Dishonour of Cheque | Cheque Bounce

 

Do these questions arise in your mind?

  What can I do when a cheque is dishonoured for the reason of insufficient funds? What legal action can I take to get the amount cleared?
 I have got my cheque dishonoured few months ago. It was issued by a Company/Person. What can I do now?
 Can a cheque be presented before the bank more than once?
 What is the Time Period for issuance of Legal Notice of Demand for Dishonor (dishonour, bouncing) of Cheque?
 Can I file a criminal complaint in case of cheque bounce?
 Important and essential part of the proceedings?
 In a notice for cheque dishonour under the Negotiable Instruments Act, do I need to mention other wrong doings, like fraud and misappropriation committed by the defaulter?
 If two cheques have bounced and the defaulter is convicted in both cases, is the punishment double?
 Can a cheque be presented before the bank more than once?

 

 

 

The proof of service of the notice is significantly vital.

You can courier it if pressed for time but also send a copy through registered post or speed post. If not pressed for time, just the speed post is enough. If it is the 15th day and no payment has still been received, you have to file a complaint within 30 days before a magistrate at the jurisdiction of your original bank where you have you main branch.

 

 

Essential Ingredients for offence under Section 138 of the Act

• There must be drawn a cheque on an account maintained by a person owning money or Cheque is issued any debt or liability or specified reasons under the act.
• Cheque should have been presented to concerned bank within a period of 3 months.
• That cheque must have returned by bank unpaid, either because of insufficient funds or any other mentioned reasons of the act.
• The payee or the holder in due course of the cheque makes a demand for payment of said amount within 30 days of return memo of cheque by giving a notice under Section 138 of N.I. Act in writing, to the drawer.
• Payee issues a notice to the concerned drawer After serving notice, if drawer fails to pay cheque amount within 15 days of receipt of such notice

 

 

Interim compensation

• The drawer of a cheque that has been dishonoured shall pay interim compensation to the complainant.
• The interim compensation will not exceed 20% of the amount of the cheque that was dishonoured.
• The interim compensation is paid by drawer of dishonoured cheque in a summary trial or a summons case. It is applicable even if he pleads not guilty to the charge made in his complaint.
• The drawer of cheque has to pay interim compensation within 60 days from the date of the order. If the court is satisfied, it can grant an extension of a further 30 days but not beyond that.
• In case the drawer of the cheque is acquitted in the case, the complainant has to repay drawer the interim compensation with interest. The repayment has to be made within 60 days from the date of the court order.

 

 

How to Recover your Cheque Bounce Amount.

• In order to recover your amount notice needs to be send as per The Negotiable Instrument Act, 1881 for dishonour of cheque under certain grounds.
• Cheque bounce is categorical a term used to intimate about unsuccessful processing of any cheque due to umpteen reasons. Funds Insufficient in the issuer's account is one of the major reasons for a Dishonor of Cheque.
• If you own a Cheque that has been bounced or has been dishonoured, or someone has issued you a cheque bounce notice against you, or you have received court summons for section138, of the Negotiable Instruments Act, complaint against you. We are the right platform to understand the legalities and information about your next step.

 

 

Reasons for Dishonour of Cheque:

• Insufficient Funds
• When payment is stopped
• Non-Applicability of Funds
• Irregular Signature
• Alterations in the Cheque
• Post-dated Cheque
• Stale Cheque
• Frozen Account
• Account Closed
• The date mentioned on the cheque is disfigured or unreadable
• The cheque has expired.
• Words and numbers do not match
• Damaged or torn
• Overwriting or scrawling on the cheque
• The bank has a suspicion of fraud or forgery
• Account number to which the cheque is drawn does not match
• Miscellaneous
  

 

Primarily Cheque bounce is a criminal offence according to Indian law. It’s a punishable offence.

Drawer: Person who draws the cheque is called ‘drawer’
Payee : In whose favour the drawer draws the cheque is called ‘payee’.
Drawee: The bank who pays the amount for the said cheque is called ‘drawee’.

Crossed and Account payee cheques are not negotiable by any person other than its payee. The cheques have to be only deposited into payee's bank account.

If the cheque was issued as a gift, towards lending a loan security or for unlawful purposes, then the drawer cannot be prosecuted in such cases.

Our company is based at Malviya Nagar and areas close to us are Saket, Mehrauli, Hauz Khas, Green Park, Chanakyapuri, C.R Park, Defence Colony, Greater Kailash or GK, Kalkaji, Khanpur, Lajpat Nagar, Moti Bagh, Nehru Place, New Friends Colony or NFC, Okhla, R.K.Puram, Safdarjung, East of kailash, Sant Nagar, Sarojini Nagar, South ex, South extension, Vasant Kunj, Vasant Vihar etc

Mr R. Singh and Mr D. Khan Lawyers