Know your legal rights in case of cheque bounce
Dishonor of cheque
Dishonor of cheque occurs whenever the cheque is returned unpaid for any reason whatsoever. It could occur because of insufficient amount of funds in your bank account or the person might have left instruction with the bank to not honor the cheque. It could also happen if the signatures on a cheque do not match. You can proceed against the person who has issued such a cheque to you under various provisions of law.The most important and useful provision to consider is Section 138 of The Negotiable Instruments Act.
Important things to keep in mind
A demand notice should be issued within 30 days of receiving information and the demand notice issued will require the defaulter to pay back the amount. One could then file a cheque bounce case if the person fails to pay within 15 days of the issue of the demand notice.
The following documents are required before filing a cheque bounce case :
1) Original cheque and return memo
2) Copy of notice and original postal receipts.
3) Evidence affidavit.
Where can a cheque bounce case be filed?
There has been quite some debate regarding the area of jurisdiction of a cheeque bounce case. But recent Supreme Court rulings has clarified the issue. The cheque bounce case should be be filed in the area where the cheque was submitted by you, to be honored.
Who can file a cheque bounce case?
Ordinarily the payee of the cheque files the cheque bounce case. But in special cases, the case can also be filed through a power of attorney. An important thing to keep in mind is that it is mandatory for the complainant to appear before the magistrate and examined under oath.
What is a material alteration?
Changing the amount of the check, changing the name of the payee (the person to whom the check is given), or making other changes on the check, such as to the date or to the name of the drawee (the person from whose bank account the check is withdrawing funds) or paying bank can be considered as material alteration. If the cheque has been dishonored and the bank finds out that there has been material alterations on the cheque, then you are not entitled to file a cheque bounce case.
How do I defend against a frivolous cheque bounce case?
In certain business transactions, you may give a person a cheque as security. However, after the completion of the business transaction, the person may fraudulently try to encash the cheque. So the manner to defend a frivolous cheque bounce case is to show that there was no legally subsistence debt at the time the cheque was issued. Therefore, you will have to show that the cheque was given as a way of security and no debt existed at that point of time.
Civil suit for recovery could be filed. In serious cases and in cases where it is applicable, criminal complaint for cheating could also be filed.
Cheque bounce case against companies and firms
If you want to file a cheque bounce case against your company or firm, the people you can file the cheque bounce case against are the directors and/or partners of the company or firm. You could even file a cheque bounce case against the firm or company.
Read the Do's and Dont's in a Cheque Bounce Case here.
To know more about the topic and how to tackle it, have a look at the video below. Advocate Dhruv Banerji can also be consulted for further information at http://lawrato.com/advocate-dhruv-banerji or by calling 09599-000-555.
Learn what should be & what shouldn't be done in case of a cheque bounce with this complete guide for Indian Laws on cheque bounce.
These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.
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