Allied Laws: Complete Notes (Part L)

Part L connects the Act with neighbouring laws: electronic payments and the Payment and Settlement Systems Act, the insolvency moratorium, civil summary suits and the offence of cheating, and stamp duty with the RBI Act restriction on bearer instruments. This consolidated note covers Topics 52 to 55.

52. Electronic Payments and Section 25 of the PSS Act

The Payment and Settlement Systems Act, 2007 makes the RBI the regulator of payment systems. Section 25 makes dishonour of an electronic funds transfer from one's own account, for a legally enforceable debt, for insufficient funds or exceeding arrangement, an offence punishable with up to two years, fine up to twice the amount, or both, if the transfer followed the system provider's guidelines, a written demand was made within 30 days and payment was not made within 15 days. It carries presumptions like Sections 139, 140 and 146 and applies Chapter XVII so far as possible. It is used mainly for dishonoured ECS and NACH mandates.

53. The IBC Moratorium

Corporate debtor: Section 138 proceedings are barred during the Section 14 moratorium (P. Mohanraj, 2021).
Directors and signatories: may still be prosecuted, even after a resolution plan (Ajay Kumar Radheyshyam Goenka, 2023); Section 32A protects only the company.
Post-moratorium cause of action: a former director who had lost control cannot be prosecuted (Vishnoo Mittal, 2025).
Personal insolvency: whether the Part III moratorium covers Section 138, wholly or only its compensatory tier, is referred to a larger Bench (Dineshchand Surana, 2026).

54. Summary Suits and Cheating

Suits on bills, hundis and notes may be brought as summary suits under Order XXXVII CPC, where the defendant needs leave to defend: unconditional for a substantial or bona fide defence, conditional for a doubtful one, refused for a frivolous one (IDBI Trusteeship v. Hubtown, 2017). Civil and Section 138 proceedings may run in parallel. Cheating (Section 318 BNS) requires dishonest intention at inception and deception; it may be prosecuted with Section 138 (Sangeetaben, 2012), but dishonour alone does not prove it (V. Ganesan, 2026).

55. Stamp Duty and RBI Act Section 31

Stamp duty on bills (including hundis) and promissory notes is fixed by Parliament and collected by the States; cheques are not chargeable. An unstamped note or bill is inadmissible and cannot be validated by penalty (Section 35 proviso, Stamp Act), though a suit on the original consideration may lie. Section 31(1) of the RBI Act bars private instruments payable to bearer on demand, except cheques and drafts on an account; Section 31(2) bars any private promissory note payable to bearer.

⚠ Key point

Part L in one line: failed electronic debits are punished under Section 25 of the PSS Act on the Section 138 model; the IBC moratorium shields the company but not its directors; holders may also sue summarily under Order XXXVII and, where there was fraud from the start, prosecute for cheating; and notes and bills must be stamped, while private bearer notes are prohibited by the RBI Act.

56. The Topics of This Part

Topic 52: electronic payments and Section 25 of the PSS Act; Topic 53: the IBC moratorium and Section 138; Topic 54: Order XXXVII summary suits and Section 138 compared with cheating; Topic 55: stamp duty and Section 31 of the RBI Act.