Dos & Don'ts for Cheque Bounce in India

What is Cheque Bounce?

When a cheque is returned by the bank unpaid, it is said to be dishonoured or bounced. Cheque bounce could occur due to several reasons such as insufficiency of funds, etc. When the cheque is bounced for the first time, the bank issues a cheque return memo along with reasons for non-payment.
 

What are the consequences of Cheque Bounce?

Cheque bounce is one of the most common financial offenses in India that can cause disastrous consequences to the issuer. Below-mentioned is a few ways through which a cheque bounce can affect you:
 

1. Bank Penalty:
   If a cheque bounce takes place due to insufficient funds or a signature mismatch or any of the other technical reasons previously mentioned in this article, the defaulter and the payee are charged a penalty amount by their banks. 
    

2. Negative influence on the CIBIL score:
   A cheque bounce can badly impact your financial credit history. A cheque bounce can damage your CIBIL score irreparably to an extent that you might get denied a loan in the future. 
    

3. Civil or Criminal action against the issuer:
   A bounced cheque can also attract civil or criminal action against the issuer if the promised funds are not given to the aggrieved party. In a situation where a cheque has been dishonoured, the aggrieved party has an option to file a case under Section 138 of the Negotiable Instruments Act , 1881 or Section 318 (Cheating) of the Bharatiya Nyaya Sanhita (BNS). 
    

4. Other Risks:
   According to the RBI guidelines, the banks can prohibit the issuing cheque books to any customer if he has been charged at least four times for cheque bounce for an amount of over Rs. One Crore.
    

What is the procedure or process for filing a Cheque Bounce case in India?

Contacting a cheque bounce lawyer is the first thing you should do if your cheque is bounced. Now, generally, you will follow the steps given below:
 

• Step 1: Send a Legal Notice to the person who issued the bounced cheque
   

• Step 2: Include all important information about the bounced cheque, such as the date it was issued and a copy of the dishonoured memo.
   

• Step 3: Give the notice's recipient 15 days from the date of receipt to make the payment.
   

• Step 4: If there is a violation, register a complaint with the court.
   

• Step 5: Include a copy of the notice that was issued and the bounced cheque that was received.
   

• Step 6: After receiving your complaint, the court will carefully analyse and confirm the information you have provided. 
   

• Step 7: The party responsible is then ordered to appear in court, if the judge is satisfied with your cheque return case.
   

• Step 8: The judge has the power to issue a bailable warrant against the accused if they don't show up in court. After the completion of the proceedings, the judge will give the appropriate verdict.
   

Do's and Don'ts in case of Cheque Bounce for Payee:

• Hire a Cheque Bounce Lawyer

• Act quickly - time is crucial in these cases

• Send a demand notice within 30 days of the cheque bounce 

• Make the complaint in court as soon as the 30-day period from the date of the notice expires. Any delay in the filing of the complaint will only be granted in certain exceptional circumstances. 

• Keep all original documents safe:
   

1.   Bounced cheque

2.   Bank memo

3.   Return slip

4.   Account statements
    

 Do's and Don'ts to Avoid Trouble for Issuer / Payer:

• Don't ignore any legal notices you receive and read them carefully

• Don't delay responding to court summons

• Don't issue cheques without sufficient balance 

• Don't forget to maintain proof of all communications

• Don’t delay in consulting a Cheque Bounce Lawyer if you recieve a legal notice

How to Prevent Cheque Bounce

• Ensure Sufficient Funds:
  It is essential for the issuer to confirm that there are enough funds in their bank account before writing a cheque.
   

• Information should be accurate:
  The issuer is required to provide accurate information, including the proper date, exact amount, and payee name on the cheque.
   

• Avoiding Post-Dated Cheques:
  Since this practice increases the likelihood that a cheque will bounce, issuers should avoid issuing post-dated cheques.
   

• Verify Signature and Date:
  In order to confirm the authenticity of the cheque, the recipient must carefully examine both the signature and the date.
   

• Use account payee cheques:
  Using an account payee check is a wise choice because it allows the specified payee to be the only one who can cash it, preventing any potential misuse.
   

• Be careful when filling out the cheque:
  To avoid any unintentional mistakes, carefully fill in all the information on the cheque, including the payee's name and account number.
   

• Present the cheque timely:
  The cheque should have been presented within its validity period of 3 months

Why is it Important to Hire a Lawyer in a Cheque Bounce case?

Cheque bounces can attract possible criminal charges. Hiring a cheque bounce lawyer to file or defend a cheque bounce case is one way you can ensure that you are on the right path in your cheque bounce journey.

A lawyer is an expert on the laws and can help you avoid significant mistakes that may cause financial or legal harm, which may require future legal proceedings to correct. You can also use LawRato's Free Legal Advice service to get free advice on your legal issue from expert cheque bounce lawyers. 

Advocate Chikirsha Mohanty

4.0 | 2+ user ratings Greater Kailash - 1, Delhi
5 years

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