Cheque Bounce is when a cheque presented in bank is returned unpaid.
Cheque Bounce occurs when there are insufficient funds in the bank of the person who issues the cheque or original signature of the person do not match with the signature on the cheque.
Most important provision for cheque bounce is Section 138 of The Negotiable Instruments Act.
Things To Do In Case Of Cheque Bounce.
- A demand letter or a legal notice must be sent to the person who issue cheque.
A person who issue cheque is known as drawer.
- Legal notice must be sent within 30 days from the date of receipt of cheque bounce from bank.
- If drawer does not pay the amount within 15 days from date when legal notice is sent.
Then the aggrieved person must file a cheque bounce case against drawer.
Documentsrequired before filling cheque bounce case.
- Original cheque and return memo.
- Copy of notice and original postal receipts.
- Evidence affidavit.
Cheque bounce case must be filled in the area where the cheque was submitted to be honoured.
Power of attorney or payee of the cheque files the cheque bounce case.
Complainant must appear before magistrate and should be examined under oath.
If there is material alterations on the cheque like changing the amount of cheque , changing name of payee or changing the name of paying bank.
Then cheque bounce case cannot be filed.
In cheque bounce case : a civil suit for recovery of money can be filled.
In serious cases criminal complaint for cheating under Section 420 of Indian Penal Code can be filled.
- To defend a frivolous cheque bounce case it must be shown that there was no legal subsistence debt at the time when cheque was issued.
- If you want to file cheque bounce case against company or firms you can file it against the directors or partners of the company or firm or you can also file it against the firm or company.
Punishment and penalty of cheque bounce.
The court will issue summons and hear the matter.
If defaulter is guilty can be punished with penalty to pay the twice amount of cheque or imprisonment which may extend to two years or both.
Bank can also close the account if there is repeat offences for bounced cheque of an account holder.
If drawer pays the amount within 15 days of receiving the notice then he does not commit any offence otherwise the payeecan file the complaint in the court of jurisdictional magistrate within one month of expiry of date of 15 days prescribed in the notice.
For more info on the subject of cheque bounce related matters, please dial 7888-356908.