Law Relating to Negotiable

Instruments
Negotiable Instrument
Act 1881
 Definitions
• ‘Negotiable’ means transferable by delivery and ‘Instrument’
means a written document by which a right is created in
favor of some person. The term ‘negotiable instrument’
literally means ‘a document transferable by delivery,’ In
English mercantile law, the term is used in this wide sense.
• But in Bangladesh the term is used in a restricted sense.
Section 13(1) of the Negotiable Instrument Act 1881 states,
“A negotiable Instrument means a promissory note, bill of
exchange, or cheque payable either to order or to bearer.”
Thus in Bangladesh only three kinds of instruments are
recognized as negotiable instruments. viz, promissory notes,
bills of exchange and cheaque.
Promissory Note (Pro-Note or Hand Note)

A promissory note is an instrument in writing

containing an unconditional undertaking signed by
the maker, to pay a certain some of money only to,
or to order of a certain person, or the bearer of the
instrument. Sec. 4.
•The person who makes the promise is called the
maker. He is the debtor and must sign the
instrument. The person who will get the money is
called the payee.
 Essential Elements
•The instrument must be in writing.
•The instrument must be signed by the maker of it. A
signature in pencil or by a rubber stamp or facsimile is good.
An illiterate person may use a mark or cross instead of writing
out his name. The mark or signature may be placed anywhere
on the instrument, not necessarily at the bottom. It may be at
the top or at the back of the instrument.
•The instrument must contain a promise to pay. The promise
to pay must be express. It can not be implied or inferred. A
mere acknowledgement of indebtedness is not enough.
•The promise must be unconditional. If the promise to pay is
coupled with a condition it is not a promissory note.
• The maker of the instrument must be certain and
definite.
• A promissory note must be stamped according to the
Stamp Act.
• The sum of money to be paid must be certain
• The payment must be in the legal tender money. A
promise to pay certain quantity of goods or certain
amount of foreign money is not a promissory note.
• The money must be payable to a definite person or
according to his order. A note is valid even if the
payee is misnamed or is indicated by his official
designation only.
• The promissory note may be payable on demand or
after certain definite period of time.
 Specimen of Promissory Notes
An instrument is valid as a promissory note if it is so drafted as
to satisfy the essential requirements of a promissory note.
Some typical specimens are given below:
•On demand I promise to pay A , B of 23 College street or
order taka 500000 ( taka five lacs only) with interest at 10 per
cent per annum, for value received in cash . Signed X, Y
•Date………….
•Address……………….
•One year after date I promise to pay C, D or order taka
100000.
•Date………………
•Address…………….
 Bill of Exchange
•A bill of exchange is an instrument in writing containing an
unconditional order, signed by the maker, directing a certain
person to pay a certain sum of money only to, or to the order
of a certain person or to the bearer of the instrument. Sec. 5
•The maker of the bill of exchange is called the drawer. The
person who is directed is called the drawee. The person who
will receive the money is called the payee. When the payee
has custody of the bill, he is called the holder. It is the duty of
the holder to present the bill to the drawee for his acceptance.
The drawee signifies his acceptance by signing on the bill.
After such signature the drawee becomes the acceptor.
•In a bill of exchange some times the name of another person is
mentioned as the person who will receive the bill if the original
drawee does not accept it. Such person is called the drawee in
case of need. .

Essentials of a Bill of Exchange;

A bill of exchange to be valid must fulfill the following

requirements:
1. The instrument must be in writing.
2. The instrument must be signed by the drawer.
3. The instrument must contain an order to pay, which is
express and unconditional.
4.The drawer, drawee and the payee must be
certain and definite individuals.
5.The amount of money to be must be certain.
6.The payment must be in the legal tender money.
7.The money must be payable to a definite person
or according to his order.
8.A bill of exchange must be properly stamped.
9.The bill may be made payable on demand or
after a definite period of time
 Difference between a promissory note
and a bill of exchange:
•Number of parties: In a promissory note there two parties
– the maker and the payee. In a bill of exchange there are
three parties – the drawer, the drawee and the payee.
•Promise and order. In a promissory note there is a
promise to pay. In a bill of exchange there is an order to
pay.
•Acceptance: A promissory note is signed by` the person
liable to pay; therefore no acceptance is necessary. A bill of
exchange in certain cases , requires to be accepted by the
drawee before it is binding upon him
• Liability. The maker of a promissory note is primarily
liable on the instrument. The drawer of a bill is liable only
if the drawee does not accept the instrument or does not
pay the money.
• Relationship: In a promissory note, the maker stands in
an immediate relationship to the payee. In a bill of
exchange a drawer stands in immediate relationship with
the acceptor and not to the payee.
• Notice: In case of non-payment or non-acceptance of a
bill of exchange , notice must be given to all person
liable to pay. This is called the notice of dishonor. In
case of a promissory note , notice of dishonor to the
maker is not necessary.
• Protest: In case of dishonor, a foreign bill must be
protested if such a protest is necessary according to
law of the place where it is drawn. In case of dishonor
of promissory note, protest is not necessary.
 Specimen of bill of exchange:

A bill of exchange may be drawn in any form, provided the

requirements mentioned above are fulfilled.
•Examples:
TO A, B
•1i. ‘Six months after date pay P, Q or order taka 100000.
• Signed X, Y
•Stamp Date………….
•One month after sight pay to P. Q or bearer ( or order) taka
100000
•Sd / X, Y
•Date………
• Stamp
 Cheque

• A cheque is a bill of exchange drawn upon a specified

banker and payable on demand. sec. 6
• Essential features of Cheque
• A cheque must fulfill all the essential requirements of a
bill of exchange.
• A cheque may be payable to a bearer or to order but in
either case it must be payable on demand.
• The banker named must pay it when it is presented for
payment to him at his during the usual office hours
provided the cheque is validly drawn and the drawer
• Bill and notes may be written entirely by hand. There is no
legal bar to cheques being hand-written. Usually, however,
banks provide their customers with printed cheque forms
which are filled up and signed by the drawer.
• The signature must tally with the specimen signature of the
drawer kept in the bank.
• A cheque must be dated. A banker is entitled to refuse to
pay a cheque which is not dated. A cheque becomes due
for payment on the date specified on it.
• A cheque drawn with a future date is valid but it is payable
on and after the date specified. Such cheques are called
post-dated cheques.
• A cheque may be presented for payment after the due
date but if there is too much delay the bank is entitled
to consider the circumstances suspicious and refuse to
honor the cheque. The period after which a cheque is
considered too old or stale is usually six months.
• In some certain circumstances the bank is not bound
to pay the cheque.
 Different types of cheques
• There are two types of cheques: Open Cheques and
Crossed Cheques.
• An open cheque is one which is payable in cash across
the counter of the bank.
• A crossed cheque is one which has two parallel lines
marked across its face. A cheque marked in this fashion
can be paid only to another banker. Naturally it will not
be paid across the counter. The system of crossing
cheques arose by mercantile usage and was later on
sanctioned by law. The advantage of crossing is that it
reduces the danger of unauthorized person getting
possession of a cheque and cashing it. A crossed
cheque can only be cashed through a bank of which the
payee of the cheque is a customer.
There are different modes of crossing cheques.
•The simplest mode of crossing is to put two parallel lines
across the face of the cheque. This is called general
crossing. A cheque crossed generally will be paid to any
bank through which it is presented.
• When the name of the bank is written between the parallel
lines, it is called special crossing. A cheque crossed
specially will be paid only when it is presented for collection
by the bank named between the parallel lines. Such crossing
affords a greater measure of protection against loss.
•In addition to general or special crossing, a cheque may
contain various remarks written on it , the effect of which is
to restrict payment in certain ways. The usual remarks are”
Account Payee” and Not negotiable’.
 Distinction between Bill of Exchange and Cheque

•A bill of exchange can be drawn upon any person including a

bank. A cheque can be drawn only upon a bank. Thus every
cheque is a bill of exchange but every bill of exchange is not a
cheque.
•Except under certain circumstances, a bill of exchange requires
acceptance. A cheque does not require any acceptance.
• A cheque is always payable on demand. The acceptor of a bill
of exchange is allowed a grace period of three days, after the
maturity of the bill, to make the payment.
•The drawer of a bill is discharged from liability if the bill is not
presented to the acceptor for payment at the due time. But the
drawer of a cheque is discharged from his liability only if he
suffers damage owing to delay in presenting the cheque for
payment.
• If a bank fails to pay a cheque , it is not necessary to
give notice of dishonor to the drawer to make him
liable to compensate the payee. in the case of bills of
exchange, it is necessary to give notice of dishonor,
except in certain special cases.
• A cheque may be crossed; there is no provision for
crossing a bill.
• The payment of a cheque may be countermanded by
the drawer. The payment of a bill can not be
countermanded.
• A cheque does not require any stamp. A bill of
exchange , except in certain cases, must be stamped.
 Holder and Holder in Due Course

• Holder. The holder of a negotiable instrument means

any person entitled in his own name to the possession
thereof and to receive or recover the amount due
thereon from the parties thereto.
• The person legally entitled to receive the money due on
the instrument is called the holder. Thus clerks or
servants having the instrument in their custody are not
holders except as agents of the holder. A person who
obtains possession of the instrument by illegal means is
not a holder.
The Holder in Due Course. The holder in due course is a
particular kind of holder. The holder of a negotiable
instrument is called the holder in due course if he satisfies
the following conditions:
•He obtains the instrument for valuable consideration.
•He becomes holder of the instrument before its maturity,
i.e., before the amount mentioned in it become payable.
•He has no cause to believe that any defect existed in the
title of the person from whom he received his title.
• Explanation: From the aforesaid conditions it is clear that
a person can not be a holder in due course if:
– he has obtained the instrument by gift or for an
unlawful consideration or by illegal methods;
– if he has obtained the instrument after its maturity;
and
– if the circumstances are such that a reasonable
person would suspect that the title of the transferor is
defective.
 Rights of a holder in due course.
• The holder in due course is in a advantageous position.
Under the law he has the following rights:
• Defects of instruments are eliminated. The
holder in due course gets a good title to the
instrument even though the title of the transferor is
defective. If X obtains an instrument by fraud, he
can not get payment. But if X transfers the
instrument to Y under circumstances which make Y
a holder in due course, Y can sue on the
instrument and get the amount due on it. The party
liable to pay can take, as against X, the defence of
fraud but as against Y he will not be allowed to take
such a defence.
• Unauthorized acts of an agent may be valid.
Negotiable instruments are sometimes handed over to
agents for particular purpose e.g., for collection. If the
agent acts beyond his authority and transfers the
instrument to a person who satisfies the conditions of a
holder in due course, the later can recover the amount
mentioned in the instrument. The party liable to pay can
not plead that the agent acted without authority.
• Good title in an inchoate stamped instrument.
The holder in due course gets a good title even
though the instrument was originally an inchoate
(incomplete) stamped instrument and the
transferor completed the instrument for a sum
greater than what was intended by the maker.
• Liability of prior parties to holder in due
course. Every prior party to a negotiable
instrument is liable thereon to a holder in due
course until the instrument is duly satisfied.
• Holder can file a suit in his own name. The
holder in due course can file a suit, against the
parties liable to pay, in his own name.
• Acceptance of bill drawn in fictitious name. The
acceptor of a bill of exchange drawn in a fictitious
name and payable according to the drawer’s order
is liable to pay to the holder in due course; if there
is an endorsement on the bill signed in the same
hand as the drawer’s signature and purporting to be
made by the drawer. The acceptor can not plead,
by way of defence, that the bill is drawn in a
fictitious name.
• Holder can file a suit in his own name. The
holder in due course can file a suit, against the
parties liable to pay, in his own name.
• Acceptance of bill drawn in fictitious name. The
acceptor of a bill of exchange drawn in a fictitious
name and payable according to the drawer’s order
is liable to pay to the holder in due course; if there
is an endorsement on the bill signed in the same
hand as the drawer’s signature and purporting to be
made by the drawer. The acceptor can not plead,
by way of defence, that the bill is drawn in a
fictitious name.
• Estoppel against denying capacity of payee to
indorse. No maker of a promissory note and no
acceptor of a bill of exchange payable to order
shall, in a suit thereon by a holder in due course
,be permitted to deny the payee’s capacity, at the
date of the note or bill, to indorse the same.
• Estoppel against denying capacity of payee to
indorse. The indorser of a negotiable instrument,
in a suit thereon by a subsequent holder, is not
permitted to deny the signature of or the capacity
to contract of any prior party to the instrument.
• Transferee from a holder in due course. A holder of a
negotiable instrument who derives title from a holder in
due course has the rights thereon of that holder in due
course.
 Essential Features of Negotiable Instruments

• Writing and Signature. Negotiable instruments must be

written and signed by the parties according to the rules
relating to Promissory Notes, Bills of Exchange and
Cheques.
• Money. Negotiable instruments are payable by legal
tender money of Bangladesh. The liabilities of the parties
of negotiable instruments are fixed and determined in
terms of legal tender money.
• Negotiability. Negotiable instruments can be transferred
from one person to another by a simple process. In case
of bearer instrument, delivery to the transferee is
sufficient. In case of order instruments two things are
required for a valid transfer: indorsement and delivery. An
indorsement may be made non-transferable by using
suitable words like, ‘pay to X only.’
• Title. The transferee of a negotiable instrument, when he
fulfills certain conditions, is called the holder in due
course. The holder in due course gets a good title to the
instrument even in cases where the title of the transferor
is defective.
• Notice. It is not necessary to give notice of transfer of a
negotiable instrument to the party liable to pay. The
transferee can sue in his own name.
• Presumptions. Certain presumptions apply to all
negotiable instruments. Example, it is presumed that there
is consideration. It is not necessary to write in a
promissory note the words ‘for value received’ or similar
expression because the payment of consideration is
presumed. The words are usually included to create
additional evidence of consideration.
• Special procedure. A special procedure is provided for
suits on promissory notes and bills of exchange
• Evidence. A document which fails to qualify as a
negotiable instrument may nevertheless be used as
evidence of the fact of indebtedness.
 Acceptance and negotiation
• A bill of exchange is said to be accepted, when the
drawee puts his signature on it, thereby acknowledging
his liability under the bill. There are certain special cases
where a bill need not be accepted. Except in these
cases; the drawee is not liable on a bill until and unless
he accepts the bill.
• Mode of acceptance. The usual mode of acceptance is
writing the word ‘accepted” across the bill and signing
under it. Writing the word “accepted” is not essential but
the signature is. The signature may be put any where, on
the face of the bill or on the back of it.
Types of acceptance: Acceptance may be either; General or
qualified.
•Acceptance is general when it is unconditional and
unqualified i.e., when the drawee accepts liability to pay the
amount mentioned in the bill in full, without any condition or
limitation. The acceptor may mention the bank where payment
will be made. This does not amount to putting a condition.
• Acceptance is said to be qualified when the acceptor puts
some conditions on the acceptance. Example: acceptance for
an amount less than that mentioned n the bill; stipulating a
place of payment other than that mentioned in the bill etc.
• A qualified acceptance may be refused by the holder. He
can in such a case treat the bill as dishonored by non-
acceptance and take legal steps to recover his dues
from the parties liable. The holder may, if he chooses,
accept qualified acceptance. The acceptor thereupon
becomes liable only to the extent, and subject to the
conditions, mentioned in the qualified acceptance. If a
qualified acceptance is accepted, all person who were
parties to the bill prior to such acceptance are
discharged from their liabilities under the bill, excepting
those if any, who consent to such acceptance.
 Presentment for acceptance
• Acceptance can be demanded by the holder or his
agent.
• When acceptance is not necessary Acceptance is not
necessary in the case of bills of exchange payable on
demand or sight, unless in any such bill it is specially
mentioned that it is to be accepted before payment. All
other bills require acceptance.
• The Time and Place of Presentment: A bill which
requires to be accepted must be presented for
acceptance before the drawee or his authorized agent.
• Where acceptance is obligatory, it must be made within
reasonable time. It must be within business day. If a bill is
directed to the drawee at a particular place, it must be
presented at that place. When authorized by agreement or
usage, a presentment through the post office by a
registered letter is sufficient.
• The document must be presented for acceptance before
the date of payment (before maturity) and within a
reasonable time after it is drawn.
• If the drawee after a reasonable search can not be
found, the bill can be treated as dishonored.
• If a bill, which requires acceptance, is not presented for
acceptance in accordance with rules mentioned above,
the drawer and all indorsers are discharged from their
liability to the holder.
 Drawee’s time for deliberation:
•The drawee is not required to accept the bill immediately
on presentation. He is entitled to have 48 hours time to
think over it. After the 48 hours are over he must return the
bill to the holder, with or without acceptance as the case
may be . if during his custody of the bill, it is mutilated, lost
or destroyed, he must compensate the holder. If the holder
allows the drawee more than 48 hours for deliberation, all
prior parties to the bill are discharged from their liabilities
under the bill.
 Who can accept a bill?
The following persons can accept a bill of exchange:
•The drawee of the bill.
•The drawee in case of need.
• The legal representative, when the drawee is dead.
•The official assignee or official receiver, when the drawee
has been declared bankrupt.
•Acceptance by several drawees not partners: Where there
are several drawees of a bill of exchange who are not
partners, each of them can accept it for himself, but none of
them can accept it for another without his authority.
• A bill may be accepted by a person for the honor of the
drawee. This is known as acceptance for honor. This is
the only case where a bill may be accepted by a stranger
to the instrument.
Dishonor by non-acceptance.
A bill of exchange is said to be dishonored by non-
acceptance when the drawee or one of several drawees
not being partners, makes default in acceptance upon
being duly required to accept the bill, or where
presentation is excused and the bill is not accepted.
 Presentment for payment
• A negotiable instrument must be presented for payment.
The person liable to pay is entitled to see the instrument
and after payment he is entitled to have it delivered to
him. The rules regarding presentation for payment are
stated below:
• Presentation of promissory note for sight. A
promissory note payable at a certain period after sight
must be presented to the maker thereof for sight by a
person entitled to demand payment, within a reasonable
time after it is made and in business hours on a business
day. In default of such presentment, no party thereto is
liable thereon to the person making such default.
• Presentment for payment. Promissory notes, bills of
exchange and Cheques must be presented for payment to
the maker, acceptor or drawee thereof respectively, by or
on behalf of the holder. In default of such presentment, the
other parties thereto are not liable thereon to such holder.
• Presentment by or to agent, representative of
deceased or assignee of insolvent. Presentment for
acceptance or payment may be made to the duly
authorized agent of the drawee, maker or acceptor, as the
case may be, or where the drawee, maker or acceptor has
died, to his legal representative, or where he has been
declared an insolvent, to his assignee.
• The place of presentment.
– Presentment for payment of instrument payable at
specified place and not elsewhere. A promissory
note, bill of exchange or cheque made drawn or
accepted payable at a specified place and not
elsewhere must be presented at that place for payment.
– Instrument payable at specified place. A promissory
note or bill of exchange made, drawn or accepted
payable at a specified place must, in order to charge
the maker or drawer thereof, be presented for payment
at that place.
– Presentment where no exclusive place specified: A
promissory note or bill of exchange , not made payable
in places as mentioned above, must be presented for
payment at the place of business(if any) or at the usual
residence of the maker, drawee or acceptor thereof, as
the case may be.
– Presentment when maker etc., has no known place
of business or residence: if the maker , drawee or
acceptor of a negotiable instrument has no known
place of business or fixed residence , and no place is
specified in the instrument for presentment for
acceptance or payment, such presentment may be
made to him in person wherever he can be found.
• Where a promissory note is payable on demand and
is not payable at a specified place, no presentment is
necessary in order to charge the maker thereof.
 The time of presentment
• Hours for presentment: Presentment for payment
must be made during the usual business hour, and, if
at a banker’s, within banking hours.
• Presentment of instrument payable after date or
sight. A promissory note or bill of exchange payable at
a specified period after date or sight thereon must be
presented for payment at maturity.
• Presentment for payment of promissory note
payable by installments. A promissory note payable by
installment must be presented for payment on the third day after
the date fixed for payment of each installment; and non-payment
on such presentment has the same effect as non-payment of a
note at maturity.
• Presentment of cheque to charge drawer: A cheque,
in order to charge the drawer, must be presented at the
bank upon which it is drawn before the relation
between the drawer and his banker has been altered to
the prejudice of the drawer.
• Presentment of cheque to charge any other person.
A cheque must, in order to charge any other person
except the drawer, be presented within a reasonable
time after delivery thereof by such person.
• Presentment of instrument payable on demand: A
negotiable instrument payable on demand must be
presented for payment within a reasonable time after it
is received by the holder.
 When presentment for payment is not necessary, or is
excused.
Presentment for payment is not necessary in the following
cases. In each case the instrument is deemed to be
dishonored at the due date for presentment:
• If the maker, drawee or acceptor intentionally prevents the
presentment of the instrument; or
• if the instrument being payable at his place of business, he
closes such place on a business day during the usual
business hours;
• if the instrument being payable at some other specified place,
neither he nor any person authorized to pay it attends at such
place during usual business hours; or
• if the instrument not being payable at any specified place,
he can not after due search be found;
• as against any party sought to be charged therewith, if he
has engaged to pay notwithstanding non-presentment.
• as against any party if after maturity, with knowledge that
the instrument had not been presented- he makes a part
payment on account of the amount due on the instrument.
or
• promises to pay the amount due thereon in whole or in
part; or
• otherwise waives his right to take advantage of any
default in the presentment for payment;
• as against the drawer, if the drawer could not suffer damage
from the want of such presentment.
Presentment for payment is excused in the following cases also:
(i) where a drawer is a fictitious person; (ii) when a person is not
competent to contract; (iii) when a bill is dishonored by non-
acceptance; and (iv) when it is impossible to present the
instrument.
• Excuse for delay. Delay in presentment for acceptance or
payment is excused if the delay is caused by circumstances
beyond the control of the holder, and not imputable to his
default, misconduct or negligence. When the cause of delay
ceases to operate, presentment must be within a reasonable
time.
 Payment in due course
Payment in due course means payment in accordance
with the apparent tenor of the instrument in good faith and
without negligence to any person in possession thereof
under circumstances which do not afford a reasonable
ground for believing that he is not entitled to receive
payment of the amount therein mentioned.
A negotiable instrument is ‘paid in due course’ when the
following conditions are satisfied:
1. The payment is according to the apparent tenor of the
instrument (tenor means the prescribed time of payment).
2. The payment is in good faith and without negligence.
3. The payment is to the possessor of the instrument.
 4. There does not exist any ground for believing that
the possessor is not entitled to receive payment.
Payment in due course completely discharges the
obligation of the party liable to pay , even though it
subsequently transpires that payment has been made to
the wrong person
Dishonor of a Negotiable Instrument
A negotiable instrument may be dishonored in two ways:
(i) by non-acceptance and (ii) by non-payment. Only bills of
exchange can be dishonored by non-acceptance, since only
bills require acceptance. Promissory notes, bills of
exchange and cheques can be dishonored by non-payment.
Dishonor by non-acceptance. A bill of exchange is
dishonored by non-acceptance in the following cases:
•‘When after due presentation, the bill is not accepted by the
drawee.’ When there are several drawees (who are not
partners) refusal by any of the drawees will amount to
dishonor.
• In cases where presentation for acceptance is excused,
the bill is treated as dishonored if it is not accepted
without presentation.
• Where the drawer is incompetent to contract, the bill may
be treated as dishonored.
• If the acceptance is qualified, the bill may be treated as
dishonored.
• Drawee in case of need: When a drawee in case of need
is named in a bill or in any indorsement thereon, the bill
is not dishonored until it has been dishonored by such
drawee.
Dishonor by non-payment. A promissory note, bill of exchange
or cheque is dishonored by non-payment when the maker of the
note or acceptor of the bill of exchange or the drawee of the
cheque makes default in payment upon being duly required to pay
the same.
Consequence of dishonor.
• Steps to be taken by the holder. When a negotiable instrument
is dishonored, the holder (i) becomes entitled to file a suit for the
recovery of the amount due from the parties liable to pay. (ii] He
must, subject to certain exception, give notice of dishonor to
parties against whom he intends to proceed. (iii) He may have the
instrument noted and protested before notary public.
 PENALTIES IN CASE OF DISHONOUR OF CERTAIN
CHEQUES FOR INSUFFICIENCY OF FUNDS IN THE
ACCOUNTS
Dishonor of cheque for insufficiency, etc. of funds in the account  
(1)] 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
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 offence and
shall be punished with imprisonment for a term which may extend
to one year, or with fine which may extend to [ thrice] the amount
of the cheque, or with both:
• 3) Notwithstanding anything contained in sub- section (1)
and (2), the holder of the cheque shall retain his right to
establish his claim through civil Court if whole or any part of
the value of the cheque remains unrealized.
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 [ thirty 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
[ thirty days] of the receipt of the said notice.
• (1A) The notice required to be served under clause (b) of
sub-section (1) shall be served in the following manner-
(a) by delivering it to the person on whom it is to be
served; or
(b) by sending it by registered post with acknowledgement
due to that person at his usual or last known place of
abode or business in Bangladesh; or
(c) by publication in a daily Bangla national newspaper
having wide circulation.]
(2) Where any fine is realized under sub-section (1), any
amount up to the face value of the cheque as far as is
covered by the fine realized shall be paid to the holder.
• (3) Notwithstanding anything contained in sub- section
(1) and (2), the holder of the cheque shall retain his right
to establish his claim through civil Court if whole or any
part of the value of the cheque remains unrealized.]
• ON PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES
FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNT
  Offences of Companies  
• . (1) If the person committing an offence under section 138 is a
company, every person who, at the time the offence was
committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company, as
well as the company, shall be deemed to be guilty of the
offence and shall be liable to be proceeded against and
punished accordingly:
Provided that nothing contained in this sub-section shall render
any person liable to punishment if he proves that the offence
was committed without his knowledge, or that he had exercised
all due diligence to prevent the commission of such offence.
• (2) Notwithstanding anything contained in sub-section
(1), where any offence under this Act has been
committed by a company and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to, any neglect on the
part of any director, manager, secretary or other officer
of the company, such director, manager, secretary or
other officer shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and
punished accordingly.
• Explanation - For the purposes of this section-
(a) “company” means any body corporate and includes a
firm or other association of individuals; and
(b) “director” in relation to a firm, means a partner in the
firm.
  

ON PENALTIES IN CASE OF DISHONOUR OF CERTAIN CHEQUES

FOR INSUFFICIENCY OF FUNDS IN THE ACCOUNTS     

Cognizance of offences  
• Notwithstanding anything contained in the
Code of Criminal Procedure, 1898 (Act V of 1898),-
(a) no court shall take cognizance of any offence punishable under
section 138 except upon a complaint, in writing, made by the payee
or, as the case may be, the holder in due course of the cheque;
(b) such complaint is made within one month of the date on which
the cause of action arises under clause (c) of the proviso to section
138;
(c) no court inferior to that of a Court of Sessions shall try any
offence punishable under section 138.