Legal opinion on dishonored cheques A/c. M/s. Company 1.

Mr. Z

Address….

Dear Sir,

Re:  Legal opinion on dishonored cheques A/c. M/s. Company 1.

We refer to your letter dated 27.04.06 on the above subject. We have perused the documents/papers referred to us. We understand that COMPANY 1 issued 03 (three) cheques of various amount in favour of COMPANY 2 who endorsed the cheques in blank and handed over the same to Bank Asia Limited to adjust his/their liabilities.

On presentation, the said three cheques one after another were dishonoured by the drawee bank Bank 1 remarking ‘insufficient fund’ in the memos issued by it on 22.01.06, 26.01.06, 31.01.06.

According to section 138 of the Negotiable Instruments Act, a notice to be served by the payee/holder in due course upon the issuer within 30 (thirty) days from the date of dishonour of the cheque(s) allowing him 30 (thirty) days time to pay the cheque(s) amount. If the drawer fails to make payment of the cheque(s) amount within the notice stipulated period then Petition case to be filed against the drawer within 30 (thirty) days of his failure.

Since in the instance case Bank Asia Limited is the holder in due course of the cheques, it may initiate legal action against the drawer as stated above if the cheques would be dishonoured by the drawee bank for ‘insufficient fund/not arranged for’ on further presentation for encashment within the validity period.

All papers/documents referred to us are returned herewith.

Thanking you.

Yours faithfully

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For: “The Lawyers & Jurists”