Cheque Dishonour in Pakistan: Remedies Unveiled

In Pakistan, a dishonoured cheque can create significant legal and financial challenges for both individuals and businesses. When a cheque bounces, it can be more than just an inconvenience, it may necessitate legal actions to recover the funds or address the issue. Understanding the remedies available under law is crucial for effectively handling such situations. There are two remedies available to a person aggrieved of a cheque dishonour, one is a criminal remedy and other is the civil remedy.

1. Criminal Remedy for Cheque Dishonour

Under Section 489-F of Pakistan Penal Code (PPC), dishonestly issuing a cheque is considered a criminal offense in Pakistan, having punishment of up to three years of imprisonment. It should be kept in mind that the criminal remedy is for the punishment of the accused, recovery can not be made through this process, for recovery of money and damages there is a civil remedy available.

Necessary Ingredients:

To initiate criminal proceedings under section 489-F of PPC, the following ingredients must be present:

1. Cheque is Issued Dishonestly

For punishment under section 489-F, there must be dishonesty on part of the person who issued the cheque that is dishonoured on presentation.

2. The Reason of Issuing Cheque

Section 489-F attracts only if the dishonoured cheque is issued for repayment of loan or fulfillment of any obligation. Otherwise criminal case under this section can not be filed.

3. Cheque is Dishonoured on Presentation

Another ingredient is that the cheque which is issued dishonestly is dishonoured by the bank on presentation and the presentation of cheque must be in time which is generally 6 months after the issuing of cheque.

4. No Fault on the Part of Bank

If the accused proves that he had made arrangements with bank for the cheque to be honoured but it was the fault of bank due to which the cheque is dishonoured then he shall be vindicated from the charge under section 489-F.

Procedure:

There are two paths for availing the criminal remedy in case of a cheque dishonour under section 489-F PPC in Pakistan.

1. Lodging an FIR

The FIR (First Information Report) is lodged by writing a complaint on a plain paper and delivering it to the Station House Officer (SHO) of the Police Station in the jurisdiction of which the cheque is dishonoured. If the officer considered the complaint reasonable, he shall lodge an FIR against the drawer and start investigation. After the commencement of investigation a challan under section 174 of the code of criminal procedure shall be submitted in the court for the trial. After the trial accused will be convicted or acquitted if not found guilty. 

If the police is not lodging an FIR on the complaint, a petition under section 22A of the code of criminal procedure can be filed in the court of justice of peace, who may instruct the police officer to lodge an FIR against the drawer.

2. Private Complaint

For initiating criminal proceedings against a person who dishonestly issued a cheque which then dishonoured on presentation, an aggrieved person can also file a private complaint under section 200 of code of criminal procedure directly in the court of the Magistrate.

To understand what is the court of magistrate read article on the hierarchy of courts in Pakistan.

2. Civil Remedy for Cheque Dishonour

In addition to criminal remedy, a civil remedy allows you to pursue financial compensation and recover the amount due. This process is governed by the order 37 of the code of civil procedure (CPC).  Order 37 of CPC provides a summary procedure in case a cheque is dishonoured in Pakistan.

Procedure:

The procedure for a recovery suit in case of a cheque dishonour includes the following steps:

1. Plaint.

Firstly a plaint is written and filed before a District Judge. District judge may mark the case to any Additional District Judge or fix it before him.

2. Summons

When a case is filed under order 37, summons shall be issued in the name of defendant (who issued the cheque which dishonoured on presentation). The summons shall be in Form No.4 in Appendix B of CPC.

3. Leave to Defense

After the service of summons the defendant have to apply for the leave to defense and if the court is satisfied that he should have right to defend, then defendant may file written statement, otherwise defendant has no right to defend.

4. Judgment

If defendant is not given leave to defend by the court, the suit shall be decreed in favour of the plaintiff and otherwise the judgment shall be announced after the evidence of the parties.

5. Execution 

After the decree is passed in fovour of the plaintiff for the recovery of amount of cheque and costs, execution of the decree shall be made by the same court.

Conclusion

Handling a dishonored cheque in Pakistan requires a clear understanding of both criminal and civil remedies. By following the appropriate legal procedures and considering different options, you can address the issue effectively. Whether pursuing criminal action or filing a civil suit, professional legal advice can be invaluable in achieving a successful resolution. If you find yourself dealing with a bounced cheque, taking prompt and informed action will help you safeguard your rights and recover the amounts due.

Contact us for legal assistance in case of cheque dishonour, for professional services and consultancy.