Cheque Dishonour Law in Bangladesh


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In the modern world it is almost unthinkable that a business would operate without the help of a bank, and as such the use of cheques in Bangladesh have been increased in the past decade. Due to the high number of transactions via this mode, the possibility of a cheque being dishonoured is substantially high. As such the receiver of cheques must have adequate and effective legal recourse which they can entertain when they do face this situation.

The Bangladesh government has taken a number of steps to provide sufficient legal remedy in order to tackle and minimize this predicament.

The most vital law that is enacted to provide legal remedy against such situation is called Negotiable Instruments Act (Act No. XXVI of 1881) (NI Act). Section 6 of the NI Act has defined what constitutes as cheque, which states that a bill
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of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Furthermore, a cheque has also been defined in case laws as an order upon a debtor by a creditor to pay to a third person the whole or part of a debt. Whenever a cheque does not clear due to insufficient fund or if the person who gave the cheque ordered his bank to cancel the said cheque or for any other reason then the remedy will lie under Section 138 of NI Act.

Firstly, Section 138 of the NI Act makes it clear that whenever a cheque is bounced then prima facie an illegal offence is created which entails punishment of criminal nature which may include 1 year imprisonment or fine which may extend to three times the value of the dishonoured cheque or both. Moreover, the person aggrieved also have a civil remedy under the same section, and to achieve the civil remedy the person needs to fulfil some procedures.

The first issue the court will assess is whether the cheque was presented to the bank for withdrawal within six months of it being given to the person aggrieved. If the cheque was presented to the bank for withdrawal any time after six months of it being given to the person aggrieved then the court will not allow the claim. Considering the cheque is presented within the requisite time and the cheque is dishonoured, then according to Section 138 of NI Act the aggrieved person must send a written notice via registered post with acknowledgment due to the person who has given the cheque demanding the money back.

This notice demanding the money back must be sent within 30 days of the cheque being bounced that is when the aggrieved person got notified that the cheque that was given bounced due to insufficient fund or any other reason. Again if the notice demanding the money is not sent within the requisite time the court will not provide any remedy. After the above mentioned procedure is fulfilled and the person who has been given the notice does not pay back the money within 30 days of receiving the said notice, then the aggrieved person will be allowed to bring a civil claim against that person for the recovery of the money.

In conclusion in cases of dishonoured cheques the vital aspect is the time one takes to fulfil all the required procedures before a claim can be bought. The NI Act is both balanced and concurrent with the time hence it is well equipped in tackling and providing efficacious remedy in cases of dishonoured cheques.

ABOUT THE AUTHOR: Fahad Bin Qader
Barrister of Lincoln's Inn, UK & Associate at Counsels Law Partners CLP

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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