Generally speaking, in the case of a cheque bounce, an offence under Section 138 of the Negotiable Instruments Act is made out, and not under Section 420 IPC. Therefore, when a cheque is dishonoured, a complaint should be filed in the competent court for the offence under Section 138 of N.I. Act, after satisfying other ingredients of the offence under that section.
However, there may be some situations when an offence under Section 420 IPC may be made out in the case of a cheque bounce. For example, if the person who has issued the cheque has already closed his bank account; and knowing fully well that he has already closed his bank account, he still issues a cheque to some other person and takes delivery of some goods against that cheque; in such a situation, the intention of the person issuing cheque is clearly dishonest since he knows very well that the cheque would not be honoured as he had himself already closed his account, and with this dishonest intention since the inception he has cheated the other party by making him deliver the goods to him for that cheque which was never intended to be honoured. So, this may perhaps be one example where offence under Section 420 IPC can be made out for cheque bounce. There may be other similar situations when the offence of cheating under Section 420 IPC could be made out in cheque bounce.
However, generally speaking, as mentioned above, in cheque bounce, the offence under Section 138 of Negotiable Instruments Act only is made out.
Please keep in mind that offences under Section 138 N.I. Act and Section 420 IPC are two different offences altogether. Whether this offence or that offence is made out would depend on the facts of each case. You’ll have to check the ingredients of which particular offence are satisfied from the facts of your case. See the provisions of Section 420 IPC, which is reproduced below and check whether these ingredients are satisfied, and if yes, then the cheating case is made out, otherwise if only the ingredients of Section 138 N.I. Act are satisfied then you’ll have to file the case under that section alone.
“420. Cheating and dishonestly inducing delivery of property.—Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.”
Offence of cheating requires that there should a dishonest intention since the beginning to cheat, and then, other ingredients of that offence (as mentioned above) should also be satisfied. If these conditions are satisfied, then the offence of cheating can be made out even in a cheque bounce case. But, as mentioned above, generally speaking, for a cheque bounce case, offence under Section 138 N.I. Act only is made out, and that too, if conditions mentioned in that section are satisfied. Please read for more details: Cheque bounce cases under Section 138 Negotiable Instruments Act Explained.
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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