STORY – GURDASPUR MAN GETS 1 YEAR JAIL IN CHEQUE BOUNCE CASE

Housing Development Finance Corporation Ltd engaged in housing loan business granted a loan of Rs. 8.75 Lakh to Mr. Sandeep Singh. The loan was to be paid off through monthly instalments but the payments were not made. Eventually a cheque for Rs. 1.5 lakh was issued by Sandeep which was dishonoured due to insufficient funds.

Jail in Cheque Bounce Cases Loan Case
Jail in Cheque Bounce Cases Loan Case

FAQs

  1. What should be done in case of a cheque bounce?

The payee has to send a legal notice to the drawer within 30 days of dishonour of cheque to make payment of the cheque within 15 days from the receipt of the notice. If the drawer fails to make the payment within 15 days from the receipt of notice the payee can move onto filing a criminal complaint in the court.

The finance corporation in the above story files a suit against Mr. Sandeep Sing for Dishonour of cheque.

  1. Where to file a case against cheque bounce?

The cheque bounce case should be filed in the area where the cheque is submitted by the payee to be honoured. The Court of Metropolitan Magistrate or a Judicial Magistrate of First Class is empowered to try the offence defined under the provision Section 138 of Negotiable Instruments Act 1881.

  1. What is the punishment in a cheque bounce case?

The punishment for the offence of cheque bounce is imprisonment up to 2 years or fine up to twice the amount of cheque or both.

The court in the above story sentenced Mr. Sandeep singh to undergo imprisonment for one year and pay Rs. 3 Lakh within one month.

  1. What are the remedies available to payee if a case is filed for cheque bounce?

The payee can file a Civil Suit for the recovery of money in case of cheque bounce. A criminal case can filed in cases where it is applicable. A criminal case for cheating could also be filed under IPC.

A criminal complaint was filed by the finance corporation in the above story.

  1. Can a case be filed against a cheque bounce where cheque has been issued as a Gift or donation?

Under Section 138 of Negotiable Instruments Act a complaint cannot be filed for cheque bounce for issue of cheque as a gift, donation or unlawful purpose.

The cheque was issued for discharge of loan in the above story.

  1. Will the cheque be dishonoured in case it is torn, overwriting, scribbling?

A cheque bounce occurs in case of disparity in amount stated in words and numbers, unattested alterations in cheque, mutilated cheque, overwriting and scribbling. However, the cheque bounce in such cases does not amount to an offence.

  1. What happens in case of a cheque bounce and drawer is dead?

A criminal suit cannot be instituted upon a deceased person. However, a civil suit may be instituted for the recovery of debt upon the legal heirs of the deceased person and it is limited to the extent of property inherited by the legal heir.

  1. Can cheque bounce case be withdrawn by the complainant if the drawer agrees to pay during the proceedings of the case?

If the accused is ready to pay the amount along with the amount of interest and cost as ascertained by the court, the court is entitled to close the proceedings.

The accused in the above story deliberately failed in discharge of his liability and did not show an intention to pay the debt.

  1. Can a complainant file for the same case again after withdrawal by him?

A person acquitted of an offence shall not be tried again for the same offence. The withdrawal of a case is granted only after court is satisfied with the reasons and conditions of withdrawal and the accused is acquitted of the offence. Also generally speaking a second complaint would be time barred as a complaint has to be filed within a period of 1 month.

  1. Can more than one suits be filed for dishonour of several cheques?

A separate suit can be filed for dishonour of more than one cheque.

  1. Whether a Director of a company be held liable for dishonour of a cheque if he was not the director of the company at the time of commission of the offence?

If director of the company was not in-charge of conduct of the company at the time of commission of the offence, he cannot be held liable under section 141 of the Negotiable Instruments Act, 1881.

  1. Whether it amounts to an offence if a cheque has been issued by way of security and it gets dishonoured?

If a cheque has been issued by way of security against a debt and subsequently the amount has become recoverable then it falls under section 138 of Negotiable Instruments Act. If however, no debt or liability was created then the section is not attracted.

The cheque was issued for discharge of loan in the above story.

  1. What are the documents required before filing a cheque bounce case?

The documents required for filing a cheque bounce case are

1)original cheque and return memo.

2)copy of postal receipts and notice.

3)evidence affidavit.

  1. What happens in case of unattested material alterations on the cheque?

If the cheque is dishonoured and the bank finds out that there are material alterations on the cheque without the consent of the drawer then a suit of cheque bounce cannot be filed.

  1. Does cheque bounce leads to deduction in bank balance?

If a cheque is dishonoured due to insufficient fund or any other reason such as signature mismatch, both the drawer and the payee are charged by their respective banks.

For your case specific advice, get in touch with a good criminal lawyer who is expert in cheque bounce matters across Tricity (Chandigarh Panchkula Mohali, Kharar, Derabassi).

This post is written by Soumya Mittal. For more info, please dial 99888-17966.