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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

Ramesh issued a cheque for Rs. 4,00,000 to Suresh Traders for a legally enforceable debt. The bank returned it for insufficient funds. Which of the following is the maximum punishment under Section 138?

Section 138 allows imprisonment up to two years, or a fine up to twice the cheque amount, or both. For a Rs. 4,00,000 cheque, the fine could extend to Rs. 8,00,000. The court may impose either punishment or both.

  1. AImprisonment up to one year or fine up to the cheque amount, or both
  2. BImprisonment up to two years or fine up to twice the cheque amount, or bothCorrect
  3. CImprisonment up to two years and fine up to Rs. 4,00,000, both compulsorily
  4. DImprisonment up to three years or fine up to twice the cheque amount, or both

Explanation

Section 138 provides imprisonment for a term which may extend to two years, or fine which may extend to twice the cheque amount, or both. Here twice the amount is Rs. 8,00,000. The punishments are alternative or combined, not compulsorily combined, so option C is wrong.

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