cheque returned as account blocked whether 138 NI applicable

[Murari Todi]

Two cheques were returned as the account was blocked by Sales Tax department. These cheques were blank cheques issued two years prior to presentation.
Whether 138 of Negotiable instrument act is applicable?

[Dr. Ashok Dhamija]

Yes, even if the reason for return of the cheque is “account blocked”, a case of cheque bounce under Section 138 of the Negotiable Instruments Act can be made out, if other conditions (such as with regard to notice, the cheque being to discharge debt or liability, etc.) are fulfilled.

You have not clarified as to whether you are the drawer of the cheque or payee of the cheque. If you are drawer of the cheque, you can take the defence that blank cheques were issued prior to the account was blocked and that the account was blocked by the Government authorities which is beyond your control. Moreover, in such scenario, when you get the notice about dishonour of the cheque, if you pay the amount as per the notice then no cheque bounce case would be made out.

     

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Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers. List of his YouTube Videos.

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