Ram Gopal Varma Gets 3-Month Jail In A Cheque Bounce Case: Things To Keep In Mind While Issuing A Cheque

If you are issuing a cheque for payment to someone, be mindful to keep a sufficient balance in the account, or you could end up in prison. Recently, filmmaker Ram Gopal Varma, known for his movies Rangeela, Satya, and Sarkar, among others, was sentenced to three months in jail in a cheque bounce case. According to a Times of India report, the Andheri Magistrate Court in Mumbai ordered a non-bailable warrant against him and ordered him to pay compensation of Rs 3.72 lakh to the complainant.

The case was filed by Shree company, the complainant, in 2018 after a cheque issued by Varma’s company was dishonoured. According to reports, Shree company provided hard disks to Varma's company and received payment via a cheque dated June 1, 2018. However, when this cheque was presented, it bounced due to ‘Insufficient Funds’. Following this, the complainant raised the issue, and Varma issued another cheque in August 2018, but this cheque also bounced for the same reason. 

What Does The Law Say?

As a cheque is a negotiable instrument and covered under the Negotiable Instrument Act, 1881, the court convicted Varma under Section 138 of the Act.

According to Section 138 of the Act which deals with cheque dishonour due to insufficient funds, “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 for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour 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, without prejudice to any other provisions of this Act, be punished with imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both”.

Thus, in Varma’s case, the court ordered three months in jail and also asked to pay compensation to the complainant.

Common Reasons For Cheque Bounce:

The cheque can bounce or be rejected for varied reasons, such as overwriting, damaged cheque, signature mismatch, irregular or expired cheque date, mismatch in amount in number and words, or insufficient funds. However, cheque dishonour due to ‘insufficient funds’ is a criminal offence as per law, but the other reasons are not. In case a cheque bounces due to any other reasons, the payee can only ask for another cheque and not issue a legal notice to the drawer (the person who wrote the cheque).

Cheque clearing is a robust record-keeping mechanism and a cheque is a safe and secure payment mode that has been followed successfully for so long. So, while issuing a cheque, be careful and make sure your account has sufficient balance, especially, close to the clearing date to avoid any possibility of a legal hassle.