Mar 17

It has been brought to the notice of CIMOGG that several companies in the small and medium size sector have been put into great difficulties, some even to the extent of having to close down, as a consequence of their being paid by cheques drawn knowingly by fraudsters on accounts with inadequate funds or after the accounts have been closed down by the banks.  The affected companies, unlike large firms, do not have the necessary resources to weather the shortfall in their cash flow or to go through the lengthy and costly process of litigation necessary to try to retrieve the moneys for the goods and services provided by them in good faith to such cheats.

Generally, when a complaint regarding such invalid cheques is made to the Police, they take action to help the victims of these frauds by filing the relevant charges in terms of the provisions of the Penal Code, which, unfortunately, often results in the culprits being released on bail.  Commonly thereafter, the malefactors either do not appear in Court or disappear altogether.  An adverse side-effect is that hard working and conscientious Police officers tend to get discouraged when they see their law-enforcing efforts go to waste.

Parliament, realising that many industrious entrepreneurs were being destroyed by the activities of cheque fraudsters, passed the Debt Recovery (Special Provisions) Act No 2 on 6 March 1990 to overcome the shortcomings in the relevant sections of the Penal Code.  Unfortunately, our sources reveal that most Police Stations, the Fraud Bureau and the CID do not make use of this new law, which creates an offence distinct from the offence of cheating as defined in the Penal Code.  The new law provides for the imprisonment of those who issue cheques without the necessary funds in their bank accounts.

It is noteworthy that, after a similar law was passed in India, there has been a drastic decline in the number of cases involving Abouncing cheques.

CIMOGG is inclined to the belief that our Police, being historically more familiar with the Penal Code, have not actively familiarised themselves with the 1990 law and do not make use of its provisions in this type of cases.  We, therefore, wrote to the Inspector-General of Police and the Attorney-General on 30 January 2006 on the subject of CHEQUE FRAUDS requesting them to take appropriate steps in this connection.  The IGP was most earnestly requested to issue instructions to all Police officers involved in dealing with this type of offence regarding the need to prefer charges in respect of cheque frauds by reference to the aforementioned Debt Recovery (Special Provisions) Act No 2 and the A-G was urged to use his good offices to see that this was done.  The A-G has indicated that the matter is receiving consideration whereas an acknowledgment by the IGP is still awaited.  With a view to allaying the fears in the minds of those who have addressed us regarding this matter that nothing will be done, we have decided to appeal to these officials through the columns of your esteemed journal in the belief that they may thus be galvanised more effectively into action.

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  10. Ravi Says:

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  11. cimoggsrilanka Says:

    Sorry we do not have the details you asked for. We just comment on what information we get from the Newspapers.

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