How to Send a Cheque Bounce Notice?

With the boom in the economy, the cheque bounce cases have increased. There are over 40 lakh cheque bounce cases clogging the legal system in India according to Supreme Court. In order to deal with bouncing of cheque, one needs to send a cheque bounce notice. This means taking legal action against the issuer of cheque.

Here in this article, we will talk about the cheque, cheque bounce and what is the procedure to send cheque bounce notice in India

Cheque Bounce-How does it happen?

Cheque Bounce is commonly known as dishonour of cheque. It can happen due to the following reasons:

• Due to insufficient funds in the bank account of the issuer of cheque.
• If there is a mismatch of signatures of the issuer.
• In India, cheques are valid for a period of three months only. There can be cheque bounce, if the cheque has already expired.
• If the amount mentioned in the words and numbers are different, there are high chances for cheque bounce.
• Moreover, if the cheque is not in good condition and is torn or the details not clearly visible, then it could lead to cheque bounce.
• Lastly, if any kind of scribbling or overwriting or correction is there, then that cheque is not allowed by the bank. To avoid the issue of cheque bounce, it is advisable to issue a fresh cheque in case of any discrepancies.

Section 138 of the Negotiable Instrument Act

According to Section 138 of The Negotiable Instrument Act, dishonor of cheque can occur due to insufficiency of funds in the account, or for any other reason. Cheque bounce is a punishable offence in India. Imprisonment of two years with fine which can extend to twice the amount of cheque or both can be given if found guilty of cheque bounce.

Through this section, the Court promotes parties to settle without the interference of the Court. Additionally, the Indian law aids the complainant in getting an interim compensation for the inconvenience due to the bouncing of the cheque.

Furthermore, the law states that if the payments are complete within 15 days of notice, then there is no need to file a case. But, if the defaulter fails to pay, then a case can be filed against him.

Interim Relief

The Negotiable Instrument (Amendment) Act, 2018 was introduced to aim at reducing the undue delay in the cases of dishonour of cheque. It also has a provision for payment of interim compensation to the complainants under section 143A.

Besides this, the Amendment also states about the power of the Trial Court to direct accused to pay interim compensation, which is not exceeding 20% of the total amount mentioned in the cheque. Furthermore, the compensation has to be paid within 60 days of the order.

The recovery of interim compensation is also provided under section 421 of the Criminal Procedure Code. Lastly, the Amendment also has a provision stating that the interim compensation received can be returned along with bank interest if the accused is acquitted after the trial is complete.

Key ingredients of a Cheque Bounce Notice

• Details of the beneficiary of the cheque
• Details of the issuer of the cheque
• The reasons for the return of the cheque
• The return date of the cheque
• That the issuance of the cheque is in accordance with section 138.

Procedure to send a Cheque Bounce Notice

Following are the steps for issuing a notice for the dishonor of cheque-

1. A demand notice is sent within 30 days. Within 15 days of receiving the notice, the drawer has to make the payments.
2. The cheque bounce is sent through registered post only. The beneficiary can retain a copy with himself and send the other copy to the issuer of cheque.
3. If the payment is not made within 15 days, then the payee can file a complaint within 30 days.

It is only after the fulfilment of the above conditions that one can engage a lawyer and approach the Court under Section 138 within a period of 30 days from the date of the receipt of the notice. There is a specific format for filing a cheque bounce notice, and it needs to be followed for recovering money.

Legal Notice Format for Cheque Bounce

While drafting a legal notice, one needs to be cautious about the terms of the legal notice, since it is just intimation about a further legal action which will be taken in case of default.

In order to send a legal notice for dishonor of cheque, one needs to draft a legal notice specifically stating about the dishonor of cheque. Once a notice is sent, you cannot make any further changes to it, and you cannot further go against the statements or information given in the notice.

Time Limit of filing case against cheque bounce

The limitation period is an essential aspect for starting a proceeding under section 138 of the Negotiable Instrument Act. One has to send a legal notice within a span of 30 days from the dishonor of cheque to make the payment within 15 days. Most importantly, on expiry of the 15 day period, one has the right to file a complaint before the Magistrate within one month.

Conclusion

With the advancement in business transactions, cheque bounce has become a prevalent problem. Consequently, the Indian legal system has implemented laws to curtail this issue and help people in matters of dishonor of cheque. Drafting a legal notice for cheque bounce is a crucial step towards recovering money, therefore we need to be specific and draft the legal notice accordingly.

For more information and assistance in drafting Cheque Bounce Notice, contact our team of expert lawyers at LawyerINC.