How to file a Cheque Bounce case?

Cheque bounce is a criminal offense in India, covered under section 138 of the Negotiable Instruments Act. The following information will act as a useful guide on what steps can be undertaken in case your cheque is bounced:

Sending a Demand Notice:

Once the cheque has been returned by the bank, then before filing a legal complaint against the drawer, you must, with the help of a cheque bounce lawyer (9643655911) , first, send a demand letter/ legal notice to the such drawer within a period of 30 days from the date the cheque has been returned to you by the bank. The letter must demand the amount from the drawer and also the legal action that can be initiated against him under the Negotiable Instruments Act in case the amount is not paid within a stipulated time period (usually 15 days).

Even though there is no prescribed format for this notice, its purpose of demanding payment and informing the issuer that s/he will be prosecuted in case payment is not made should be highlighted very clearly. Further, proof of delivery of such a letter should be preserved. A demand letter can be sent by the complainant himself. However, it is advisable to get the draft vetted by a cheque bounce lawyer before sending it to the person concerned.

The following information should be stated clearly in the demand notice:

A statement that the cheque was presented within its period of validity
Statement of debt or legally enforceable liability
Information regarding dishonor of cheque as given by the bank
Demanding the issuer to pay the amount due within 15 days of receiving such notice

Drafting a Complaint:

If the drawer has not replied to your demand notice within a period of 15 days from the date of the delivery of the demand letter or has refused to pay your amount, then the next option available in such a case is to file a complaint in court within a stipulated time period of 30 days. Before filing a legal complaint, it is important to understand which court you should approach in such cases. You can file the complaint in a court within whose local limits of jurisdiction any of the following incidents have taken place:

Where the cheque was drawn
Where the cheque was presented
Where the cheque was returned by the bank
Where the demand notice was served by you
You must have all the following documents:
Complaint
Photocopy of all the documents such as cheque, memo, notice copy, and acknowledgment receipts

Payment of Court Process fees for filing a Cheque Bounce case

While filing a cheque bounce complaint, the complainant is required to pay court fees. The Court fees vary depending upon the amount of the cheque against which the complaint is being filed.

Court Notice to Accused

After the complaint is filed by the payee, the court issue summons to the accused person who owes the money to the person who filed the complaint.

Evidence

The Complainant with the help of his/her cheque bounce lawyer (9643655911) puts forward all the evidence like the original bounced Cheque, Cheque Return Memo, Record of sending a demand notice to the accused and all other relevant documents in support of his/her case to prove that accused is under a legal obligation to pay the stated amount in the bounced cheque.

Punishment and Penalty

After the whole trial process, If found guilty, the accused can be punished with a monetary penalty which may be double the amount of the cheque or imprisonment up to 2 years or both.

Memo of Advocate is essential at the time of filing of the suit along with signatures of the complainant

After the case is filed in the court, all documents are cross-checked by Judicial Magistrate First Class, so original documents such as original cheque (bounced), original memo, a copy of the notice, receipt of the post office, receipt of U.P.C., acknowledgment receipt, are required at the time of cross-checking
The period of limitation is also verified at this stage
The Process Form, also known as the Bhatta, is filed by the complainant or lawyer, along with the address of accused
The court then issues summons to the accused to appear in court on the specific date
If the accused does not appear in court on the date of hearing, the court can also issue a bailable warrant on the request of the complainant
It the accused still does not appear before the court, the court may issue a non-bailable warrant of arrest

Important things to be kept in mind

A delay in filing the complaint after the lapse of 30 days may be excused by the magistrate only in exceptional circumstances
Dishonor of a cheque due to stop payment is also covered under Section 138 of the NI Act
Presentation of the cheque at the request of the drawer after the demand notice has been sent and the consequent dishonor of the cheque will not mean that the drawer’s time limit under the notice has increased
A cheque issued as a gift/donation/any other obligation, will not be covered under Section 138 of the Act. For this section to apply, the cheque has to carry a legal obligation
A cheque expires after three months from the date on which it is issued.

Contact with expert lawyer (9643655911)

How can a lawyer help you in the process?

A lawyer having a significant amount of experience in the field of cheque bounce issues can be of great help if you are facing dishonor of cheques. An experienced cheque bounce attorney can ensure that you have made a strong case when you are filing or defending a cheque bounce complaint. He can take care of all the paperwork and can help you understand all the complexities of a cheque bounce case. He can draft and send, on your behalf, a legal notice or a reply to a legal notice in case of dishonor of cheque and can track the limitation period for your case so that you do not suffer any legal damage. Thus, a cheque bounce attorney can help you throughout your legal journey and can ensure low chances of failure in your cheque bounce case.

Dos & Don’ts of a Cheque Bounce Case in India

What is a Cheque?

A Cheque is a bill of exchange drawn upon a specified banker and is payable only on demand. Legally, the person who has issued the cheque is called a ‘drawer’ and the person in whose favour the cheque is issued is called a ‘drawee’. The following are the essential characteristics of a cheque:

It has to be in writing
It has to be an unconditional order
The banker has to be specified
Payment should be directed to a specified person
It should be payable on demand
It should be for a specific sum of money
Should have the signature of the drawer

Parties to the Cheque

Drawer: Also known as the “author of the cheque,” the term “drawer” refers to the individual who issues the cheque. (In some circumstances, the drawer may be the debtor.)

Payee: The individual on whose behalf the cheque is drawn and to whom the specified amount on the cheque is payable is referred to as the “payee.” (The Creditor may also be the Payee.)

Drawee: The bank in charge of or authorised to pay out the specified amount on the cheque is referred to as the drawee.

Payee’s Bank: The ‘payee’s banker’ is the bank where the payee has an account and where the amount of the cheque must be deposited or credited, particularly in the case of a crossed cheque.

What is a Cheque Bounce?

When a cheque is returned by the bank unpaid, it is said to be dishonoured or bounced. Cheque bounce could occur due to several reasons such as insufficiency of funds, etc. When the cheque is bounced for the first time, the bank issues a ‘cheque return memo’ along with reasons for non-payment.

Cheque Bounce-related Law in India

The Negotiable Instruments (Amendment) Act, 2018
The fine for a bounced cheque is specified in Section 138 of the NI Act. It offers the legal means to pursue compensation for a bouncing cheque. The primary objective is to commit the crime in order to use cheques and increase the legitimacy of dealing with cheques. A breach committed in accordance with Section 138 is not a separate offence. Bail is also an option for this crime.

New cheque bounce rule

The Negotiable Instruments (Amendment) Act, 2018, made significant amendments to the Negotiable Instruments Act, 1881, which governs how cheque bounce cases are handled in India. Some significant changes include:

Under the revised law, instances involving cheque bounces must be handled within six months of the day the complaint was filed. This quickens the legal procedure and gives individuals who are harmed quicker relief.
Prior to now, a cheque bounce case could only be brought up in the location where the cheque was cashed. The new law does allow complainants to file complaints in the location of their bank branch or the location where the cheque was issued.
The amendment permits the compounding of crimes involving bounced cheques. This indicates that the dispute can be resolved amicably, without a trial, between the complainant and the defendant. However, only first-time offenders are covered by this clause.
Repeat Offenders now face harsher sanctions. A person can receive up to two years in prison and a fine up to twice the value of the bounced cheque if they have been found guilty of cheque bounce two or more times.

Early in August 2021, the Reserve Bank of India (RBI) sent a letter explaining new guidelines for consumers using cheques. People who frequently use cheques or who just prefer to use them must abide by these rules. Customers are required to maintain a minimum bank balance under these regulations or their cheques may bounce. Additionally, penalty fees may apply to people who write cheques without keeping the necessary minimum amount. Updates to the National Automated Clearing House (NACH), which is important for cheque clearance, are also a result of these improvements. These changes, which apply to both public and private institutions, have been made to improve and speed up the clearance of cheques. Additionally, it guarantees that the NACH is operational 24/7.

Section 420 in Cheque Bounce.

Usually, bounced cheques are settled with reimbursement rather than imprisonment under Section 138 of the Negotiable Instruments Act. Legal remedies, however, may differ if the complainant was the victim of fraud, including dishonesty or a criminal breach of trust. For instance, the complainant may submit a police report under Sections 138 of the NI Act and 420 and 406 of the Indian Penal Code if a cheque is issued for immediate encashment, items are purchased on false pretences, and the cheque bounces, suggesting fraudulent intent. This demonstrates how legal guidelines change to manage incidents of cheque bounce including dishonesty and fraud.

How to defend a Cheque Bounce case in India?

If you are facing a cheque bounce case in India, you can defend yourself by taking the following steps:

Check if the cheque is valid: Ensure that the cheque is not post-dated, is signed, and is not stale. A stale cheque is one that is presented for payment after three months of its issue date.
Verify the details: Check the details such as the amount, date, and payee name on the cheque to ensure they are correct.
Review the reason for the bounce: The bank returns the cheque with a memo indicating the reason for the bounce. Verify the reason provided by the bank and check if it is valid.
Respond to the legal notice: If you receive a legal notice from the complainant or their lawyer, respond to it within 15 days. Failure to do so may result in a court case being filed against you.
File a reply in court: If the complainant files a case against you, hire a lawyer and file a reply in court. In your reply, explain the reason for the cheque bounce and provide any evidence to support your claim.
Attend the court hearings: Attend all the court hearings related to the case and provide any additional information as required by the court.
Attempt to settle out of court: You can also try to settle the matter out of court by negotiating with the complainant and offering to pay the amount due. If the complainant agrees to settle, you can request them to withdraw the case filed against you.

It is important to note that cheque bouncing is a criminal offence in India, and if found guilty, the accused can be fined or imprisoned. Therefore, it is crucial to take the matter seriously and defend yourself with the help of a lawyer.

Consult: Top Cheque Bounce Lawyers in India (9643655911)

What is the nature of a Cheque Bounce case in India – civil or criminal?

The aggrieved party has both criminal and civil remedies for tackling a cheque bounce case.

Criminalremedy-
A cheque bounce is a criminal offence in India under Section 138 of the negotiable instruments act. When a cheque is dishonored due to insufficient funds or any other reason, the complainant can file a criminal case against the person who issued the cheque. The complainant can file the case in a court of law within 30 days from the date of receiving the cheque bounce memo from the bank. If found guilty, the person who issued the cheque may be sentenced to imprisonment for a term that may extend to two years, or a fine that may extend to twice the amount of the cheque, or both.

Civilremedy –
In addition to criminal proceedings, the complainant can also initiate civil proceedings for recovery of the amount due under the cheque. However, civil proceedings cannot be initiated until the criminal proceedings are completed. If the complainant files a civil suit, they can seek recovery of the cheque amount, along with interest and legal costs.

FAQs: Cheque Bounce Matters

Q. What is the jurisdiction of a bearer cheque?
A. In the case of a bearer cheque, legal proceedings can be initiated under Section 138 of the Negotiable Instruments Act in the territorial jurisdiction of the Court where the bank receives the cheque for processing.

Q. Which court does a cheque bounce case go to?
A. The jurisdiction for the complaint of cheque bounce/cheque dishonour lies with the Magistrate Court where the payee’s or drawer’s bank is situated based on the deposit or presentation of the cheque.

Q. Can Section 138 case be transferred from one state to another?
A. Yes, Section 138 cases under the Negotiable Instruments Act, 1881, can be transferred between states, and the Supreme Court has the power to transfer such cases, considering the ends of justice. However, this transfer is not automatic and involves multiple factors.

Q. What is the territorial jurisdiction for a money suit?
A. Territorial jurisdiction for a money suit lies with the court where the defendant resides, conducts business, or where the cause of action, wholly or partially, arises.

Q. Can I file a cheque bounce case in another state?
A. Yes, you can file a cheque bounce case in another state. However, all cases filed under the Negotiable Instruments Act for cheque bounce can only be filed within the territorial jurisdiction of the courts where the drawee bank is located.

Q. Is a Cheque Bounce Case Civil or Criminal?
A. It has both civil and criminal implications. Section 138 of the Negotiable Instruments Act treats it as a criminal offence, while civil remedies involve recovery of the amount due.

Q. Can police take action on a cheque bounce case?
A. The police have a limited role in cheque bounce. Complaints are filed directly with the magistrate, but police intervene if non-bailable warrants are issued against the defendant to ensure court appearance

Q. What is Defence evidence in a cheque bounce case?
A. In the case of a cheque bounce, some of the primary defenses can be showing that the cheque was for security, disputing the signature, stopping payment orders, or proving the complainant’s financial inability to lend. The accused can also argue that the statutory obligation of notice or limitation period has not been adhered to                     .

Q. What are the important documents in the case of Cheque Bounce?
A. Important documents in the case of Cheque Bounce include the original dishonoured cheque, a return memo from the bank indicating non-payment, copies of the legal notice, and an affidavit supporting the claim.            .

Q. Can a warrant be issued in a cheque bounce case?
A. Yes, in the case of a cheque bounce, a non-bailable warrant, as discussed earlier, can be issued by the Magistrate to ensure the appearance of the accused.                .

Q. How do you fight a cheque bounce case?
A. You can fight a cheque bounce by disputing the debt, showing security use of the cheque, and gathering key documents. Once the proceedings have been initiated or are about to be initiated, you should hire a specialized lawyer, attend court dates, and present evidence like bank statements.

Q. What is the maximum punishment for a cheque bounce case?
A. A bounced cheque under Section 138 can lead to a maximum penalty of two years imprisonment or a fine up to twice the cheque amount.

Q. What happens if a complainant does not attend court?
A. If a complainant does not attend court, the court might grant adjournments, dismiss the case due to repeated absences affecting proceedings, issue summons or a warrant for the complainant, drop their testimony, or in some instances, acquit the accused due to the complainant’s absence.

Q. Can I get bail in a cheque bounce case?
A. Yes, bail can be obtainable in a cheque bounce case, considering it is a bailable offence. If warrants have been issued, appearing in court, and applying for regular bail is necessary. The court assesses your case circumstances and may request a surety bond or bail bond for your release, along with a specified deposit for attendance assurance during court hearings.

About the Author

Adv. Mukesh Kumar sah (9643655911) Advocate Mukesh Kumar Sah has been practicing and handling cases independently with a result-oriented approach, both professionally and ethically and has now acquired many years of professional experience in providing legal consultancy and advisory services

How to File a Cheque Bounce Case