What remedies for payee besides criminal?

Answer

A: Section 138 of the Negotiable Instruments Act makes it a crime to bounce a check. However, the payee (the person who was supposed to get the money) has a number of civil and other options for getting the money back.

 1. A civil suit to get money back

The payee can sue the person who wrote the check in civil court to get back:

The amount of the check,

Interest on the amount and

Costs of legal services.

This is especially helpful if the person who owes money wants to be paid back rather than punished.

 2. Filing a Summary Suit (Order 37 CPC)

If the payee wants to get the case over with faster, they can file a summary suit under Order 37 of the Civil Procedure Code (CPC).

The drawer has few defenses in summary suits, which speeds up the process of getting the money back.

This is a great way to get your money back without having to wait for a long trial.

 3. Starting arbitration (if there is an agreement)

If the underlying contract has an arbitration clause, the payee can start arbitration to quickly get the money back.

 4. Bankruptcy Proceedings

If the check amount is large and the drawer doesn't pay it, the payee can file an insolvency petition against the drawer under the Insolvency and Bankruptcy Code (IBC).

This can make the person who owes money pay it back to avoid being declared bankrupt.

 5. How to file a civil complaint under contract law

The payee can also seek damages under the Indian Contract Act, 1872 for breach of contract because issuing a check creates a legal obligation.

 The main difference between civil and criminal remedies is

Section 138 of the NI Act says that the goal of criminal punishment is to punish people (up to two years in prison, up to twice the amount of the check, or both).

Civil remedies: The main goal is to get money back and make up for losses.

In a lot of cases, payees go after both remedies at the same time: they file a criminal case to put pressure on the other party and a civil suit to get their money back.


In addition to criminal prosecution under Section 138 of the NI Act, the payee can also use civil remedies like recovery suits, summary suits, arbitration, and bankruptcy proceedings to get back the check amount plus interest and costs..