Bounced cheque: No case if borrower hasn't issued it

While accepting a cheque from someone who owes you money, make sure that he himself — or his authorised representative — has signed it. Otherwise, in case the cheque bounces, you won’t be able to file criminal case against the actual borrower, as per a judgement of the Bombay High Court. Viral Filaments, a Mumbai-based company, borrowed certain amount from one Arvind Degvekar sometime in 1997. When the time to return the money came, the company gave him a cheque. The cheque was issued by one Balram, an associate of Viral Filaments and owner of another firm. It bounced, and even after Degvekar informed Viral Filaments about it, he did not get his money back. Degvekar filed criminal case against both Balram and Viral Filaments under Section 138 of the Negotiable Instruments Act. Viral Filaments then moved the high court, seeking to quash the complaint. In the order last week, Justice R Kingaonkar noted that the company itself had not issued the cheque, though it owed the money. Under the provisions of Section 138, "action could be initiated against the drawer of the cheque", Justice Kingaonkar observed, quashing the case against Viral. However, Degaonkar was free to file a civil suit against the company, the judge added.