Cheque Bounce - Legal Notice

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What is Cheque Bounce/Dishonour of Cheque

Cheque bounce or cheque non-payment in a serious offence in India punishable with imprisonment or fine under Section 138 of the Negotiable Instruments Act. In case of cheque bounce, a cheque beneficiary must present the cheque issuer with a cheque bounce notice under section 138 within 30 days of return of the cheque to protect his/her rights under Section 138 of the Negotiable Instruments Act. Cheque bounce notice is a firm and serious intimation to the cheque issuer that the cheque beneficiary will proceed with legal action if payment for the cheque is not made immediately.

Reasons for Cheque Bounce

Following are some of the reasons why a cheque is bounced or dishonoured:

1. Insufficient funds in the account of the person issuing the cheque
2. Unmatching signature on the cheque
3. Post dated cheque i.e. the date mentioned on the cheque is yet to come
4. Stale cheque i.e. the cheque is presented to the bank 3 months after the cheque was issued
5. When the payment is stopped- if the drawer asks the bank to stop the payment and not to pay for cheque already issued
6. Difference in amount in words and number 
7. Disfigured or Damaged cheque- a cheque will be dishonoured if it is torn, damaged or not in a good condition or has some details not clearly visible 

Legal Remedies available in a Cheque Bounce case?

SEND A LEGAL NOTICE/ DEMAND LETTER TO THE DRAWER
Before filing a suit against the drawer, a legal notice/demand letter must be sent to him. The notice must be sent within 30 days from the date on which the bank returns the cheque along with the information that the cheque is dishonoured.
You can take assistance from a lawyer to draft the legal notice in such a case. 

FILE A COMPLAINT IN THE COURT 
If the drawer does not make the payment within 15 days from the date on which the notice has been sent to him, then the payee can initiate legal action against such person within 30 days from the date of expiry of the 15 days period provided to the drawer. 

Documents Required for Cheque bounce notice

You must essentially have the following documents when filing a complaint of cheque bounce: 

1. Original cheque
2. Cheque returning memo
3. Copy of the legal notice sent to the drawer demanding the payment of money
4. Power of Attorney signed by the complainant 
5. Preliminary evidence in shape of Affidavit

Reply to the Cheque bounce

In case you receive a legal notice for payment of money in a cheque bounce case, then you have to send a reply to such notice within 15 days from the date on which the notice has been received. Along with the notice, you must also send a cheque in favour of the payee of the same amount as was the previous cheque. The reply must also specify the reason for the dishonour of cheque. If the reply is not made within the stipulated time period then a legal action will be initiated against you. 

However, if you do not have an outstanding debt against the person who has sent the notice, then you should mention the same in your reply to the notice, which is to be sent within 15 days. 
You can always take assistance of a lawyer who is an expert in this field 

WHERE CAN A CHEQUE BOUNCE CASE BE FILED?

Who deals with Cheque Dishonour complaint/cases: (Judicial Body)

Cheque Bounce is governed under section 138 of the Negotiable Instrument Act. Any offence against Cheque, as specified under section 138 of Negotiable Instrument Act, is a Criminal Offence and thus the proceedings against such Cheque is dealt in accordance with the Summary Trial provisions of Code of Criminal Procedure, 1973 (CrPC).

The offence relating to Cheque is tried by Metropolitan Magistrate (in case of Metropolitan cities) or Judicial Magistrate of First Class (for other than Metropolitan cities). Thus, the complaint against the defaulting Drawer shall be made accordingly.

Where can a Cheque Bounce case be filed?

As per the latest change made as per 2015 Ordinance and laws for time being in force, the complaint of the dishonour of cheque is made at the place as specified below:
1. In case where the Cheque is deposited by the Payee/Holder for collection of the amount through his bank account – the place where the branch of the bank is situated in which the Payee/Holder holds and maintains the account.
2. In case where the Cheque is deposited by Payee/Holder for collection of the amount otherwise through his bank account – the place where the branch of the Drawee bank is situated where Drawer holds and maintains the account.

Who can file a cheque bounce case?

The complaint or case of the dishonour of cheque is filed at a place where the cheque was submitted for honouring, thus, the Drawer is the one who files a cheque bounce case. The case for the dishonour of cheque can be filed not only against the individual but also against any organisation dishonouring the Cheque.

Cheque Bounce Charges or Cheque Bounce Penalty:

Section 138 of Negotiable Instrument Act deals with Cheque bounce punishment. Dishonour of Cheque is a Criminal Offence which is punished with fine or imprisonment or both. The monetary penalty for dishonour of cheque may be twice the amount of the cheque. If imprisonment is pronounced to the drawer, it may extend to two years. In addition to this, the bank has right to stop the cheque book facility and close the account for repeat offences of bounced cheques.

Can a person dishonouring the Cheque get Bail in case a complaint is filed?

Dishonour of Cheque is a bailable offence, implies, one can get bail if complaint is made against him for dishonouring the Cheque. But, in case where after getting bail a person fails to appear before the court after receiving summons (a letter requiring a person to be present in the court on the specified date), the court can issue non-bailable warrant against you. In effect of such warrant, the police can arrest you.

FAQ
As cheque bounce is a Cognizable offence underSection 138 of the Negotiable Instrument Act, 1881 and is punishable 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.
According to Section 138 of the Act, the dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both. If payee decides to proceed legally, then the drawer should be given a chance of repaying the cheque amount immediately.
Section 138 of Negotiable Instrument Act governs the Cheque as Cheque is one of the Negotiable Instruments.
If the payee or a person holding the cheque belives that the cheque, once dishonoured, will be honoured the second time, he can resubmit such cheque within 3 (three) months of the date specified on the cheque.

The criminal complaint can be filed if the following ingredients for the offense of cheque bouncing are present:

  • The cheque must have been issued fulfill some legally enforceable debt or any other liability.
  • The cheque must have been presented either within a period of six months or within the period of its validity whichever is earlier.
  • The payee is obligated to issue a legal notice in writing to the check issuer within a duration of 30 days.
  • The issuer must have failed to pay the amount to the payee within the duration of 15 days from the date of receiving the above mentioned period.
If a company committed the offense of cheque bounce, every single individual who was involved in the discharge of liability along with the company will be parties to the offense. Hence, both individuals and the company will be served the legal notice and subsequently will be parties to the criminal complaint.

Don’t worry, just fill the above mentioned details & contact the professionals of Aapkaconsultant.com and we will guide you with the complete process.

According to the Negotiable Instrument (Amendment) Act, 2015, a cheque bounce case can be filed in a court within whose local limit of jurisdiction is the bank to which the cheque is presented is situated

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