CA Foundation · Business Laws · The Negotiable Instruments Act, 1881
Deepak's cheque for Rs 80,000 to Farida is returned by the bank with the memo 'funds insufficient'. Farida wants to start action under Section 138. What is the first step she must take within the prescribed time?
Farida must send Deepak a written demand notice for the Rs 80,000 within 30 days of receiving the bank's return memo. Only if Deepak fails to pay within 15 days of receiving the notice can she file a complaint under Section 138. Skipping the notice would make a complaint premature.
- AFile a criminal complaint directly in court within 7 days
- BPresent the cheque again to the bank after one year
- CGive a written demand notice to Deepak within 30 days of receiving the bank's return memoCorrect
- DInform the Reserve Bank of India within 30 days
Explanation
Before a complaint for cheque dishonour can be filed, the payee must send a written notice to the drawer demanding payment within 30 days of receiving information of dishonour from the bank. The drawer then has 15 days to pay. A direct complaint without notice is premature, and the RBI has no role in this step.
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