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Cheque Bounce Notice - Procedure, Punishment and Penalty

  • Writer: lead India
    lead India
  • Aug 10, 2023
  • 3 min read

Because they owe the Payee money, the Drawer issues a cheque in their name. After that, the Payee/Holder of the Cheque deposits it at the bank where he has an account or another location. The cheque must be deposited on or after the date indicated on the cheque, but not more than 30 days after that date, or it will become void.


The "Cheque Return Memo" is sent to the Payee's banker if the Drawee realizes that it is unable to pay the amount specified in the Cheque after depositing it in the account. Then, the Payee's banker notifies him via a "Cheque Return Memo" that the cheque has been dishonored. Dishonor of a Cheque is defined as the Drawer's inability to pay the Payee the full amount of the Cheque on the Due Date or at the Time of Submission or Deposit.


If the Drawee Bank discovers that it is impossible to pay the Payee's bank the full amount of the Cheque for whatever reason, the Drawee Bank promptly sends the Payee's banker a "Cheque Return Memo" stating the cause for non-payment.


The dishonored cheque and memo are then given to the Payee by the Payee's banker. There are a variety of reasons why a check would bounce, but the one covered under Section 138 of the Negotiable Instruments Act is "Insufficient Balance," for which you can send the Notice provided on our website to the defaulting debtor (Drawer).


Procedure:

  • Within 30 days of a dishonored cheque, the beneficiary sends the defaulter the Cheque Bounce Notice through registered mail. The notice of a bounced cheque must be properly formatted and include details about the transaction's type, the amount, the date the cheque was deposited with the bank, the beneficiary's request for payment within 15 days, the date the notice bounced, and the reason why the cheque bounced are all given.

  • In the event that the check issuer defaults on payment, the payee may bring a criminal complaint in court within 30 days of the expiration of the 15-day notice period.

  • A court in the city where the cheque was presented must be contacted with complaints regarding cheque bounce.

  • A hearing will be held in the cheque case when the matter has been admitted in court, and summonses will be issued in accordance with Section 138 of the Negotiable Instruments Act.

  • Cheque defaulter must appear before the court to get the issue resolved.

Penalties and Punishment

The court will issue a summons and hold a hearing after receiving the complaint, an affidavit, and any pertinent document trail. If proven guilty, the defaulter faces a financial fine that may be double the amount of the cheque, a sentence that might be up to two years in jail, or even both. The bank also has the authority to terminate the account and take away the ability to use a cheque book in cases of frequent rejected checks.


If the drawer pays the cheque's balance within 15 days of the day they received the notification, they have not broken any laws. If not, the payee has 15 days to file a complaint in the jurisdictional magistrate's court, beginning on that day. If not, the payee has one month to do so.


How Do I Send a Notice of Cheque Bounce?

An alert regarding a bounced cheque may be produced using our platform. Before handing it to the person who will pay the check, the finished draft has to be printed on white paper or on formal letterhead. The following must be included in a cheque bounce notification.

  • Name of the cheque's recipient,

  • The cheque's issuer's name and address,

  • cheque's return deadline,

  • Reasons for a returned cheque,

  • The cheque issuer has been asked for an urgent alternative payment, and the cheque has been issued in accordance with Section 138 of the Negotiable Instruments Act.

For cheque bounce case solution, you can contact Lead India. Lead India offers online internet data, legal services, and free legal advice. In this case, ask a legal question and talk to a lawyer is the best course of action.


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