In India, a cheque is a common mode of payment used for various transactions, such as payment of bills, loans, salaries, etc. However, there are times when a cheque can bounce, which means that the payment is not processed due to insufficient funds, account closure, or any other reason. When a cheque bounces, it is considered a criminal offense and can lead to legal consequences.
Cheque bounce is a term used to describe the situation when a cheque is dishonored or returned unpaid by the bank. When a cheque bounces, it means that the issuer of the cheque has failed to fulfill their payment obligations. This can have severe consequences for the person who deposited the cheque, as it can cause financial loss, damage to their credit score, and a significant amount of inconvenience.
In India, cheque bounce is considered a criminal offense and is punishable under the Negotiable Instruments Act, 1881. The Act defines a dishonored cheque as one that is returned by the bank unpaid for insufficient funds, a closed account, a signature mismatch, or any other reason. Under the Act, the payee or holder of the cheque can initiate legal proceedings against the issuer of the cheque and seek legal remedies.
Legal Remedies for Cheque Bounce in India:
Sending a Legal Notice:
The first step in seeking legal remedies for cheque bounce is to send a legal notice to the issuer of the cheque. This notice should be sent within 30 days of the cheque being dishonored and should inform the issuer of the cheque about the consequences of their action. The notice should also demand that the issuer pay the amount due within a specific time frame, failing which legal action will be initiated.
Filing a Criminal Complaint:
If the issuer of the cheque fails to respond to the legal notice or refuses to pay the amount due, the payee or holder of the cheque can file a criminal complaint against them. The complaint should be filed in the court within 30 days of the expiry of the notice period. The complainant must provide evidence of the dishonored cheque, the legal notice sent to the issuer, and any other supporting documents.
Issuing a Summon:
Once the criminal complaint is filed, the court will issue a summon to the issuer of the cheque, asking them to appear before the court. If the issuer fails to appear before the court, a non-bailable warrant can be issued against them.
At the trial, the complainant must prove that the issuer of the cheque was aware of the insufficiency of funds in their account at the time of issuing the cheque. If the court finds the issuer guilty, they can be fined up to twice the amount of the cheque and sentenced to imprisonment for up to two years.
Filing a Civil Suit:
The payee or holder of the cheque can also file a civil suit against the issuer to recover the amount due. This can be done simultaneously with the criminal complaint or after the criminal case has been concluded. In a civil suit, the complainant must prove that they suffered a financial loss due to the dishonored cheque, and the court can order the issuer to pay the amount due with interest.
Cheque bounce can have serious consequences for both the issuer and the payee of the cheque. To avoid legal troubles, it is essential to ensure that sufficient funds are available in the account before issuing a cheque. In case of a cheque bounce, legal remedies are available to the payee or holder of the cheque, and they can seek redressal under the Negotiable Instruments Act, 1881.