Section 138 NI Act - Dishonor due to Kindly contact drawer, drawee bank remark Multiple sources (Sakshi Yadav vs State of U.P. - Allahabad, S.VIJAYAN vs A.MARIMUTHU - Madras, N.Kannan vs M.Arumugam - Madras, G.CHINNASAMY vs S.K.N.JAYAKUMAR - Madras, etc.) 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. Such remarks indicate procedural issues or the need for re-presentation, not dishonor under Section 138.Sakshi Yadav vs State of U.P. - Allahabad, S.VIJAYAN vs A.MARIMUTHU - Madras, N.Kannan vs M.Arumugam - Madras, G.CHINNASAMY vs S.K.N.JAYAKUMAR - Madras
Legal Implication of Contact Drawer/Drawee Bank Endorsement Courts have held that this endorsement alone does not fulfill the criteria for dishonor under Section 138, which requires a clear reason such as insufficient funds, account closure, or signature mismatch. The presence of this remark suggests procedural or banking issues, not a statutory dishonor, unless the cheque is ultimately returned unpaid for valid reasons.Sakshi Yadav vs State of U.P. - Allahabad, M/S.SASIKALA AGENCIES REP BY A.SUNDAR RAJAN vs M/S.REFTECH RESOURCES REP BY K.RAMESH BABU - Madras, G.CHINNASAMY vs S.K.N.JAYAKUMAR - Madras
Re-Presentation and Compliance with Section 138 When a cheque is returned with such remarks, 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, affecting the validity of proceedings under Section 138 (N.Kannan vs M.Arumugam - Madras, M/s.Novelty Reddy and Reddy Motors Pvt. Ltd. vs STATE OF ANDHRA PRADESH - Andhra Pradesh).
Inoperative Accounts and Section 138 An account being inoperative or closed does not automatically constitute dishonor under Section 138 unless the cheque is returned unpaid for reasons like insufficient funds. The courts emphasize that the core requirement is the actual dishonor due to statutory reasons, not procedural endorsements (N.Kannan vs M.Arumugam - Madras).
Legal Precedents and Judicial Views Courts have consistently stated that the endorsement kindly contact drawer/drawee bank does not amount to dishonor unless the bank explicitly returns the cheque unpaid. The complainant must demonstrate that the cheque was dishonored for statutory reasons to invoke Section 138 (M/S.SASIKALA AGENCIES REP BY A.SUNDAR RAJAN vs M/S.REFTECH RESOURCES REP BY K.RAMESH BABU - Madras, RAZAK P.S. vs ASHRAF AGALPADY - Karnataka).
Analysis and ConclusionPresenting the cheque again after receiving a kindly contact drawer, drawee bank remark does not automatically invoke Section 138 of the NI Act. The crucial factor is whether the cheque was dishonored for reasons specified under Section 138, such as insufficient funds. Courts have clarified that procedural remarks alone do not constitute dishonor, and the complainant must establish actual dishonor for the provisions of Section 138 to apply. Therefore, contacting the drawer or drawee bank and re-presenting the cheque is a procedural step, not a statutory requirement under Section 138 unless the cheque is ultimately returned unpaid for valid reasons.
