Law Wisdom
Cheque bouncing cases
In a Cheque bounce case, an overview typically involves the account holder issuing a cheque to the payee, which is then presented to the bank for payment. However, due to insufficient funds or other reasons, the cheque bounces, causing complications for both the payer and the payee. The bank notifies the account holder about the insufficient funds in their account, leading to potential legal consequences.
Consequences of Dishonoured Cheque
The consequences of a dishonoured cheque in India can be financially and legally serious.
- Financial penalties: The bank will charge a penalty for dishonouring a cheque. This penalty can be up to ₹200, payable by the cheque’s drawer.
- Criminal prosecution: If a cheque is dishonoured due to insufficient funds, the cheque drawer can be prosecuted under Section 138 of the Negotiable Instruments Act 1881. This is a criminal offence, and the drawer can be sentenced to imprisonment for up to two years, or a fine of up to twice the cheque amount, or both.
- Civil suit: The payee of the dishonoured cheque can also file a civil suit against the drawer to recover the cheque amount. The payee can also claim damages for any loss or inconvenience caused by the dishonoured cheque.
- Damage to reputation: A dishonoured cheque can damage the reputation of the drawer. This can make it difficult to get loans or credit in the future and damage relationships with businesses and individuals.
Procedure for a Cheque Bounce Case
- Step 1: The first step is to send a Demand Notice to the person who has issued you a bounced cheque
- Step 2: The notice should include details regarding the bounced cheque. The notice should include information such as the date the check was issued and a copy of the dishonoured memo
- Step 3: The person has 15 days from the time they receive the notice to pay you
- Step 4: If they don’t, you can file a complaint in the prescribed format in the court
- Step 5: You must also present an oath letter, a copy of the notice issued with the acknowledgement receipt, a photocopy of the memo, and the bounced cheque received, in addition to the complaint form
- Step 6: When the judicial court gets your complaint, it will review and verify the documents you sent
- Step 7: Once the court is satisfied with your cheque return case, the complainant or their lawyers must fill out the bhatta or cheque bounce case process form, after which the accused is summoned to appear in court
- Step 8: If the accused fails to appear in court, the judge has the authority to issue a bailable warrant against the person in question.