Question

What is main objective of Section 138 of Negotiable Instruments Act

• A. Recovery of stolen property
• B. Recovery of seized vehicles from RTO
• C. Recovery of the cheque amount incase cheque issued by the payer is bounced
• D. None of the above

Hint:

Remember the three key requirements to file a case under Section 138 NI Act: 1. Cheque presented within its validity period. 2. A legal notice sent to the drawer within 30 days of receiving the bounce memo. 3. The drawer fails to pay within 15 days of receiving the notice.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question asks about the primary objective of Section 138 of the Negotiable Instruments Act, 1881. This section deals with the dishonor of cheques, commonly known as "cheque bouncing."

Step 2: Key Legal Provision:
Chapter XVII of the Negotiable Instruments Act, 1881, which contains Sections 138 to 147, was inserted to enhance the acceptability of cheques in commercial transactions.

Step 3: Detailed Explanation:
Section 138 makes the dishonor of a cheque for insufficiency of funds a criminal offence. The main objective of this provision is to promote the efficacy of banking operations and to ensure credibility in commercial transactions by making cheque bouncing a punishable offence. It provides a speedy remedy to the payee (the person to whom the cheque is issued) to recover the amount of the cheque. If a cheque is bounced and the drawer fails to make the payment within the stipulated time after receiving a notice, the payee can file a criminal complaint. The provision aims to deter people from issuing cheques without sufficient funds in their accounts.
Therefore, the objective is to facilitate the recovery of the cheque amount and to punish the defaulter, thereby ensuring the sanctity of cheques. Option (C) accurately captures this objective.

Step 4: Final Answer:
The main objective of Section 138 of the Negotiable Instruments Act is to ensure the recovery of the cheque amount in case a cheque is dishonored or bounced.