After E Check Bounces Do It Again

April 03, 2022 Post a Comment

A cheque bounciness is an offence under Section 138 of the Negotiable Instruments Act, 1881 ("Act") punishable with a fine which can extend to twice the amount of the check or imprisonment for a term not more than than two years or both. When the payee presents a bank check to the depository financial institution for payment, and the cheque is returned unpaid by the bank with a memo of bereft funds, then the check is said to have bounced.

A cheque bounce can occur due to several reasons, just if a cheque bounces due to insufficient funds in the drawer's account, information technology amounts to an offence under the Act. The banking concern must reject the cheque presented for payment with a return memo stating the reason as bereft funds. In such a case, the payee of the cheque can event a cheque bounce notice to the drawer enervating to pay the bank check corporeality.

Circumstances of Cheque Bounce

The various situations that result in cheque bounce are as follows:

Insufficient business relationship residuum – If at that place is not enough balance in the drawer'south account to make the payment of the bank check, the depository financial institution will reject and return the cheque to the payee with a memo stating insufficient funds to pay the cheque corporeality.

Expired validity of cheque – One time the drawer issues the check, it must exist presented for payment within three months. If it is not presented to the banking concern within three months, the bank check expires. If the expired check is presented to the bank, it bounces.

Overwriting – If the signature of the drawer or check amount or any other statement has been overwritten on the cheque, then the cheque bounces for overwriting.

Damaged check – If a cheque is damaged or disfigured and the details are not visible or have marks or stains, the bank check will bounciness.

Signature mismatch – If the drawer'due south signature is unclear or absent or does non match the ane in the banking concern's data, then the cheque will bounciness.

Mismatch of amounts or digits – If the bank check corporeality mentioned in words and figures does not lucifer, and so the cheque will bounce.

Remedies Confronting Cheque Bounce

Resubmission of check

When the cheque bounces due to overwriting, mismatch of signature, mismatch of the figures and words of the bank check amount or damaged cheque, the payee can enquire the drawer to submit another cheque rectifying the fault. If the drawer does not agree to submit another cheque, and then the payee can initiate civil action confronting the drawer to pay the cheque amount due to him and non for cheque bounce.

Cheque Bounce Notice under Section 138 of the Negotiable Instruments Deed

A cheque bounce notice is issued under Section 138 of the Negotiable Instruments Act when a cheque bounces due to insufficient funds in the drawers' account for making the payment of the cheque amount. If the cheque bounces for any other reason other than insufficient funds, the bank check bounce notice cannot exist issued, and the payee can demand resubmission of the cheque.

Issuance of Cheque Bounce Notice

When the check bounces due to an insufficient amount, the first step is to demand the payment of the corporeality by issuing a cheque bounce notice in writing by post under the Negotiable Instruments Human action. The payee can issue a bank check bounce notice within 30 days of an intimation sent past the bank forth with the bounced cheque stating that the bank cannot brand the cheque payment due to an bereft amount.

After issuance of the cheque bounce find, the payee must give the drawer fifteen days fourth dimension menses from the receipt of the cheque bounce notice to pay the cheque amount. If the drawer does not pay the cheque corporeality even afterwards the death of 15 days time period, so legal action can exist initiated past the payee confronting the drawer within 30 days of the death of 15 days.

Still, a cheque bounce find cannot be issued if the cheque was issued equally a donation, souvenir or whatever other obligation that is not legally enforceable. The cheque must be issued for the discharge of a legally enforceable liability or debt to establish an offence under the Act.

Procedure to Follow After Issuance of a Cheque Bounciness Discover

Subsequently the expiry of 15 days of issuing the bank check bounciness notice, the payee can initiate legal activity against the drawer. The payee should register a complaint under Section 138 of the Act. Under Section 138 of the Act, the offence of cheque bounce is a criminal offence for which the payee can initiate a criminal suit. The payee must file the complaint against bank check bounce before the Magistrate within 30 days of the decease of 15 days of the issuance of the cheque bounciness notice.

Jurisdiction of Magistrate for Filing Cheque Bounciness Adjust

The payee can file the complaint before the Magistrate in any of the post-obit places:

Where the cheque was drawn,
Where the cheque was presented for payment,
Where the payment had to exist made,
Where the cheque is dishonoured, or
Where the demand notice was served.

The cheque bounciness complaint has to be filed earlier the Metropolitan Magistrate if the adjust for the cheque bounce falls in any of the metropolitan cities. If the adapt for cheque bounce falls in whatsoever other cities, then the complaint must be filed before the Judicial Magistrate.

Procedure of Cheque Bounce Adjust

The process of a cheque bounciness suit are every bit follows:

Filing a complaint before the Magistrate subsequently the expiry of 15 days of receipt of cheque bounce notice past the drawer.
The payee/complainant has to announced before the court and provide the details of the instance. If the Magistrate is satisfied with the complainant'south statement, he volition issue summons to the drawer for appearing before the courtroom.
The drawer will appear and accept or deny the facts stated by the complainant. If the drawer denies the complaint, and so the courtroom will proceed with the criminal trial of the case.
The drawer/accused will file his argument, evidence and arguments of both sides will exist presented to the courtroom.
If the court finds the drawer guilty of the offence of bank check bounce, the court will pass a judgement of conviction against the drawer for the offence of check bounciness.

The penalty for cheque bounce is imprisonment for a term not more than two years or a fine that tin can extend to twice the amount of the cheque or both.

A civil suit tin can likewise be instituted against the drawer for payment of the bank check amount. In the case of the establishment of a civil suit, the payee cannot issue a cheque bounce notice. The payee can just result legal notice for recovery of the amount.

The offence of bank check bounce under Section 138 of the Deed provides criminal punishment for the reason of cheque bounciness due to bereft amount, whereas the ceremonious suit for recovery does not punish the drawer and provides for only the recovery of the bank check bounce amount.

The cheque bounciness discover tin be issued against the company, and a criminal adjust can be initiated against a company when the visitor bug the bank check, and it bounces due to an bereft amount nether Department 148 of the Deed. When a criminal arrange is initiated under Section 148 of the Act, the company and its directors will be punished for the offence of bank check bounciness.

All the same, if the drawer pays the cheque amount to the payee within 15 days of receipt of the cheque bounce notice, no office is committed past him, and legal activity cannot be instituted confronting him for cheque bounce nether section 138 of the Deed.

Often Asked Questions

Can I file an FIR for a cheque bounce?

Yes, you can file an FIR confronting the person who has issued a check. A person can and then file a case against the issuer of the bank check under Section 420 or 406 of the Indian Penal Code (IPC) in a criminal court. Alternatively, the payee can straight file a complaint before the Magistrate under Section 138 of the Negotiable Instruments Act, 1881 for a cheque bounce example after issuing a cheque bounce notice.

Is cheque bounce a crime?

Yep. When a cheque is bounced for the reason of bereft funds in the bank account, it is a criminal offence. The payee can file a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. When a criminal complaint is filed, the issuer of the cheque can be imprisoned.

Can I be arrested in a cheque bounciness case?

Yes, you tin can be arrested if the cheque issued past y'all bounces for the reason of insufficient funds in the account since it is a criminal offense. The penalization of imprisonment is provided to ensure that unscrupulous people do not fool innocent people in regard to payments and that they practice not escape or abscond away from the state. However, it is a bailable offence. Thus, you tin can get bond if you lot assure your presence in courtroom when demanded.

What is the bail amount for the cheque bounce case?

The bond amount for a bank check bounce case varies on a case-to-instance basis. Sure parameters bear upon the bail amount such equally, the amount for which the bank check was issued, the number of similar cases pending confronting the drawer in the same transaction, the financial status of the drawer, etc.

What is a cheque render memo?

When a cheque is dishonoured, the bank issues a memo to the issuer of the bank check containing the reason for the dishonour of cheque, date of cheque bounce, cheque number and date of upshot of the cheque. This memo is called a cheque return memo and is an essential document to issue a cheque bounce notice. The payee can upshot a cheque bounciness find based on the cheque render memo issued by the bank.

What are the documents required to file a cheque bounce case in Bharat?

The documents required to file a cheque bounciness instance in India are:

Copy of the notice served on drawer
Proof of service of notice, either courier receipt or receipt of registered postal service
Original cheque on record
Cheque return memo issued by the banker to the drawer
Proof of the existence of a legally enforceable debt or liability

Can in that location be both civil and criminal proceedings in case of cheque bounce?

Yeah, in that location can exist ceremonious and criminal proceedings against the issuer in example of check bounce. The civil proceedings can be instituted under Section 138 of the Negotiable Instruments Act, or criminal proceedings can be initiated past filing a complaint before the Magistrate.

Can I send the check again to the bank if it has bounced once?

Yes, you can send back the cheque to the bank even if information technology has bounced once. Dishonour of cheque once or twice does not curtail your right to send the cheque to the banking concern for payment. There is no brake regarding the number of times a check can be presented. However, when you nowadays the cheque, and information technology is dishonoured once again, it will requite rise to an additional cause of activity for filing a complaint under Department 138 of the Negotiable Instruments Deed, 1881.

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