Does 'Kindly Contact Drawer' on Cheque Return Attract Section 138 of NI Act?
In the world of business transactions, cheques remain a common payment method in India. However, when a cheque bounces, it can lead to serious legal consequences under Section 138 of the Negotiable Instruments Act, 1881 (NI Act). A frequent query arises: Kindly Contact Drawer Whether it Attracts Section 138 of Negotiable Instrument Act? This remark on a cheque return memo often confuses payees (holders). Does it automatically deem the drawer liable for an offence? This blog post breaks down the legal principles, analyzes the implications, and provides guidance based on established case law and statutory provisions.
We'll explore the key elements of Section 138, the meaning of 'kindly contact drawer', procedural requirements, and practical recommendations. Note: This is general information and not specific legal advice. Consult a qualified lawyer for your case.
Understanding Section 138 of the Negotiable Instruments Act
Section 138 NI Act creates a deeming offence for cheque dishonour. If a cheque issued for a legally enforceable debt is returned unpaid due to insufficient funds or exceeds arrangement, the drawer is presumed guilty unless proven otherwise. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court
Key principles include:- The cheque must represent a legally enforceable debt at the time of encashment. Without this, no offence is made out. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court- Section 139 NI Act raises a presumption in favor of the holder that the cheque was issued for discharge of a debt or liability. The drawer must rebut this with evidence; mere denial suffices not. M. C. Subramanyam Reddy VS Balaji Steel Traders Dealers In Iron - Karnataka- Common dishonour reasons like 'insufficient funds', 'account closed', or 'payment stopped' trigger liability if other conditions are met. Subir Sarkar VS Sk. Anisur Rahaman - 2023 Supreme(Cal) 435 - 2023 0 Supreme(Cal) 435
However, not all return remarks lead straight to prosecution. Let's examine the specific phrase in question.
What Does 'Kindly Contact Drawer' Remark Mean?
When a bank returns a cheque with 'kindly contact drawer' or 'please contact drawee bank and present again', it signals an issue requiring clarification from the drawer or bank, such as signature mismatch, stale cheque, or account status verification. Importantly, courts have clarified this does not constitute explicit dishonour under Section 138.
For instance:- Cheques from Sr. Nos. 2 to 9 came with the remarks 'kindly contact drawer'. Summy Bhasin VS State NCT Of Delhi - 2021 Supreme(Del) 2273 - 2021 0 Supreme(Del) 2273Sumit Bhasin VS State NCT of Delhi - 2021 Supreme(Del) 62 - 2021 0 Supreme(Del) 62- Such endorsements indicate a need for further action before legal proceedings. The holder must comply with bank instructions and re-present the cheque. Sakshi Yadav vs State of U.P. - AllahabadS.VIJAYAN vs A.MARIMUTHU - MadrasM/S.SASIKALA AGENCIES REP BY A.SUNDAR RAJAN vs M/S.REFTECH RESOURCES REP BY K.RAMESH BABU - MadrasJatan Kumar Singh VS State of U. P. - Allahabad
Judicial view: A cheque returned with 'kindly contact drawer' or 'please present again' does not automatically amount to dishonour. The bank must explicitly state dishonour reasons, and the complainant should follow due process. Sakshi Yadav vs State of U.P. - AllahabadNikunj Keyal VS Golden Goenka Credit Pvt. Ltd. - Calcutta
Does 'Kindly Contact Drawer' Attract Section 138 Liability?
No, not automatically. While Section 138 applies to dishonoured cheques for legally enforceable debts, a 'contact drawer' remark alone does not fulfill the criteria. Here's why:
Essential Conditions for Section 138 Offence
To attract liability, all these must be satisfied:1. Cheque issued for legally enforceable debt at presentation time. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme Court2. Sufficient funds lacking or exceeds arrangement at issuance. Modi Cements VS Kuchil Kumar Nandi - Supreme Court3. Dishonour due to specified reasons (e.g., funds insufficient, not vague remarks). Modi Cements VS Kuchil Kumar Nandi - Supreme Court4. Payee sends demand notice within 30 days of bank memo, demanding payment within 15 days. Failure to pay triggers offence. Central Bank Of India VS Saxons Farms - Supreme CourtSahiram VS Brijlal - RajasthanRamkrit Jadav VS Samir Kumar Das - Calcutta
If the remark is 'kindly contact drawer', the holder should:- Contact the drawer/bank as instructed.- Re-present the cheque.- Obtain a clear dishonour memo if it bounces again.
Example from records: In cases involving Cheque No. 196949 (dated 30-09-1998), dishonoured on 20-10-1998, notice to drawer under Section 138 was issued on 03-11-1998. Similar for Cheque No. 196948. Atlaz Degi-Tel Pvt. Ltd. and others VS Atlaz Technology Pvt. Ltd. and another - Dishonour Of ChequeAtlaz Degi-Tel Pvt. Ltd. and others VS Atlaz Technology Pvt. Ltd. and another - Dishonour Of ChequeAtlaz Degi-Tel Pvt. Ltd. and others VS Atlaz Technology Pvt. Ltd. and another - 2001 Supreme(Bom) 1080 - 2001 0 Supreme(Bom) 1080
Failure to re-present prematurely invokes proceedings may lead to quashing of complaints, as seen in matters like M/s Muscle Fuelz and Ors. under Section 138. M/S MUSCLE FUELZ & ANR. Vs UNITED SPIRITS LTD. - 2024 Supreme(Online)(Del) 32732 - 2024 Supreme(Online)(Del) 32732
Presumptions and Burden of Proof
Insights from Case Law and Practice
Courts emphasize procedural compliance:- Dishonour for 'kindly contact drawer' is not culpable under Section 138 unless explicit reasons like insufficient funds follow re-presentation. Subir Sarkar VS Sk. Anisur Rahaman - 2023 Supreme(Cal) 435 - 2023 0 Supreme(Cal) 435- Implication: Merely receiving this remark does not suffice for Section 138 action. Adhere to notice under Section 138(b). Sakshi Yadav vs State of U.P. - Allahabad
In Criminal Procedure Code Section 200 contexts with NI Act Section 138, vague endorsements do not sustain complaints without due process. Subir Sarkar VS Sk. Anisur Rahaman - 2023 Supreme(Cal) 435 - 2023 0 Supreme(Cal) 435
Practical Recommendations
If you receive a 'kindly contact drawer' memo:- Immediately contact the drawer and bank to resolve (e.g., verify account, funds).- Re-present the cheque promptly after compliance.- Issue legal notice only on confirmed dishonour, within timelines.- Gather evidence: Debt proof, issuance circumstances, bank memos.- Review case law like those on presumptions under Sections 118/139. M. C. Subramanyam Reddy VS Balaji Steel Traders Dealers In Iron - Karnataka- Consult a legal professional for tailored advice, as facts determine applicability.
Pro tip for businesses: Maintain digital records of transactions to rebut presumptions if needed.
Conclusion and Key Takeaways
A cheque returned with 'kindly contact drawer' does not automatically attract Section 138 NI Act liability. It requires explicit dishonour confirmation post-re-presentation, proper notice, and proof of enforceable debt. While presumptions favor the holder, procedural lapses can derail cases. Dashrathbhai Trikambhai Patel VS Hitesh Mahendrabhai Patel - Supreme CourtSakshi Yadav vs State of U.P. - Allahabad
Key Takeaways:- Treat such remarks as procedural hurdles, not offences.- Follow bank instructions to avoid complaint dismissal.- Section 138 protects genuine creditors but demands compliance.- Always seek professional legal counsel for specifics.
Disclaimer: This article provides general insights based on legal principles and does not constitute advice. Laws evolve; verify with current statutes and precedents.
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