What is a gift cheque? if the cheque is given as a gift can it attract to cheque bounce case?

(1) What is a gift cheque?

The gift cheque is another banking instrument presented for gifting money to the loved ones alternatively of hard cash.

people are used various types of cheques not only for making business or financial transactions easy and safe but in this global world, people may like the use of cheques many other categorial purposes or special occasions like the cheque is giving as a gift to the other one to fulfill the same purpose.

For example, the cheque is given to whish a Birthday, wedding, anniversary, gift for the motivational purpose like social, sports, educational, scholarship, etc.

(2) If the cheque is given as a gift can it attract to cheque bounce case?

The answer of this question is no because the main ingredients are of the cheque bounce case is that when the cheque is issued by a drawer for the discharge, in whole or in part, of any debt or other liability, and if the said cheque was dishonoured due to insufficient funds, etc., then only S.138 of the Act gets attracted but if the cheque is given as a gift and such cheque was dishonoured due to insufficient funds, it means not that the cheque is given for any debt or other liability, it 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 Negotiable Instruments Act, under section 138 which specifically mention in 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. Dishonour 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 honour 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 offence 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 a period of 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 the purposes of 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 honour 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 offence under this Section. So, the essential ingredients of S. 138 are that there must be a debt or other liability legally enforceable, that a cheque must be given by the debtor in favour 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 honour the cheque. 

But one thing we should know that if the other elements are not satisfied the cheque bounce case not attract, 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 that cheque is dishonoured by the bank, the maker of the cheque is not liable for prosecution. (1), The 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 discharge of the full or part of the debt or liability and if the said cheque was dishonoured 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. Held the complaint is not maintainable and the petitioners are entitled to quash the proceedings. (2).

(3) conclusion :

when the cheque not given a discharge of the full or part of the debt or liability and if the said cheque was dishonoured due to insufficient funds, etc. in this circumstance the cheque bounce case under section 138 of the Negotiable Instruments Act not attracted. held the cheque is given as a gift can not attract to 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

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