A cheque is used to take money out of a bank by an individual. It is a "bill of exchange" that is due upon demand and is always drawn by a certain banker. When a bank receives a cheque that is intended to be paid and it bounces, the bank is going to return the cheque and provide a return memo outlining the reasons behind it. A cheque bounce notice and possible legal action could be delivered to the drawer if the bank refuses the cheque for insufficient cash.
Cheque Bounce Notice: About
A cheque that "bounces" indicates that the issuer will not honour it. The notice informs the defaulter or drawer that, in the event of a dishonoured cheque, Section 138 of the Negotiable Instruments Act requires the unpaid creditor or payee to serve legal notice on them through an advocate.
Cheque Bounce Notice: When to Issue?
The first requirement is that the cheque be made payable to the obligation.
The beneficiary must present the cheque within the six months that it is valid.
The bank has to have returned the cheque because there wasn’t enough money.
The payee raises demand by sending a written cheque bounce notice for the payment to be returned within 30 days after learning from the bank that there are not enough funds.
Drawer fails to pay the specified amount within 15 days of receiving written notice that the cheque bounced.
Legal action is started within a month following the cause of action's emergence.
Cheque Bounce Notice: Procedure to Send One
The bank produces a "cheque return memo" explaining why the payment failed to arrive when a cheque bounces for the first time.
The holder may resubmit the cheque to the bank within the allotted time or in accordance with instructions if he thinks it will be honoured a second time.
After obtaining the memo on the return of the cheque, the party that feels wronged has 30 days to send a legal notice to the defaulter and begin legal action.
If payment does not arrive within 15 days, the payee has 30 days to file a complaint with a magistrate.
The state in which the bank is located is where a complaint must be lodged.
Cheque Bounce Notice: Procedure Involved
Using Lead India’s website, you may draft a Cheque bounce notice. After the drafting is finished, it must be printed on plain paper or on the company's letterhead before being sent to the person who issued the cheque.
To properly document the notice's issuance date, a cheque bounce notice is sent by registered mail. A single copy of the letter can be kept by the beneficiary of the cheque, while the other copy is sent by registered mail to the cheque issuer.
Cheque Bounce: Punishment & Penalty
Upon receipt of the complaint, an affidavit, and pertinent documentation, the court will convene to hear the case and issue a summons. If proven guilty, the defaulter may face a prison sentence for a term that may be extended to two years.
A monetary penalty equal to twice the amount of the cheque, or both. If there are repeated instances of bounced cheques, the bank additionally holds the authority to terminate the cheque book service and cancel the account.
The drawer is not guilty of an offense if they pay the amount on the cheque within 15 days after receiving the notice. If not, the payee has one month from the day the notice's 15-day deadline expires to file a complaint in the jurisdictional magistrate's court.
In banks, cheque bounce incidents are a common sight. Cheque bounces are frequently the result of careless or insignificant errors. As a result, India has rules in place to help us handle situations involving bounced cheques.
You will need the help of a lawyer to file a cheque bounce case if you have been fooled. These lawyers help you effectively find your cheque bounce case solution. Therefore, by providing legal compliance advice, delivering demand letters, and taking necessary legal action to shield their clients from monetary damages and possible criminal charges, lawyers contribute to the prevention of cheque bounce.
One can talk to a lawyer from Lead India for any kind of legal support. In India, free legal advice online can be obtained at Lead India. Along with receiving free legal advice online, one can ask a legal question to the experts online free through Lead India.
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