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File a Complaint in Cheque Bounce Cases

Cheque bounce cases, also known as dishonoured cheques or cheque dishonour cases, occur when a bank refuses to honour a cheque due to insufficient funds in the issuer's account, a mismatch in signatures, a frozen account, or other reasons. Here's an overview of the legal and procedural aspects of cheque bounce cases in India. You can get online Mediation at 24 Hours Law. Moreover You can resolve dispute online outside court, if both parties agree.

Legal Framework For Cheque bounce cases

Negotiable Instruments Act, 1881:

Section 138: This section deals with the offence of dishonour of cheque for insufficiency of funds or if it exceeds the amount arranged to be paid from that account.

Section 139: It presumes that the cheque was issued for the discharge of any debt or liability.

Section 142: It outlines the procedure for filing a complaint for dishonour of a cheque.

Procedure for Filing a Cheque Bounce Case

Demand Notice in Cheque Bounce Case:

Within 30 days of receiving the information of dishonour from the bank, the payee must send a written demand notice to the drawer (issuer) of the cheque, asking for payment of the cheque amount.

The drawer has 15 days to make the payment from the date of receipt of the notice.

Filing a Complaint in Cheque Bounce Case:

If the drawer fails to make the payment within the 15-day period, the payee can file a complaint in the court of the Judicial Magistrate or Metropolitan Magistrate through Lawyer.

The complaint must be filed within one month from the expiry of the 15-day period.

Court Proceedings in Cheque Bounce Case

Once the complaint is filed, the court issues a summons to the drawer to appear before the court.

The case then proceeds through the judicial process, which may include the recording of evidence, cross-examination, and arguments from both sides.

Punishment in Cheque Bounce Case:

If found guilty, the drawer can be punished with imprisonment up to two years, or a fine that may extend to twice the amount of the cheque, or both.

Preventive Measures

Ensure Sufficient Funds: Always maintain sufficient balance in the account to cover the amount of issued cheques.

Verify Details: Double-check the details on the cheque, including the date, amount, and signature.

Timely Communication: If you anticipate issues with cheque clearance, communicate proactively with the payee.

Recent Developments in Cheque Bounce Case

Digital Payments: With the rise of digital payments, the frequency of cheque usage has decreased, but legal provisions for cheque bounce cases remain stringent.

Court Rulings: Recent court rulings have emphasized the strict compliance with procedural requirements and timelines for filing and responding to cheque bounce cases.

Frequently Asked Questions (FAQs) about Cheque Dishonour Cases

1. What is a cheque bounce or dishonour?

A cheque bounce or dishonour occurs when a bank refuses to honour a cheque due to reasons such as insufficient funds, a mismatched signature, or a frozen account.

2. What are the legal provisions governing cheque bounce cases in India?

Cheque bounce cases are primarily governed by the Negotiable Instruments Act, 1881, particularly Sections 138 to 142.

3. What is the process to file a cheque bounce case?

Step 1: Send a demand notice to the drawer within 30 days of cheque dishonour.

Step 2: Wait for 15 days for the drawer to make the payment.

Step 3: If payment is not made, file a complaint in the court within one month from the expiry of the 15-day period.

4. What should be included in the demand notice?

The demand notice should include details of the cheque, the reason for dishonour, and a demand for payment within 15 days from the date of receipt of the notice.

5. What is the punishment for cheque bounce under Section 138?

If found guilty, the drawer can face imprisonment for up to two years, a fine up to twice the amount of the cheque, or both.

6. Can a cheque bounce case be settled out of court?

Yes, cheque bounce cases can be settled out of court if both parties agree. The complainant can withdraw the case upon receiving the payment.

7. What happens if the drawer does not respond to the demand notice?

If the drawer does not respond or fails to make the payment within 15 days, the payee can file a complaint in the court.

8. Is there a time limit for filing a cheque bounce case?

Yes, the complaint must be filed within one month from the expiry of the 15-day period after sending the demand notice.

9. What evidence is required to prove a cheque bounce case?

Essential evidence includes the dishonoured cheque, the bank's dishonour memo, a copy of the demand notice, and proof of delivery of the notice to the drawer.

10. Can a company file a cheque bounce case?

Yes, a company can file a cheque bounce case through its authorized representative.

11. What if the cheque is post-dated?

A post-dated cheque can be presented for payment on or after the date mentioned on it. If dishonoured, the same legal process applies.

Can a cheque bounce case be filed for partial payment?

No, a cheque bounce case under Section 138 cannot be filed if the drawer has made a partial payment before the notice period ends.

13. Can the drawer appeal against the court's decision?

Yes, the drawer has the right to appeal against the court's decision in a higher court.

14. What if the drawer changes address after issuing the cheque?

The payee must make efforts to serve the demand notice at the drawer's last known address. Proof of attempts to deliver the notice will be needed in court.

15. Can a cheque bounce case be filed for a cheque issued as a gift?

No, Section 138 applies to cheques issued for the discharge of legally enforceable debts or liabilities, not for gifts or donations.