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Alok Jyoti Bhowal
in Contracts Law Commercial Law
Asked October 21, 2017

Sale of share without the payment

  • 1 Answer
  • 714 Views

ON 21.09.2017 I HAD HANDED OVER CHEQUE OF RS 8 LAKH & SIGNED FORMS FOR FD & ONE SHARE & GIVEN DOCUMENTS-SELF ATTESTED VOTER CARD,PANCARD,PHOTOS M/S RAGE MULTI STATE CREDIT CO-OPERATIVE SOCIETY LTD HABRA,WEST BENGAL. ON 22.09.2017 I CANCELLED THE CHEQUE ANTICIPATING THEY MAY BE FRAUD.THEY COULD NOT ENCASH THE CHEQUE AMOUNT. SURPRISINGLY,ON 20.10.2017 I HAVE RECEIVED THROUGH COURIER SHARE CERTIFICATE & FD CERTIFICATE BOTH DATED 26.09.2017,THOUGH THEY HAVE NOT RECEIVED ANY MONEY AS THE CHEQUE WAS CANCELLED. CAN THEY LEGALLY FORCE ME TO PAY THE AMOUNT,PENALTY,PREMATURE CLOSURE PENALTY ETC OR ANY LEGAL ACTION AGAINST ME IF DO NOT PAY THEM?KINDLY ADVISE. ALOK JYOTI BHOWAL

Answer 1

You have engaged in an act of “stop payment”- when the drawer , i.e. creator of a cheque cancels it after it has been authorized or handed to the other party for payment and this under Section 138 of the Negotiable Instruments Act, 1881,  can be  deemed to be an act of a cheque bouncing or you dishonouring a cheque as declared by the Supreme Court in cases like Rangappa v. Sri Mohan, (2010) 11 SCC 441 and Goaplast (P) Ltd. v. Chico Ursula D’Souza, (2003) 3 SCC 232.

 

However, in the case of M.M.T.C. Ltd. v. Medchl Chemicals and Pharma (P) Ltd., (2002) 1 SCC 234, the court also declared that if the drawer of the cheque can prove there were genuine reasons behind cancelling the cheque as seen in Section 139 of the Negotiable Instruments Act, 1881, then the court will not hold the drawer of the cheque guilty of cheque bouncing under Section 138 of the Negotiable Instruments Act, 1881. Therefore, you are advised to collect evidence that the company is a fraud or is engaged in possibly  dubious activities that caused you to doubt their integrity and cancel the cheque in case the company decides to approach the court and claimed that your cheque has bounced.

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