Does 'Kindly Contact Drawer/Drawee Bank & Present Again' Constitute Dishonor Under Section 138 NI Act?
In the fast-paced world of business transactions, cheques remain a cornerstone of financial dealings in India. However, when a cheque bounces, it can lead to serious legal repercussions under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). But what happens if the bank returns your cheque with the ambiguous remark: Kindly Contact Drawer/Drawee Bank and Present Again? Does this count as a dishonor triggering criminal liability?
This common query arises frequently: Kindly Contact Drawer Drawee Bank and Present again Whether its Applicable under Section 138 of Ni Act. In this post, we dive deep into the legal nuances, drawing from judicial precedents and statutory interpretations to clarify this issue. Note: This is general information and not specific legal advice. Consult a qualified lawyer for your case.
Understanding Section 138 of the NI Act
Section 138 NI Act addresses the dishonor of cheques due to insufficient funds or exceeding the arranged amount. For an offense to be made out, several conditions must align:
- The cheque must be presented to the drawee bank within its validity period.
- It must be returned unpaid for specified reasons.
- The payee must issue a demand notice within 30 days of dishonor information.
- The drawer fails to pay within 15 days of the notice.
The key? Dishonor must be for a statutorily recognized reason. Procedural or ambiguous endorsements don't suffice.
Nagalakshmi VS Kadar Basha - Dishonour Of Cheque (2011)
As held in K. Bhaskaran v. Sankaran Vaidhyan Balan, the offense completes only with the concatenation of several acts, including the return of the cheque unpaid by the drawee bank. Mere return without a clear 'insufficient funds' or similar memo doesn't activate Section 138.
Nagalakshmi VS Kadar Basha - Dishonour Of Cheque (2011)
Analyzing the 'Contact Drawer/Drawee Bank' Remark
The endorsement Kindly contact drawer, drawee bank and please present again is not a definitive dishonor. Courts have repeatedly ruled it indicates procedural issues, such as mismatched signatures, technical glitches, or the need for verification, rather than insufficiency of funds.
N.Kannan vs M.Arumugam - Madras
For instance:- In one case, the cheque was returned with Kindly Contact Drawer Drawee Bank, and the court quashed proceedings, noting it didn't constitute statutory dishonor. 2024 Supreme(Online)(Del) 32732- Another judgment emphasized: It was admittedly also not returned dishonoured for insufficient funds but with the memo bearing the reason 'kindly contact the drawer/drawee bank and please present again'. 2020 0 Supreme(Bom) 669
Multiple High Court rulings affirm: Such remarks suggest re-presentation after resolving banking issues, not invoking Section 138. 2025 0 Supreme(All) 3253 2023 Supreme(Online)(MAD) 45751 2021 Supreme(Online)(MAD) 8951 2023 Supreme(Online)(Mad) 82728
Why It Doesn't Qualify as Dishonor
- No Statutory Reason: Section 138 requires explicit grounds like 'funds insufficient' or 'account closed'. Ambiguous notes fall outside. 2018 0 Supreme(MP) 973
- Drawee Bank Focus: Per Shri Ishar Alloy Steels Ltd. v. Jayaswals Neco Ltd., presentation must be to the drawee bank, and dishonor confirmed there. Collecting bank's memo alone isn't enough. 2011 0 Supreme(Mad) 3099
- Procedural Nature: It implies the cheque hasn't been properly processed. Re-present after contacting parties. Failure to do so weakens any complaint. 2021 Supreme(Online)(MAD) 8951 2024 Supreme(Online)(AP) 2980
In Lalit Mohan Pandey's case, the cheque returned with ‘Kindly Contact Drawer Drawee Bank’ didn't sustain conviction under Section 138. 2024 Supreme(Online)(Del) 32732
Legal Precedents and Judicial Insights
Courts consistently quash complaints based solely on this remark:
The Supreme Court in Modi Cements v. Kuchil Kumar Nandi clarified even 'stop payment' attracts Section 138 if presumption under Section 139 holds, but procedural endorsements don't equate. 2014 7 Supreme 695
Key Takeaway from Sources: Multiple sources... clarify that a cheque returned with the endorsement kindly contact drawer, drawee bank and please present again does not constitute dishonor due to insufficient funds or other statutory reasons.2025 0 Supreme(All) 3253 2023 Supreme(Online)(MAD) 45751 2021 Supreme(Online)(MAD) 8951 2023 Supreme(Online)(Mad) 82728
Steps to Take If You Receive This Remark
Don't rush to file a complaint. Follow these generally recommended steps:
- Contact the Drawee Bank Immediately: Clarify the issue (e.g., signature mismatch, account status).
- Communicate with Drawer: Seek confirmation or resolution.
- Re-Present the Cheque: Within validity, after fixes. Document everything.
- Monitor Return Reason: Only if returned for 'insufficient funds' etc., proceed with demand notice.
- Preserve Records: Bank memos, communications – crucial evidence.
The complainant must follow the bank's instructions and re-present the cheque after addressing the issue. Failure to do so may lead to the conclusion that the dishonor was not due to insufficient funds.2021 Supreme(Online)(MAD) 8951
Common Pitfalls in Cheque Bounce Cases
Inoperative accounts or similar don't auto-trigger unless tied to statutory reasons. 2021 Supreme(Online)(MAD) 8951
Conclusion and Key Takeaways
Generally, a cheque returned with Kindly Contact Drawer/Drawee Bank and Present Again does not invoke Section 138 NI Act. It signals procedural hurdles, requiring re-presentation for true status. Courts prioritize actual unpaid return for specified reasons, protecting genuine transactions from hasty litigation. 2018 0 Supreme(MP) 973 2011 0 Supreme(Mad) 3099
Key Takeaways:- Re-present after contacting parties.- Document all steps meticulously.- Only statutory dishonor (e.g., insufficient funds) sustains action.- Promote cheque credibility – the legislative intent of Section 138. 2023 0 Supreme(Cal) 1372
If facing a cheque issue, seek professional advice tailored to facts. Stay informed, act prudently.
#Section138, #NIACT, #ChequeBounce
