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WHAT IS MEANT BY CHEQUE BOUNCE

A cheque bounces when a bank doesn’t honour a payment. A few of the reason are wrong signature, mismatch of figures written on the cheque (in words and figures) and overwriting.
  • • These issues are minor and can be solved without the court’s intervention, A major cause for concern is when a cheque bounces due to lack of funds in the drawer’s account.
  • • If you have received a cheque that has bounced, you have two options. You can send the person a notice and then if there is no response after 15 days, you can send them a legal notice, by filing a complaint in court.
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What is the procedure for Cheque Bounce Case

  • • The first step in to send a Demand Notice to the person who has issued you a bounced cheque. The notice should contain information about the dishonoured cheque. Details such as the date on which the cheque was issued and a copy of the dishonoured memo should be mentioned in the notice.
  • • Once the person receives the notice, he or she has until 15 days to make a payment to you. If they fail to do so, you can lodge a complaint with the court in the prescribed format. If the accused doesn’t appear in court, the judge can issue a bailable warrant against the concerned person.
    • 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 hefty fine.
  • • The fine can be up to two times the amount that had to be paid. In case the court decides on a jail time, it is generally for a period of one term, but it can be extended to two years.
    • What documents should you submit in a cheque bounce case
  • • A copy of the Demand Notice along with the acknowledgement of the receiver.
  • • The original cheque that has bounced.
  • • A memo, the communication from the bank to state that the cheque dishonoured and the reasons for it.