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138 Cheque Bounce Limitation

  • Writer: lead India
    lead India
  • Nov 13, 2023
  • 4 min read

With a sudden increase in industrialisation, business transactions take place widely with payments through cheques. As mode of payment through cheques is widely used, so has the number of cases reporting the cheque dishonour and cheque bounce, which have resulted in the need to criminalise the offence of cheque bounce or dishonour. Therefore, in the year 1988, criminalisation of the written cheques was introduced in the Negotiable Instruments Act, 1881.


What is Cheque Bounce ?


After the bank returns any cheque unpaid due to an insufficiency of funds in the account of the drawer and for certain other reasons, the cheque shall be called as bounced. It could also be referred to as cheque dishonour, as it is a dishonour of payment by the drawer due to some reason.


The one who issues a cheque is Drawer, while the one in whose favour the cheque has been issued is the Drawee.

Reasons for a Cheque Bounce ?


After a cheque gets bounced, the respective Bank issues a cheque return memo as well as the reason for the cheque bounce. Mentioned below are some of the reasons for a cheque bounce-

  • In case the signature of the drawer does not match

  • When there is an overwrite on the cheque.

  • When the cheque was presented after the validity of three months had expired.

  • In case the account of the drawer has been closed.

  • When there are insufficient funds in the drawer’s account.

  • The payment from the said cheque was stopped by the account holder himself.

  • Insufficient opening balance.

  • There is some inconsistency in words and figures mentioned in the cheque.

  • In case no seal of the company issuing the cheque is there.

  • When the account number does not match.

  • If the account is a joint account, the cheque would be bounced if it does not contain the signatures of both the parties. The cheque gets bounced if only one signature is there.

  • When either the drawer or the drawee has died.

  • If the drawer has become insolvent, or has gone insane.

  • If it is a crossed cheque.

  • In case a cheque issued is against the rules of the trust.

  • If there are some alterations noticeable on the cheque.

  • If the drawee presented the cheque at a wrong branch of the Bank.

  • If the amount of the cheque has crossed the limit of the overdraft.

Remedies against cheque bounce- Mentioned below are some of the steps which must be taken as to what happens when a cheque bounces-

  • Resubmission of the cheque- When a cheque gets dishonoured due to overwriting, mismatch of the signature, or the figures and words on the cheque, the drawer will be asked by the payee to submit another cheque in order to rectify the former mistake. If the drawer has disagreed to submit another cheque, the payee will have the right to initiate civil action against the drawer to pay the amount due to him.

  • Notice for cheque bounce under Section 138 of the Negotiable Instruments Act- A notice for the cheque bounce will be issued under Section 138 of the NIA, in case a cheque gets bounced due to insufficiency of the funds. If the cheque is dishonoured due to some other reason, a notice cannot be sent and the payee would have to demand for another cheque.

After a notice for cheque bounce has been sent-

  • The notice would have to be issued within a period of 30 days after an intimation is sent by the bank stating that the payment can not be made due to insufficient amount in the account.

  • The payee would have to provide the drawer a period of 15 days from the date on which he sent the notice.

  • A legal action would have to be initiated within a period of 30 days after the 15 days notice period has ended.

  • Also, a notice will not be issued in case the cheque was issued as a donation or a gift or any such obligation which is not legally enforceable. The cheque so issued must be to discharge a liability which is legally enforceable

Procedure necessary-

  • A complaint will be filed before the Magistrate of appropriate jurisdiction after an expiry of 15 days time period.

  • The payee or the complainant must appear before the Magistrate and provide details of the case. When the Magistrate is satisfied with the same, summons would be issued to the drawer so as to appear before the court.

  • After which the defendant would have to file his statement and arguments and evidences are required to be produced in the court.

  • If the court finds the drawer guilty, judgement of conviction would be passed by the court for an offence of cheque bounce.

Conclusion


As could be inferred from the above article, whether you are a victim of a cheque bounce case or if you are defending yourself in a cheque bounce case, or a false cheque bounce case, it is important to seek proper legal guidance from experienced cheque bounce lawyers.


Who could help you write a proper legal notice as per the situation of your case, as if the drawer does not give a satisfactory reply to your notice and you decide to continue the case in the court, the notice se sent would be very helpful for your case.


If you wish to talk to a lawyer or seek free legal advice online for a cheque bounce case or any other legal issue related to a criminal or civil case, you may contact us at Lead India.



Call Us: +91–8800788535


 
 
 

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