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Cheque Bounce Notice

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Cheque Bounce:

With the increase in the usage of cheque instead of cash or any other mode, the ease of transactions has without doubt increased. What also has increased is the evading of payments i.e. cheque bounce in the garb of providing cheque that can be honoured by the banks or in simple words when the bank cannot process the cheque presented for the payment due because of some reasons.

There have been a plethora of such incidents wherein an individual or an entity presents the cheque to a bank only to receive a bank memo stating its inability to make the payment.

What are important features of a cheque?

  • Cheque needs to be in writing
  • Cheque needs to be an unconditional order
  • Banker name needs to be specified on the same
  • Payment of cheque is to be directed to specified person
  • Cheque should be payable on demand from party specified
  • Cheque needs to be for a certain amount of money
  • It needs to be signed by drawer

What are various categories/reasons of cheque bouncing mentioned under law?

  • Signature mismatch;
  • Account closed;
  • Insufficient Funds in Account.
  • Overwriting on the cheque.
  • Expiry of cheque i.e.if cheque not presented in bank for a period of 3 months from the date of cheque
  • Payment stopped by Drawer/Countermand of cheque.
  • Disparity/difference in the words and figures mentioned on the cheque.
  • Cheque doesn’t bear the seal of the company.
  • Any contradiction/mismatch related to Account information.
  • Non-presence of signature of both parties in case of joint account;
  • Death or insolvency or insanity of the party on Drawer/Drawee
  • Crossed cheque or Alteration in cheque
  • If there is any issue related to genuineness of the cheque, etc.

What is the procedure of sending cheque bounce notice?

What one must be aware of is that cheque bouncing is an offence and you have legal remedies against the defaulter. The Indian laws have provisions in the Negotiable Instruments Act, 1881 for the offence of Cheque Dishonour. This implied that the Drawee in whose name the cheque is issued should be aware of his rights: to demand the payable amount through a legal notice and in the event where the payment is not made even upon the demand, to approach the appropriate court of proper jurisdiction. Before approaching the court, you must be sure to have read this checklist. The legal remedy to the drawee is available only if: .

  • The cheque was issued in discharge of a debt or liability, in whole or in part, and not as a gift or loan.
  • You presented the cheque within the period of its validity;
  • You have sent the defaulter a written demand notice within 30 days of the receipt of information of cheque bounce from the bank, giving 15 days for the payment of due amount, and
  • The payment has not been made within the 15 days as provided in the demand notice.
  • It is only after the above that you have to engage a lawyer and approach the court with a criminal complaint under the provisions of Section 138 Negotiable instruments Act, 1881, within a period of 30 days from the date of the receipt of the Legal Notice.

What are the services Lawyerinc offers for cheque bounce?

Our services:

Our comprehensive range of end-to-end solutions includes following:

  • End to end services for cheque bounce.
  • We will draft a Legal Demand Notice on your behalf. Our expert professions will contact you for the details of the transaction, and prepare Legal Demand Notice.
  • If you have not received the payment within 15 days of the receipt of the notice by the drawer, we will assign a Case Manager w11ho shall be your point of contact during the period of preparation of documents and the trial.
  • Let us know the details of the transaction and the default, to aid us in providing you with the best advice.
  • We will find you the best Lawyer as per your case and facts
  • We shall help you prepare your case to be presented to the court of the appropriate jurisdiction.
  • At every stage of the trial, till its finality, you shall be notified of the updates of the case.
  • We shall keep track of the lawyer assigned to you so that you face no troubles.
  • *Any fee, stamp duty and miscellaneous charges shall be payable extra.

    Do contact us in case of any query related Cheque bounce and much more. To avail any of the above-stated services, kindly establish contact by posting a query at our site.

What are the primary objective of section 138 and the related provisions of the negotiable instruments act?

The Negotiable Instruments Act aims to provide relief to the complainant who can be achieved upon receiving the full amount he is entitled to along with interest and just compensation for the inconvenience suffered by him. This implies that the provision is primarily compensatory and the punitive element has been added for smoother enforcement of the compensatory element.

It is for the same reason that:

  • The court encourages mediation and settlement between the parties without jeopardizing the interest and rights of the complaint who should be appropriately compensated in all situations.
  • The courts have also been given the power to discharge the accused, even in absence of consent of either party, if it has reason to believe that the cheque amount with all the costs and interest has been paid and there is no reason available to proceed with the punitive part of the punishment.

Is complaint filed based on second legal notice after re-presentation of cheque is maintainable?

Yes, Complaint filed on basis of second legal notice is maintainable. Hon’ble Supreme Court in “Leathers vs. S. Palaniappan and Another” in 2013 held that:

“There is nothing in the provisions of Section 138 of the Negotiable Instrument Act that forbids the holder of the Cheque to make successive presentation of the cheque and institute the criminal complaint based on the second or successive dishonour of the cheque on its presentation.”

Frequently Asked Questions

  • Is cheque bouncing a criminal offence?

    Yes, Cheque Bounce is a criminal offence. Drawer/signatory of the cheque can be prosecuted for the offence and can be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both.

  • One civil complaint is already pending in civil court between the same parties, can complaint under Section 138 NIA be filed simaltaneously?

    Yes, both criminal complaint and civil suit can be filed simultaneously for the same cause of action.

  • What if accused is ready to deposit the cheque amount during the pendency of the complaint?

    As per Hon’ble Supreme if the Accused is ready to compound the matter and to pay the cheque amount along with interest and other expenses as assessed by the Court by a specified date, the Court is empowered to dismiss the proceedings as provisions of Section 143 of the NI Act, 1881 read with Section 258 Code of Criminal Procedure

  • Can I sue a party for dishonour of cheque if the cheque in question was given as a gift or in charity?

    No, if the cheque in question was given as a gift or in charity, it will not be considered as an offence.

  • Why to get cheque bounce legal notice and complaint drafted through lawyerinc?

    Lawyerinc is a complete blend of professionals from across the globe. In-house team of lawyers and attorneys, CA, CS. All professional work together in Lawyerinc, providing you end to end solution. It guarantees delivery in the shortest and most reasonable rate in India. It enjoys a global presence.

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