What Is The Punishment In Cheque Bounce Case?

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Updated: 04-04-2024

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A cheque bounce case frequently commences with an account holder writing a cheque to the payee, which is subsequently sent to the bank for approval. However, there can be a number of reasons why the cheque bounces, notably insufficient funds, resulting in problems for both the payer and the recipient of the cheque. After the bank’s notification of the account’s low balance, the account holder could become subject to legal penalties.

Cheque Bounce: Reasons

A cheque may bounce for a number of reasons, as stated in section 138 of the Negotiable Instruments Act. Let’s quickly examine it:

Insufficient Account Balance: It is thought that the bank will reject the cheque and return it to the payee with a note stating that there are not enough funds to cover the cheque amount if there is not enough money in the drawer’s account to match the amount on the cheque.
Overwriting: An attempt to overwrite may result in a bounced cheque if the drawee’s signature has been somewhat altered, bolded, or highlighted.
Signature Mismatch: It is stated that the cheque is likely to bounce if the payer’s signature is different from the one on file with the bank.
Mismatched Digits: If the amount stated or written does not match, the cheque will bounce.

Cheque Bounce Penalty

The offender will be penalized for a cheque bounce case section 138 of the NI Act. Depending on what caused the bounce.

The Negotiable Instruments Act of 1881 makes it illegal to dishonoured a cheque due to insufficient money in the payer’s account. If a cheque is written on a bank account that is not adequately funded, the payer may be punished. The payee may either allow the person who made the payment to reissue a cheque or decide to take legal action against the payer within a period of three months after the first payment was made.

If the payer issues a cheque that is returned unpaid, they could spend a maximum of two years in jail.

In addition, banks impose penalties for cheque dishonouring. Bank to bank variations exist in the penalty. Various banks may impose various penalty rates depending on the amount for which a cheque is returned unpaid.

Cheque Bounce Case: Procedure to be Followed

Sending a Demand Notice to the individual who gave you the bounced cheque is the first thing you should do.
Information about the returned cheque should be included in the message. A copy of the dishonoured memo and the date the cheque was issued should be included in the notice.
After receiving the notification, the person has 15 days to reimburse you.
If they don’t, you can submit a cheque bounce complaint with the court using the required format.
In addition to the complaint form, you must also provide an oath letter, a copy of the notification sent along with the acknowledgment receipt, a duplicate of the memo, and the received bounced cheque.
The judicial court will examine and confirm the documents you supplied after receiving your complaint.
Following the court’s approval of your cheque return case, the accused will be called to appear in court and the complainant or their attorneys will need to complete the Bhatta or cheque bounce case process form.
The judge has the power to issue a bailable warrant against the accused if they do not show up for court.

By pursuing the appropriate legal actions in accordance with Section 138 of the Negotiable Instruments Act, a lawyer for cheque bounces can assist you in recouping the money plus interest. Before taking any further action, an experienced cheque bounce lawyer can assist you by serving the drawer with a statutory notice. When they file the petition, they may represent you as the pleader under a Power of Attorney (POA).

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