Consequences of a Cheque Bounce Case

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Last Updated on June 21, 2024 by Satish Mishra

Due to insufficient balance, torn cheque, overwriting, expiration of the validity of cheque, fraud, signature issue, etc., there are chances of cheque bounces or dishonored cheque. Section 138 of the Negotiable Instruments Act, 1881 deals with cheque bounce related cases. This section lays down the punishment for the one who is found guilty of cheque bounce.

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Section 138of the Negotiable Instruments Act, 1881 reads as follows:

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for  a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless—

 

Also Read-CHEQUE BOUNCE CASE ACQUITTAL IN A CRIMINAL CASE

(a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier;

(b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20[within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and

(c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

Also Read- BAIL IN CHEQUE BOUNCE CASES

Punishment for Cheque Bounce in India

  • Imprisonment for up to 1 year,
  • Fine which may be equal to double the amount of cheque, or
  • Both

Also Read- LEGALLY ENFORCEABLE DEBT IN CHEQUE BOUNCE CASES

 

Legal Action against Bounced Cheque

If a cheque bounces in a bank, then the bank shall send the cheque bounce memo to the account holder mentioning about the reason for which the cheque bounced. If the cheque bounces due to the reasons beyond the control of cheque issuer, a notification is sent about the cheque bounce.

However, if the cheque bounces intentionally by the issuer, or any grounds mentioned under Section 138 of IPC, following legal actions can be taken:

Also Read- ACQUITTAL IN CHEQUE BOUNCE CASES

  • The cheque can be submitted again within 3 months if the issuer is informedan assurance is given that the cheque will not be dishonored this time.
  • After receiving the cheque return memo from your bank, a legal notice can be sent to the issuer within 30 days.
  • If the payment within 15 days is not made by the issuer after receiving the legal notice the cheque bounce case can be filed in Magistrate’s Court within 30 days under Section 138.
  • The complaint should be filed along with an affidavit and other relevant documents that are associated with cheque bounce.

Also Read- CHEQUE BOUNCE PROCEDURE IN TRICITY

Facts of the case

  • A Ram Darbar resident has been awarded six-month rigorous punishment in a cheque-bounce case.
  • The court of judicial magistrate first class (JMIC)also directed the convict to pay double the amount mentioned on the dishonored cheque that goes above Rs. 2 lakh.
  • A criminal complaint was filed by Ramwati. A resident of Phase 2, Ram Darbar, against KamruNisa of the same locality, who was booked under section 138 of the negotiable instruments act.
  • It was mentioned in the complaint that kamru had sought Rs. 1.1 lakh from Ramwati in June 2016, which she gave considering the cordial relations between them.
  • However, after a repeated request made over the period of the next five months, kamru gave her Rs. 1.1 lakh cheque.
  • When the complainant presented the cheque in the bank, it was dishonored due to insufficient funds.

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  • On November 11, 2017, a legal notice was issued to Kamru, who denied allegations and said she was implicated.
  • She claimed that she had not taken any loan from Ramwati who used to conduct ‘committee’ of which kamru was a member.
  • She alleged that the complainant had taken blank signed cheques from her during a committee transaction and misused them.
  • The order, meanwhile, stated that the court was of the opinion that no leniency can be shown to the convict. The court observed that punishment should be a deterrent which should serve as a lesson for others as well.

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  • In this case, ends of justice would best be served if the convict is directed to pay compensation to the tune of double the amount of cheque to the complainant, it said.
  • It further directed Kamru to pay the compensation to the tune of Rs. 2.2 lakh, that is double the amount mentioned in the cheque, to the complainant within two months starting from Wednesday.
  • In default of payment of compensation within the above said period, convict shall further undergo rigorous imprisonment for one month, the order read.

Also Read- FALSE CHEQUE BOUNCE CASE. DEFEND IT!

 

Cheque Bounce is a serious criminal offence for which two years of imprisonment is awarded. Therefore one must never shy to engage a best/top/expert competent cheque bounce lawyer/ advocate/legal advisor in Chandigarh Panchkula Mohali Zirakpur Derabassi Kharar.

This post is written by Damini Aggarwal of Punjab University. For more info, please dial 99888-17966.

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