Notice, Complaint, and Section 138 of the NI Act: Understanding Dishonour of Cheques
The introduction of cheques revolutionized the commercial and corporate world. Instead of carrying large sums of cash, people found it convenient and safer to carry a small piece of paper called a cheque. Cheques quickly became an essential part of banking, commerce, industry, and the economy overall. However, as the use of cheques increased, so did the misuse. Many people started issuing cheques without having enough funds in their bank accounts, with no intention to honor the payment. Before 1988, there was no strong legal provision to control or punish this behavior. Although a dishonoured cheque created a civil liability, recovering the money through civil lawsuits was a slow and difficult process. Need for Stronger Laws To address this growing issue, the Indian government amended the Negotiable Instruments Act, 1881. Through the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988, and later the Negotiable Instruments (Amendment and Mi...