Navigating Legal Remedies When a Cheque Dishonor Case Is Dismissed

Cheque dishonor cases are a prevalent concern in commercial transactions, and addressing them requires a precise understanding of legal principles. This article delves into the intricacies of such cases through a case study and provides a comprehensive legal pathway for individuals facing similar situations.

The Case of Shaheen and Rafique

Shaheen, a diligent entrepreneur, extended financial assistance of BDT 5 lakh to a neighboring businessman, Rafique, who promised repayment within a stipulated period. As collateral, Rafique issued a cheque. However, when Shaheen eventually deposited the cheque, it was dishonored due to insufficient funds. Upon confrontation, Rafique requested additional time, assuring full repayment.

Weighing the potential costs and consequences of litigation—including filing fees, lawyer expenses, and the disruption to his business—Shaheen opted to delay legal action. He was also mindful of the impact litigation could have on their professional relationship, given that they operated within the same business community.

Observations on Cheque Dishonor Cases

In practice, many cheque dishonor disputes are resolved through settlements during litigation. The procedural timeline for such cases is relatively expedited, with judgments typically rendered within 2–3 years, provided there are no procedural lapses.

Notably, the Negotiable Instruments Act, 1881, mandates that defendants deposit 50% of the cheque amount to appeal an unfavorable judgment. Failure to comply may result in incarceration, creating a strong incentive for settlement. However, the time and resources expended by plaintiffs, like Shaheen, during the process are irreversible.

The Importance of Timeframes

Legal remedies under Section 138 of the Negotiable Instruments Act, 1881, are strictly time-sensitive. A cheque must be presented to the bank within six months of the date of issuance. Failure to adhere to this timeframe extinguishes the right to pursue a criminal case under this provision.

For example, during a recent case before the Joint District Judge Court, a complaint was dismissed because the plaintiff presented the cheque to the bank and filed the case just four days after the six-month period had lapsed. Such dismissals highlight the critical importance of adhering to procedural timelines.

Unfortunately, Shaheen found himself in a similar predicament. By accommodating Rafique’s requests for extensions, he inadvertently allowed six months to lapse, rendering his cheque dishonor case inadmissible.

Exploring Legal Alternatives

If a cheque dishonor case is dismissed or appears time-barred, it is imperative to seek alternative legal remedies without delay. Importantly, dismissal under Section 138 does not negate the right to recover the debt.

The Negotiable Instruments Act, 1881, is fundamentally a civil law governing financial instruments such as cheques, promissory notes, and bills of exchange. While Section 138 introduces criminal penalties for cheque dishonor, the Act’s foundational nature remains civil.

As clarified in Lutfur Rahman vs. State and Others, 30 BLT (HCD) 497, litigants retain the right to pursue recovery through civil courts, even if the statutory period under Section 138 has elapsed. The judgment emphasized that incorporating a criminal penalty provision does not transform the Act’s civil nature.

Remedies in Civil Court

When criminal proceedings are no longer viable, the aggrieved party can file a civil suit to recover the outstanding amount. While civil litigation may take longer, it protects the plaintiff’s financial rights. Plaintiffs are advised to act promptly to minimize delays and secure their claims effectively.

Procedure for Filing a Cheque Dishonor Case

1. Dishonor the Cheque: Ensure the cheque is dishonored within six months of the date mentioned on the cheque. Upon dishonor, the bank will issue a dishonor slip.
   
2. Send a Legal Notice: Engage a lawyer to send a legal notice to the cheque issuer’s address. The notice should inform them of the dishonor and demand payment of the due amount within 30 days.
   
3. File the Case: If the cheque issuer fails to settle the amount within 30 days of sending or receiving the legal notice, you must file a cheque dishonor case in the Magistrate’s Court within the following 30 days.
   

Conclusion

The Negotiable Instruments Act, 1881, offers dual remedies—criminal and civil—for addressing cheque dishonor cases. However, adherence to procedural timelines is crucial for criminal proceedings. For individuals like Shaheen, who miss these deadlines, civil litigation provides a viable pathway to reclaim their dues.

Although civil recovery may require additional time and effort, the law upholds the right to recover owed amounts. As legal practitioners, we have to guide clients effectively through these remedies, ensuring their interests are safeguarded and justice is served.