Know your legal rights in case of cheque bounce

October 30, 2018
By Advocate Chikirsha Mohanty



 Dishonor of cheque

Dishonor of cheque or cheque bounce occurs when a cheque that is presented in the bank is returned unpaid. It could occur due to insufficient funds in the bank account of the person who issued the cheque or if the signatures on the cheque do not match with the original signature of that person. You can proceed against the person who has issued such a cheque 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

The first step that must be taken in a cheque bounce case is to send a demand letter or legal notice to the person who has issued the cheque also called as 'drawer'. You must take help from a lawyer to draft the legal notice. The legal notice must be sent within 30 days from the date on which the receipt of cheque bounce is given by the bank. However, if the drawer does not pay the amount within the stipulated period of 15 days from the date on which the legal notice is sent to him, then the aggrieved person can file a cheque bounce case against the drawer in such a situation.

 

Documents Required:

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 cheque bounce case. But recent Supreme Court rulings have clarified the issue. The cheque bounce case should be filed in the area where the cheque was submitted by you, to be honoured.

 

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 cheque, changing the name of the payee (the person to whom the check is given), or making other changes on the cheque, such as the date or the name of the drawee (the person from whose bank account the cheque 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 have 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, cheques are used as a method for payment of money or as a security. However, there have been instances where after the completion of the business transaction, the person tries to fraudulently encash the cheque. And subsequently files a false complaint in the court. Hence, the manner to defend a frivolous cheque bounce case is to show that there was no legal subsistence debt at the time the cheque was issued. Hence, you will have to show that the cheque was given as a way of security and no debt existed at that point in time.

 

Alternate remedies

Generally, a civil suit for recovery of money is filed in a cheque bounce case. However, in serious cases where the cheque amount is big and in cases where it is applicable, a criminal complaint for cheating could also be filed under section 420 of the Indian Penal Code.

 

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.



 

Related Articles


Googling your legal issue online?

The internet is not a lawyer and neither are you.
Talk to a real lawyer about your legal issue.

Popular Cheque Bounce Lawyers in India

Advocate Sunil Kumar Bakshi
Sector-16, Faridabad
32 years Experience
Advocate Harish Malhotra
District Court, Gurgaon
22 years Experience
Advocate Rajesh K.S
LH House, Bangalore
13 years Experience
Advocate Prashant Mendiratta
Lajpat Nagar 4, Delhi
26 years Experience

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.

Legal Services

15 Minutes Cheque Bounce Advice Session by Phone

4.8 | 104 ratings
Legal advice and answers from a local experienced advocate about your Cheque Bounce issue
Legal Notice / Reply to Legal Notice

4.7 | 83 ratings
30 Min Intro call + Start to finish help - Send a legal notice through an experienced advocate
Get free legal advice from top Cheque Bounce lawyers for your specific issue

Cheque Bounce Law Articles

Director’s liability in cheque bouncing matters

The new law on territorial jurisdiction for cheque bounce matters

Section 138 Negotiable Instruments Act 1881 (NI Act): Cheque Bounce or Dishonor of Cheque

How to File a Cheque Bounce Case

Talk to a lawyer for your legal issue