CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments
Ramesh Traders issued a cheque for Rs. 4,00,000 to Suresh Enterprises for a legally enforceable debt. The bank returned it unpaid for insufficiency of funds, and all conditions of the proviso to Section 138 were satisfied. What is the maximum fine that may be imposed on Ramesh Traders under Section 138?
The maximum fine is Rs. 8,00,000, because Section 138 permits a fine extending to twice the amount of the cheque. With a cheque of Rs. 4,00,000, twice that amount gives the ceiling, and imprisonment up to two years or both may also be imposed.
- ARs. 4,00,000
- BRs. 6,00,000
- CRs. 8,00,000Correct
- DRs. 12,00,000
Explanation
Section 138 allows imprisonment up to two years, or a fine which may extend to twice the amount of the cheque, or both. Twice Rs. 4,00,000 is Rs. 8,00,000. Rs. 4,00,000 would wrongly use the cheque amount itself as the limit.
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