If you are stuck in such a situation, here is what to do.

Mr. Alok Sharma, a resident of Vikasnagar, finds himself in a complex financial predicament. A few months ago, he lent a sum of ₹2,50,000 in cash to an acquaintance, Mr. Brijesh Kumar. Mr. Kumar had claimed he needed the funds urgently for a business project and assured Mr. Sharma that the money would be returned within a week, along with a handsome profit for his help.

However, instead of using the money himself, Mr. Kumar passed the entire amount to a third individual, Mr. Chandan Singh. To secure the loan, Mr. Singh provided Mr. Sharma with two post-dated cheques drawn on his personal bank account, amounting to a total of ₹2,50,000. When Mr. Sharma deposited the cheques on the due dates, both were dishonoured by the bank with the reason “insufficient funds.”

Mr. Sharma possesses call recordings where Mr. Singh explicitly admits to having received the money and repeatedly promises to repay the amount. Despite these admissions, Mr. Singh has been making endless excuses and delaying the payment. He has now started to claim that his arrangement was with Mr. Kumar, not Mr. Sharma, attempting to absolve himself of any direct liability, even though the bounced cheques were issued by him directly to Mr. Sharma.

Simultaneously, Mr. Kumar has washed his hands of the matter, stating that he cannot return the money because Mr. Singh is not paying him back. Both Mr. Kumar and Mr. Singh are now avoiding Mr. Sharma’s calls and refusing to meet, leaving him in a lurch.

Advice in such cases

When faced with a situation involving multiple parties, bounced cheques, and broken promises, it is crucial to act strategically and within the bounds of the law. The primary goal is to recover the money, and there are several legal avenues available to achieve this. The key is to understand the liability of each person involved and to use the available evidence effectively.

• Act Promptly: The law provides specific timelines, especially for cheque bounce cases. Delay can weaken your legal position.
• Document Everything: Keep all evidence, such as the original bounced cheques, bank return memos, call recordings, and any written communication, securely.
• Separate Liabilities: Understand that you may have different legal claims against different individuals. In this case, Mr. Singh is liable for the bounced cheque, while Mr. Kumar is liable for the original loan you gave him.
• **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Several legal provisions can be invoked in such a scenario:

• Section 138 of the Negotiable Instruments Act, 1881: This is the primary remedy for a bounced cheque. It makes it a criminal offence for a person to issue a cheque that is dishonoured due to insufficient funds, provided it was issued to discharge a legally enforceable debt or liability.
• Section 318 of the Bharatiya Nyaya Sanhita (BNS), 2023: This section deals with cheating and dishonestly inducing the delivery of property. A police complaint can be filed against both individuals if it can be proven that they had a fraudulent intention from the very beginning.
• Section 316 of the Bharatiya Nyaya Sanhita (BNS), 2023: This section pertains to criminal breach of trust. It could be argued that Mr. Kumar committed a breach of trust by not using the money for the stated purpose and instead giving it to someone else without your consent.
• Civil Suit for Recovery: A summary suit under Order XXXVII of the Code of Civil Procedure, 1908, can be filed for the recovery of the money. This can be filed against Mr. Kumar (based on the initial loan) and Mr. Singh (based on the bounced cheques).

If you are the complainant

As the person who has lost money, you need to take systematic legal steps:

• Send a Legal Demand Notice: The first step for a cheque bounce case is to send a legal notice to the issuer of the cheque (Mr. Singh) within 30 days of receiving the cheque return memo from the bank. The notice should demand payment of the cheque amount within 15 days.
• File a Complaint under NI Act: If Mr. Singh fails to pay within 15 days of receiving the notice, you can file a criminal complaint against him under Section 138 of the Negotiable Instruments Act in the appropriate Magistrate’s court.
• File a Police Complaint (FIR): You can file a complaint with the police against both Mr. Kumar and Mr. Singh for cheating and criminal conspiracy under the relevant sections of the Bharatiya Nyaya Sanhita (BNS).
• File a Civil Recovery Suit: You can also file a civil suit for the recovery of your ₹2,50,000. You can name both Mr. Kumar and Mr. Singh as defendants in the suit.
• **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

Being a victim of financial fraud can be distressing. It is important to remain calm and take calculated steps to protect your interests.

• Gather and Organise Evidence: Your case will be built on the strength of your evidence. Secure the original dishonoured cheques, the bank memos, postal receipts of the legal notice, and any digital evidence like call recordings or messages.
• Do Not Engage in Extralegal Methods: Avoid any threats or use of force to recover the money, as this could lead to legal trouble for you. Rely solely on the legal process.
• Be Prepared for a Legal Battle: Legal proceedings can take time. Be patient and follow your lawyer’s advice diligently.
• **Consult with Lawyer**: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

Often, the police may initially perceive such cases as civil disputes, especially when it involves a loan between acquaintances. They might be hesitant to register a First Information Report (FIR) for cheating and may advise you to approach the court directly. However, if your lawyer can present the facts clearly, highlighting the element of deception and fraudulent intent from the outset, the police are more likely to register an FIR under Section 318 of the BNS. The existence of a bounced cheque can strengthen the criminal aspect of the complaint.

FAQs people normally have

Can I take direct legal action against Person C (the cheque issuer) even though I gave money to Person B?
Yes, absolutely. The moment Person C issued a cheque in your name, he created a direct legal liability towards you under the Negotiable Instruments Act. You have a very strong case against him under Section 138 of the NI Act, irrespective of his dealings with Person B.

Is Person B (the middleman) legally responsible for returning my money?
Yes. Your initial transaction was with Person B. You gave him the money based on his promise. Therefore, he is legally bound to return it. You can file a civil suit for recovery against him. You can also name him as a co-accused in a criminal complaint for cheating, arguing that he was part of a pre-planned scheme to defraud you.

Should I file a criminal case or a civil suit?
You can and should do both. A criminal case under Section 138 of the NI Act or Section 318 of the BNS puts pressure on the accused, as it can lead to imprisonment or a fine. A civil suit is specifically for the recovery of your money. The two proceedings can run simultaneously and complement each other.

What evidence is required?

To build a strong case, you will need the following evidence:

• The original dishonoured cheques.
• The cheque return memos issued by the bank stating the reason for dishonour.
• A copy of the legal demand notice sent to the cheque issuer.
• Proof of delivery of the notice (postal or courier receipts).
• Call recordings where the debt is admitted (their admissibility will be decided by the court, but they are useful).
• Any WhatsApp, SMS, or email correspondence related to the loan and repayment promises.
• Witness statements, if any, from people who were aware of the transaction.

How long will the investigation take?

The duration varies depending on the legal path you choose:

• Cheque Bounce Case (NI Act): These are tried as summary proceedings and are intended to be concluded quickly, often within six months to a year. However, due to the backlog in courts, it can sometimes take longer.
• Police Investigation (BNS): If an FIR is registered, the police investigation and filing of a chargesheet can take a few months. The subsequent trial will take its own course.
• Civil Recovery Suit: Civil cases in India are known to be time-consuming and can take several years to reach a final verdict.

Advocate Sudhir Rao, Supreme Court of India