Cheque Bounce Case Filing Procedure In India

Cheque dishonour is a criminal violation that can result in a sentence of up to two years in prison, a monetary fine, or both. Loan repayment, wage payment, bill payment, and fee payment are all examples of transactions where cheques are used. On a daily basis, banks handle and clear the vast majority of checks. Cheques are issued in order to provide proof of payment. Cheques, on the other hand, are still a popular mode of payment for many people. On the other hand, it is always a good idea to issue crossed “Account Payee Only” cheques to avoid their being misappropriated.A check is a form of negotiable currency. Cheques that are crossed and account payee are not negotiable by anyone other than the payee. The checks must be deposited into the account of the payee. In Cheque bounce Case, The “drawer” is the person in whose favour the cheque is written, the “payee” is the person in whose favour the cheque is drawn, and the “drawee” is the bank that is directed to pay the money.

Cheque bounces, on the other hand, are rather prevalent these days. Cheques for substantial sums of money are occasionally returned by the bank on which they were drawn. The following article explains what you may do if your check is returned unpaid.

Here’s A Step-By-Step Breakdown Of The Legal Procedure For a Cheque Bounce Case:

If A Check Is Returned

When a check is returned unpaid, the drawee bank sends a ‘Cheque Return Memo’ to the payee’s banker, detailing the cause for non-payment. The dishonoured cheque and the memo are then given to the payee by the payee’s banker. If the holder or payee believes the cheque will be honoured a second time, he or she can resubmit it within three months after the date on it. If the cheque issuer fails to make a payment, the payee has the right to take legal action against the drawer.

The payee may lawfully sue the defaulter/drawer for cheque dishonour only if the amount in the cheque is used to pay off a debt or the defaulter’s other obligations to the payee. The drawer cannot be charged if the check was given as a gift, used to lend money, or was used for illegal purposes.

Legal Action

For cases of cheque dishonour, the Negotiable Instruments Act of 1881 applies. Since 1881, this Act has been revised numerous times. For a well Cheque Bounce Case proceudre you should hire a good lawyer in Gurgaon.

● According to Section 138 of the Act, dishonouring a check is a criminal offence punishable by up to two years in prison, a monetary penalty, or both.

● If the payee wishes to proceed lawfully, the drawer should be given the option of returning the check amount immediately. Only a written notification can be given in the case of a chance like this.

● The payee must send the notice to the drawer within 30 days of receiving the bank’s “Cheque Return Memo.” The notice should state that the amount of the check must be paid to the payee within 15 days of the drawer receiving the notice. The payee has the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act if the cheque issuer fails to make a new payment within 30 days of receiving the notice.

The complaint must be filed in a magistrate’s court within a month of the notice period expiring. In this scenario, it is critical to seek the advice of an attorney who is well-versed and skilled in this field of law.

Fine Points: Conditions For Prosecution

● In order to use Section 138’s provisions, certain legal requirements must be met.

● The drawer should have drawn the check on a bank account he controls.

● The check should have been returned or dishonoured since there was insufficient funds in the drawer’s account.

● The check is written to settle a debt or fulfil a legal obligation.

● The drawer commits an offence under Section 138 of the Negotiable Instruments Act if he fails to make the payment within 15 days of receiving the notification.

Punishment & penalty

The court will issue summons and hear the case after receiving the complaint, as well as an affidavit and related paper trail. If proven guilty, the defaulter may be penalised with a monetary penalty of double the amount of the check, or imprisonment for a time of up to two years, or both. For repeated bounced check offences, the bank has the power to suspend the chequebook facility and cancel the account.

If the drawer pays the amount of the check within 15 days after receiving the notice, the drawer is not guilty of any offence. Otherwise, the payee has one month from the date of receipt of the payment to file a complaint in the jurisdictional magistrate’s court.