INTRODUCTION
A document that is issued by any person for his or her legal requirements or to secure his or her proof for any kind of payment done to some other party is called a cheque. Delete transactions like loan repayment for payment of rent including the making of cheques. The world today is certainly quite dependent on making and delivering cheques from one party to another and these cheques seem to be a more reliable option of payment than any other source as these are negotiable modes of payment. The question that arises here is how the cheques are to be issued to make them negotiable. To make a cheque non-negotiable, it has to be crossed that it is an account payee cheque. This makes the author of the cheque known as the drawer of the cheque, and the other person for whom the cheque is to be drawn is called the payee.
WHAT DOES CHEQUE BOUNCE MEAN?
Now we have often heard that a cheque has been bounced or dishonoured. What does this mean?[1] Cheques can be bounced for multiple reasons one of the very common reasons is due to an insufficient balance left in the payee’s account or the account through which the cheque is being issued. Under Section 138 of the Negotiable Instrument Act of 1881, dishonouring a cheque due to insufficient funds is also a criminal offence. Therefore, a person issuing a cheque must make short that he or she has sufficient funds in the particular bank accounts from which they are issuing the cheque. The thing here to be noted is that, when a cheque is bounced, the bank immediately sends a ‘cheque return memo’ to the payee along with mentioning the reason for dishonouring of cheque under Section 138[2].
WHAT TO DO AFTER YOUR CHEQUE HAS BEEN DISHONOURED?
Now, what is the course to be followed after your cheque has been bounced? According to the Negotiable Instrument Act of 1881, the payee can prosecute the other party for any cheque bounced in case it was issued for any kind of Debt or payment of any liability to the party but he cannot pursue further if the cheque that has been bounced was a gift given to any person or party. Certain essentials that are mentioned in section 138 of the act on who can be prosecuted for a cheque bounce case include the party account that is maintained by himself or herself, the cheque has been bounced due to insufficient funds in the account and the cheque was issued for any debt or legal liability towards the other party. On the fulfilment of these three conditions, you can legally be prosecuted for any check bounce case[3].
Legal notice for cheque Bounce is sent within 30 days after the ‘cheque return memo’ is acknowledged. The payee has to deliver the payment within 15 days after he has received such legal notice. In case the payee fails to deliver such payment within 15 days, he or she put punishable as a criminal open under section 138 of the Negotiable Instruments Act. This type of complaint is filed in either the Judicial Magistrate of a first-class Court or the Metropolitan Magistrate. This complaint has to be filed along with attaching the affidavit by an individual after which all the documents that have been submitted are checked by the concerned authorities and the confirmation of the offence that has been committed is done. Once the procedure for the confirmation is completed, photo proceedings begin. The individual has to follow the instructions given for notice under Section 251 of the criminal procedure act (Substance of accusation to be stated. When in a summons- case the accused appears or is brought before the Magistrate, the particulars of the offence of which he is accused shall be stated to him, and he shall be asked whether he pleads guilty or has any defence to make, but it shall not be necessary to frame a formal charge) and therefore has to submit the defence plea. Thus, the trials take place accordingly and the Metropolitan Magistrate gives out the final judgement. The individual has to pay a fine of Rs. 5000 along with imprisonment varying from one to two years if he or she is found guilty in regards to the evidence by the Metropolitan Magistrate. Along with this, the bank that has issued the cheque earlier is compared to completely restrain his or her chequebook facility along with freezing his or her account under the Negotiable Instrument Act. To avail of the legal remedies, complete that is filed should be done within 30 days from replying to the check bounce legal notice which can only be excused in exceptional cases by the metropolitan magistrate. In case the notice expires, the complaint should be filed within 30 days after the expiry of 15 days from when the notice was sent. It should be remembered that Section 138[4] of the activities discussed above is only applicable in case the cheque that was issued was legally applicable. This implies that any cheque that has been issued with the intention of any kind of gift or donation or covering any other non-legal sphere, would not be covered under the ambit of this particular act.
WHAT IS THE PROCEDURE TO FILE A CHEQUE BOUNCE CASE IN INDIA?
To file a cheque bounce case in India[5], the documents that would be required are a copy of the notice served on the drawer, a proof of service of notice which can either be courier respect or the respect of registered post A.D., an original cheque on record, a proof of the existence of a legally enforceable liability and lastly a cheque returned memo that should be issued by the banker to the drawer. A cheque return memo is issued by the bank or the banker to the drawer or the issuer when a check is dishonoured. The check return memo generally contains the reason for dishonouring the cheque, the date of cheque bounces along with the cheque number and date of issuing of such a cheque. It is a very important document when it comes to taking legal action and so was a notice to the issuer of the cheque.
CONCLUSION
The bail amount for a cheque bounce case varies but the usual idea can be drawn from the amount for which the cheque was issued along with the financial status of the drawer and the number of similar cases pending against him in the same transaction or other transactions that have close timings to each other.
Author(s) Name: Navjeet Kaur (University Institute of Legal Studies, Panjab University)
References:
[1] Prachi Mehra, ‘Explained: What is Cheque Bounce and Laws in India’ (News18.com, May 19, 2021) <https://www.news18.com/news/india/explained-what-is-cheque-bounce-and-laws-in-india-3753209.html> accessed April 03, 2022
[2] The Negotiable Instrument Act of 1881
[3] Sanjeev Sinha, ‘What if your cheque bounces? 4 reasons why you should not take it lightly’ (The Economic Times, June 19, 2015) <https://m.economictimes.com/industry/banking/finance/banking/what-if-your-cheque-bounces-4-reasons-why-you-should-not-take-it-lightly/articleshow/47731034.cms> accessed April 04, 2022
[4] Prakash PB, ‘Time to dishonour Section 138? Why there is little reason to continue with India’s cheque bounce law’ (The Economic Times, March 16, 2022) <https://m.economictimes.com/industry/banking/finance/banking/time-to-dishonour-section-138-why-theres-little-reason-to-continue-with-indias-cheque-bounce-law/articleshow/90231220.cms> accessed April 04, 2022
[5] Advocate Chikirsha Mohanty, ‘Do’s & Don’ts in case of a Cheque Bounce’ (Law Rato, June 08, 2021) <https://lawrato.com/indian-kanoon/cheque-bounce-law/dos-donts-in-case-of-a-cheque-bounce-16> accessed April 05, 2022
