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7 Things you should know about Cheque Bouncing

December 14, 2016

 

Negotiable Instrument Act, 1881 is applicable for the cases of dishonour of cheque. It is a criminal offence with imprisonment upto 2 years or maximum twice the amount of cheque as fine or both.  Drawer writes cheque, payee gets the amount and Drawee (bank) is directed to pay.

1 Legal Notice to the drawer within 30 days of Cheque Bouncing and to pay the amount within 15 days, else the legal proceeding s would be initiated.

2 Preserve the proof of legal notice sent via post or registered AD along with Bank Memo and Original Cheque.

3 After lapse of 15 days of period, file the complaint before a magistrate within 30 days time period. The complaint includes original copies of Cheque, Bank Memo, Authority letter, and Notice copy with acknowledgement receipts. Don’t forget to include the court fees along with the Memo (Process Form/Checklist)

4 Jurisidiction- The case can be instituted where payee maintains the account at home branch or if delivered over the counter, then where drawer maintains the account. For multiple cheques against the same person, the cases would be filed in the same court.

5 Maximum 3 cheques can be clubbed in a single case.

6 Cheque is issued towards discharge of a debt or legal liability and cheque should have been returned or dishonoured because of insufficient funds in the drawer’s account.

7 In cases of material alteration in cheques,  Sec 138 is not applicable. For recovering the amount, Civil suit can be filed and offence of cheating can be added in the complaint.

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