Cheque Bounce Case
What Is Cheque Bounce meaning?
A bounced check is slang for a check that cannot be processed because the account holder has nonsufficient funds (NSF) available for use. Banks return, or “bounce”, these checks, also known as rubber checks, rather than honouring them, and banks charge the check writers NSF fees.
A cheque bounce is when an unpaid cheque is returned back by the bank, also known as dishonour of cheque. Cheque bounce can eventuate because of a lot of reasons, for instance, due to insufficiency of funds in the account of the ‘drawer’ and many other reasons.
Reasons For Cheque Bounce:
Although, there are several cheque bounce reasons to be considered such as incorrect date mentioned on the cheque, signature mismatch, mismatch of the amount and figures, damaged cheque, overwriting of the cheque, drawer orders the bank to stop payment on the cheque and the name of the payee is absent or not clearly written. etc. The principal reason for a cheque bounce is insufficient funds.
How to file a case on cheque bounce?
In India. a cheque bounce is a criminal offence stipulated under Section- 138 of the Negotiable Instruments Act, 1881. However, in case of a cheque bounce, the aggrieved party can file a criminal as well as a civil suit against the accused.
Filing a criminal complaint
When a cheque bounces the first time, the bank issues a ‘cheque return memo’, stating the reasons for non-payment. The holder can resubmit the cheque to the bank within three months of the date on it, if he believes it will be honoured the second time.
The other option would be to prosecute the defaulter legally. The first step is to send a legal notice to the defaulter within 30 days of receiving the cheque return memo. All the relevant facts of the case, including the nature of transaction, amount, date of depositing the instrument in the bank, and subsequent date of dishonouring, should be clearly mentioned in the notice. If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act. However, the complaint should be registered in a magistrate’s court within a month of the expiry of the notice period.
Filing a civil suit
While the above-mentioned process is helpful in taking a defaulter to task, it may not always result in recovery of the pending dues. Hence, one can file a separate civil suit for recovery of the cheque amount, along with the cost borne and the lost interest.
This is where a summary suit under Order 37 of the Code of Civil Procedure (1908) comes in. A summary suit is different from an ordinary suit as it does not give the accused the right to defend himself. Instead, the defendant has to procure permission from the court to do so. However, remember that summary suits can be availed of only in recovery matters, be it promissory notes, bills of exchange or cheques. “Since a summary suit is a civil proceeding that does not have the force of a criminal charge, the chances of imprisonment are remote in such matters.
Cheque Bounce Charges:
Court fee or the stamp duty that is to be paid while filling the case under the negotiable instruments act 1881 id subjected to quantum of amount that is due. The following tabulation shows the same Amount on cheque Court fee Rs. 0 to Rs. 50,000/- Rs. 200 Rs. 50,000/- to Rs. 2,00,000/- Rs. 500 Above Rs. 2,00,000/- Rs. 1000.
If a cheque bounces due to insufficient funds or any other technical reason, such as signature mismatch, their respective banks charges for both the defaulter and the payee.
The penalty charges vary from one bank to another and are different for different account types. Premium accounts usually have higher penalty charges.
Documents required for file a case for cheque bounce?
- When you are filing a complaint u/s 138 of the N.I.Act, all the original documents which shows the reason for cheque bounce like bank statements, original cheque, cheque return memorandum, notice under the N.I.Act, shall be produced before the Negotiable Act Court.
- The original cheque which is bounced shall be produced and submitted before the court during the stage of evidence and it will be under the custody of the honourable court only. So, there will be no chance of missing or misplaced of the original documents.
- Copy of the notice served on drawer;
- Proof of service of notice, either courier receipt or receipt of registered post A.D.
- Original cheque on record
- Cheque return memo issued by the banker to the drawer
- Proof of existence of legally enforceable debt or liability
If you fail to file the complaint within this period, your suit will become time-barred and, hence, not be entertained by the court unless you show sufficient and reasonable cause for the delay. On receiving the complaint, along with an affidavit and relevant paper trail, the court will issue summons and hear the matter. If found guilty, the defaulter can be punished with a prison term of two years and/or a fine, which can be as high as twice the cheque amount.
However, the defaulter can appeal to the sessions court within one month of the date of judgement of the lower court. If a prolonged court battle is not acceptable to both the parties, an out-of-court settlement can be attempted at any point. “You can also file a case of cheating under Section 420 of the Indian Penal Code, but the above recourse is preferred as it is faster and specially dedicated to this particular offence (bounced cheques).
It is better to consult cheque bounce handling lawyer.
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Trying to Escape From Cheque Bounce Case ?
Cheque bouncing is a criminal offence in India under the provisions of section 138 of Negotiable Instrument Act. It is possible to avoid the unnecessary legal hassle of a false Cheque bounce case by consulting an experienced lawyer for Cheque bounce case