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A cheque drawn on SBBJ (State Bank of Bikaner and Jaipur), Aerodrome Circle, Kota, dated 15 March 2026, was deposited by me on 2 April 2026. The cheque was not dishonoured due to insufficient funds, but because the drawee bank (SBBJ) no longer operates as an independent entity after its merger with SBI. My presenting bank has issued a return memo stating the reason for non-payment. My questions are: (1) Does Section 138 of the Negotiable Instruments Act apply when a cheque is returned due to the drawee bank’s closure/merger rather than insufficient funds? (2) Is the return memo issued by my presenting bank legally admissible and sufficient as primary evidence in court under Section 138 NI Act proceedings?
Section 138 NI Act generally applies only when cheque is dishonoured due to insufficient funds or related reasons. If the cheque is returned due to bank merger or technical reason, liability depends on facts of the case and court interpretation. The return memo issued by the presenting bank is valid evidence but supporting bank communication is also important. Courts may examine intent and validity of dishonour before applying Section 138. For further legal assistance contact us on our helpline number.