Know your legal rights in case of cheque bounce

हिंदी में पढ़ें
April 17, 2019
By Advocate Chikirsha Mohanty



Dishonor of Cheque/ Cheque Bounce

Dishonor of cheque or cheque bounce occurs when a cheque that is presented in the bank is returned unpaid. Cheque Bounce 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 '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 the 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.

 

Alternative 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.


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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Popular Cheque Bounce Lawyers in India


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April 17, 2019 Know your legal rights in case of cheque bounce https://lawrato.com/assets/images/lawguide.png
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very nice article

Kanchan on Apr 10, 2019
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Very good work with the article. Gave a nice clarity about the subject.

Sharad on Mar 16, 2019
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thanks for the info. How can we contact a lawyer?

Aarti on Mar 23, 2019
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how to contact a lawyer for my legal case?

Babita on Mar 03, 2019
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Thanks for the detailed article.

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nice one. Please share more info

Divya on Mar 01, 2019
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Answered all my legal queries.

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more info needed on the law

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needed legal help…whom shall I contact?

Aditya on Mar 03, 2019
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nicely explained. Thanks fro the information

Sapna on Mar 25, 2019
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can you share your helpline number

Suraj on Apr 02, 2019
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thanks for the information

Ritika on Mar 09, 2019
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helpful in understanding the law

Anita on Apr 06, 2019
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The article is written ver well. Learned a lot about my case through this.

Sathish on Apr 05, 2019
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very informative. Can you tell more about this

Brijesh on Mar 13, 2019
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needed more information on the law

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