(1) What is a gift cheque?
The gift cheque is another banking instrument used to gift money to loved ones, alternatively to hard cash.
People use various types of cheques not only to make business or financial transactions easy and safe. In this global world, people may also like to use cheques for many other categories or special occasions, like giving a cheque as a gift to another person to fulfill the same purpose.
For example, the cheque is given to someone who wishes to give a Birthday, wedding, anniversary, or motivational gift for social, sports, educational, or scholarship purposes.
(2) If the cheque is given as a gift, can it attract a cheque bounce case?
The answer to this question is no because the main ingredients of the cheque bounce case are when the cheque is issued by a drawer for the discharge, in whole or in part, of any debt or other liability. If the said cheque was dishonored due to insufficient funds, etc., then only S.138 of the Act gets attracted. Still, if the cheque is given as a gift and such cheque was dishonored due to insufficient funds, it means not that the cheque is given for any debt or other liability; it is just given for gifting money to the beloved ones in this circumstance, it not to attract to cheque bounce case.
Now, as per the provision of the Negotiable Instruments Act, under section 138, which specifically mentions the following terms :
In this connection, it is necessary to extract hereunder Section 138 of the Negotiable Instruments Act, which is in the following terms:-
“138. Dishonor of cheque for insufficiency, etc., of funds in the account:-
Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offense and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to one year or with fine which may extend to twice the amount of the cheque or with both.
Provided that nothing contained in this Section shall apply unless:-
(a) the cheque has been presented to the bank within six months from the date on which it is drawn or within the period of its validity, whichever is earlier;
(b) the payee or the holder, in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within fifteen days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque within fifteen days of the receipt of the said notice.
Explanation:- For this Section, “debt or other liability” means a legally enforceable debt or other liability.”
Thus, on a plain reading of Section 138 of the Act, it is clear that where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offense under this Section. So, the essential ingredients of S. 138 are that there must be a debt or other liability legally enforceable, that the debtor must give a cheque in favor of the creditor in the discharge of the said debt or liability, in whole or in part, and that that cheque should be returned by the bank for insufficiency of funds to the credit of the debtor to honor the cheque.
However, one thing we should know is that if the other elements are not satisfied, the cheque bounce case could be more attractive, as in the case of B. Mohan Krishna vs Union Of India And Ors, 1996 CRI. L. J. 636, The Andhra Pradesh High Court held that where a cheque is issued not for the discharge of any debt or other liability, the maker of the cheque is not liable for prosecution. For example, when the cheque is given by way of a gift or present and the bank dishonors the cheque, the maker of the cheque is not liable for prosecution. (1) A similar view was taken in the case of Uplanche Mallikarjun and Ors. Vs. Rat Kanti Vimala and Anr,1997 CRI.L.J.4237, The Andhra Pradesh High Court Held that the cheque should be issued by the drawer in the discharge of the full or part of the debt or liability, and if the said cheque was dishonored due to insufficient funds, etc. then only Section 138 of the Negotiable Instruments Act gets attracted, if other conditions are complied with. On a perusal of the averments of the complaint, there is no averment that the cheque was issued by the petitioners in the discharge of any legally enforceable debt or other liability. If the complaint is not maintainable, the petitioners are entitled to quash the proceedings. (2).
(3) conclusion :
When the cheque is not given as a discharge of the full or part of the debt or liability and if the said cheque was dishonored due to insufficient funds, etc., in this circumstance, the cheque bounce case under section 138 of the Negotiable Instruments Act is not attracted. Held the cheque is given as a gift, it cannot attract a cheque bounce case.
Footnote:
(1) B. Mohan Krishna vs Union Of India And Ors, 1996 CRI., L. J. 636.
(2) Uplanche Mallikarjun and Ors. Vs. Rat Kanti Vimala and anr.,1997 CRI. L. J. 4237
