Cheque Bounce Notice - Procedure, Punishment And Penalty

 A "bill of exchange" that is due upon demand is a cheque. The "drawer" is the person who issues the cheque, and the "drawee" is the person for whom the cheque is issued. Cheques are utilized in almost every transaction, including loan repayment, wage payments, bill payments, payment of fees, etc. Daily, banks process and clear the vast majority of checks. Cheques are issued as a means of obtaining payment documentation. However, for many people, checks continue to be a trusted form of payment. Conversely, it's usually a good idea to print crossed "Account Payee Only" checks to prevent misuse.

According to the Negotiable Instruments Act, Cheque Bounce is a serious crime that carries a prison sentence and a fine. To preserve his legal rights under the Negotiable Instruments Act, the drawer of the cheque must deliver the document within 30 days after the day it was dishonored. Cheque bounce or cheque non-payment is a serious offense punishable in India by a fine or jail, according to Section 138 of the Negotiable Instruments Act.

How Should a Cheque Bounce Legal Action Be Started?

• Cheque Within 30 days of the dishonored cheque, the Beneficiary notifies the defaulter of the cheque bounce by registered mail. The  legal notice for cheque bounce must be written properly and include details about the transaction's type, the amount involved, the date the check was deposited with the bank, the notice of the bounced check's date, the cause of the bounced check, and the beneficiary's request for payment within 15 days.

• The payee may bring a criminal prosecution before a court if the cheque issuer defaults in payment within 30 days of the expiration of the 15-day notification period.

• Cheque bounce complaints must be lodged at the court of the city where the cheque was presented.

• Following the admission of the case, a hearing will take place, and summonses will be issued by Section 138 of the Negotiable Instruments Act.

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

How Does a Cheque Bouncing Procedure Work?

• Demand notification is sent inside of the 30-day window. The drawer must make payment within 15 days of receiving the demand letter.

• To establish proof of delivery, the notice of a bounced cheque is issued via registered mail.

• The payee has 30 days to submit a complaint with a magistrate if payment is not received within the allotted 15 days.

• The state where the bank is located is where the complaint must be lodged.

Penalties and Punishment

The court will issue a summons and hold a hearing after receiving the complaint, an affidavit, and any pertinent paper trail. If proven guilty, the defaulter faces a financial fine that may be twice the amount of the cheque, a sentence that might be up to two years in prison, or even both. For repeated instances of bounced checks, the bank also has the power to stop the ability to use a checkbook and close the account. The drawer does not violate the law if the cheque amount is paid in full within 15 days of the notice's receipt date. If not, the payee may proceed to submit a complaint in the jurisdictional magistrate's court within a month of the notice's 15-day expiration date.

When is a notice of a bounced cheque valid?

• Within six months of the date of issuance, the cheque must be presented.

• The cheque must have been returned for insufficient funds.

• Within 15 days of receiving the notice that the cheque was bouncing, the maker of the cheque has not made the required payment.

• After the cheque bounced, the beneficiary notified the maker of the cheque within 30 days.

• The cheque is being used to pay off any outstanding debt.

SOURCE:-

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