it clear that whenever a cheque is bounced, then accepted as correct until proved otherwise an unscriptural guilt is created, which entails punishment of criminal nature that may include 01 (one) year captivity or fine, which may prolong to three times the value of the dishonoured cheque or both. Moreover, the person regretful also have a civil redress under the same section, and to achieve the civil remedy, the person needs to fulfil some steps.

n The first issue the court will assess is whether the cheque was presented to the bank for withdrawal within six months of it being given to the person regretful. If the cheque was presented to the bank for withdrawal any time after six months of it being given to the person regretful, then the court will not allow the claim. Considering the cheque has been presented within the valid period of time and if it is dishonoured, then as per Section 138 of Negotiable Instrument Act, 1881, the regretful person must send a written notice via registered post with acknowledgment due to the person, who has given the cheque demanding the money back.

n This notice demanding the money back must be sent within 30 days of the cheque being bounced, that is, when the regretful person got notified that the cheque that was given bounced due to insufficient fund or any other reason. Again, if the notice demanding the money is not sent within the constitutive time, the court will not provide any redress. After the above-mentioned process is fulfilled and the person who has been given the notice does not pay back the money within 30 days of receiving the said notice, then the mortified person will be allowed to bring a civil claim against that person for recovery of the money.

Last but not the least, dealing with a dishonoured cheque is always an embarrassing experience for the recipient. Still, law has the arrangement for legal redress in such cases favouring the beneficiary. But one must maintain all requisite processes before bringing in such a claim. The Negotiable Instrument Act 1881, which was enacted more than almost 150 years ago, is still effectively functional. Hence we see that the law of the land has enough provision for providing the holder of dishonoured cheque with due legal protection and forcible redress.

Sk. Shamim Iqbal is serving the R&D

Division of a leading commercial bank.

[email protected]