All You Need to Know About Starting a Company
What is meant by cheque bounce?
A cheque bounces when a bank doesn’t process the payment of cheque. There can be various reasons for a cheque bounce: -
- Mismatch of signature
- Mismatch of figures written on the cheque (in words and figures)
- Overwriting of any kind
These issues are minor and can be resolve without any legal help.
But when a cheque bounces due to lack of funds in the drawer’s account, we need to take a legal action.
A cheque bounce is governed by the Section 138 of the Negotiable instruments Act, 1881.
If you have received a cheque that has bounced, you have two options. You will be connected to our lawyers who will prepare and send a demand notice to the bounced cheque issuer. The lawyers will now draft a complaint against the bounced cheque issuer if there is no response to the notice within 15 days.
What is the procedure for Cheque Bounce Case?
- The first step is to send a Demand Notice to the person who has issued you a bounced cheque. The notice sent must have information about the bounced cheque. Details such as the date on which the cheque was issued and a copy of the dishonoured memo must be mentioned in the notice.
- The person to whom the notice has been sent need to response within 15 days of notice. In case of failing to do so, you can file a complaint against the bounced cheque issuer in the prescribed format.
- An Oath Letter also needs to be submitted with the complaint form. Besides it, a copy of the notice served along with the acknowledgement receipt, a photocopy of the memo and the bounced cheque received also have to be submitted.
- After receiving your complaint, judicial court will go through the documents sent and verify them. If the court found all your documents correct and is satisfied with your complaint, you will be asked to fill the Bhatta or Process Form. The accused will be summoned by the court for a hearing once you have submitted the Bhatta or process form. If the accused doesn’t appear in court,a bailable warrant against the concerned person can be issued by the court.
What is the penalty for Cheque Bounce Case?
According to the Negotiable Instruments Act, 1881, under section 138, issuing a bounced cheque is a criminal offence. So, if a complaint is filed in a court, a person can go to jail or might have to pay a heavy fine.
The fine amount up to two times the original amount needs to be paid by the cheque issuer. If a jail term is decided by the court after hearing the case, generally it will be of 1 yearbut extendable up to 2 years. The court can grant both the punishments if the case is of major importance. The court can also grant additional time for payment of dues.
What documents should you submit in a cheque bounce case?
While filing a complaint against a party in a cheque bounce case, you need to submit an application form along with the following documents:-
- A copy of the Demand Notice along with the acknowledgement of the receiver.
- The original bounced cheque
- A memo, the communication from the bank which states that the cheque has bounced and mention the reasons for the same.