Cheque Bounce Case
The Indian government launched a program named ‘Digital India’ in 2015. After the implementation of this program, a sector that underwent major change was the banking sector. Every bank in the country was made available on our finger tips. Even though this program is implemented on a large scale, many people prefer going traditional ways like going to the bank and depositing cheque than opting online banking. Whichever ways we prefer, there is always a risk associated with money like online fraud or cheque bounce. Our generation or the future generation might know about online fraud but do we know anything about cheque bounce? Or what all we need to do when our cheque is bounced. Here are some points that will guide you through this topic.
First, let us see what a cheque is. It is a document that orders a bank to pay a certain amount of money from a person’s account to the person in whose name the cheque has been issued.
Some points are to be kept in mind while using a cheque as means to transfer money. The cheque has to be in writing, and the banker should be specified. The cheque should contain signature of the drawer, and it should be payable on demand.
Now let us see how does the cheque bounce and under what circumstances. The cheque is said to be dishonored or bounced when the bank does not or is unable to deposit it. There are numerous reasons behind this issue. Mentioned below is the list of reasons behind the cheque getting bounced.
- Signature mismatch
- Insufficient funds in the account of the payer
- Difference in the word and figures mentioned on the cheque
- When the cheque is crossed
- Overwriting on cheque
- Account closed
- Deposition of cheque after its expiry
- Opening balance insufficient
- If the cheque is issued by a company, the company seal missing
- Mismatch in the account number
- Death of the customer
- Insolvency and insanity of the customer
- In case of joint account, when there is requirement of both signatures, and only one among them has signed
- Doubt in the authenticity of the cheque
- Presented at the wrong branch
- Alteration in the cheque
Cheque bounce is considered as a crime in India. The following tips will provide useful measures in cases of cheque bounce according to the Negotiable Instruments Act.
1: Demand Notice
Once the cheque has bounced, you are required to send a letter (demand notice) within 30 days of such bouncing to the party who wrote the cheque (the drawer) threatening to initiate proceedings under the Negotiable Instruments Act in case the amount is not paid within a stipulated period (usually 15 days).
2: Drafting of Complaint
After a lapse of 15 days from the date of delivery of the demand letter, if no payment has been received, there is a 30 day period to file the complaint before a magistrate against the payer.
3: Court Process for filing a case
1. The court issues an amount as fee depending on the amount issued on the cheque.
2. Memo of Advocate along with signatures of the complainant is essential at the time of filing a case.
3. All documents are cross checked by the Judicial Magistrate First Class after the case is filed by the complainant in court. For this procedure, original cheque (bounced), a copy of the notice, original memo, receipt of the post office, acknowledgment receipt, and receipt of U.P.C. are required.
4. The period of limitation is also verified at this stage.
5. The Process Form, known as the Bhatta, is filed by the complainant or lawyer, along with the address of accused.
6. The court then issues a summon to the accused to appear in court on a specific date.
7. If accused does not appear in court on the date of hearing, the court issues a bailable warrant on the request of the complainant.
8. If the accused still disobey the court and does not appear for the hearing, the court may issue a non-bailable warrant of arrest.
Some other tips to keep in mind are as follows
- A cheque issued as a gift/donation/any other obligation, cannot be covered under the Section 138 of the Act. For this section to apply, the cheque has to carry a legal obligation.
- A cheque expires after three months.
- Presentation of the cheque at the request of the drawer after the demand notice has been sent will not mean that the drawer’s time limit under the notice has increased.
- A delay in filing the complaint after the lapse of 30 days may be excused by the magistrate only in exceptional circumstances.
Many questions might come to our mind when we get to know that our cheque has been bounced like where can the case of cheque bounce be filed, who can file a cheque bounce case, and so on? There was a debate regarding the area of jurisdiction of a cheque bounce case. According to the latest verdict of the Supreme Court, the cheque bounce case should be filed in the area where the cheque has been submitted by you.
Mainly, the payee files the cheque bounce case. But, in special scenarios, the case can also be filed through a power of attorney. It is mandatory for the complainant to appear before the magistrate and examined under oath.
There are several other ways like material alteration by which a cheque gets bounced. Changing the name and amount on cheque or making some other changes like change in date and name of the drawee is known as material alteration. When the bank learns that there is material alteration in cheque, then the person is not eligible to file a cheque bounce case.
There are various other ways through which a cheque bounce case can be dealt. A criminal complaint can be filed in case of cheating. If you want to file a cheque bounce case against your company or firm, you need to file a complaint against the directors and/or partners of the company or firm. You could even file a case against the firm or company.
Do bear in mind that these tips are not legal advice, nor a substitute for a lawyer under critical circumstances.