If a cheque was issued and the bank returns that cheque unpaid by giving the reason “no such account”, then it can generally happen in the following two situations:
(1) If the cheque was genuine, then it means that previously there was a bank account for which the cheque book must have been issued by the bank and the returned cheque was issued from such account; but by the time the cheque was presented to the bank, the account would have been closed due to which the bank gave the reason for the return of the cheque as “no such account”, which in this situation is equivalent to saying that the “account is closed”. In such a situation, it would amount to an offence of cheque bounce under Section 138 of the Negotiable Instruments Act (because of the amount of money standing to the credit of that account is insufficient to honour the cheque or it exceeds the amount arranged to be paid from that account by an agreement made with that bank), provided other conditions mentioned in that section are satisfied. There are judgments to show that Section 138 offence is made out when the cheque is returned unpaid on the grounds of “account closed”.
(2) On the other hand, if the cheque was not genuine, then that means that the cheque might have been a forged one or that the account never existed in the bank. In such a situation, issuing of such a cheque by the drawer when no such account existed, may even amount to the offence of cheating under Section 420 of IPC.
There does not appear to be any decided Supreme Court case on the issue of “no such account”. However, in the case of Subodh S. Salaskar v. Jayprakash M. Shah, (2008) 13 SCC 689 : AIR 2008 SC 3086, which was decided by the SC, the cheque was returned on the reason of “no such account”, but this case was decided on other issues. In that case, the cheque was issued as a post-dated cheque in 1996 and it was presented in bank in 2001, by which time the account had been closed. Due to this reason, the cheque was returned on the ground of “no such account”. However, in this case, the complaint under Section 138 of the N.I. Act was filed after delay beyond the limit permissible in the N.I. Act. Therefore, this case was decided on the issue of delay.
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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