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Hire The Best Lawyers or You Could End Up Behind The Bar If Your Cheque Bounces

Hire The Best Lawyers or You Could End Up Behind The Bar If Your Cheque Bounces

The cheque is popularly known as a bounced cheque when the payee presents to any commercial bank a cheque to complete a payment, but the cheque is cancelled due to the bank's refusal because of insufficient funds, account closed or any other reason.

Events of Cheque bounce can occur for a variety of causes, particularly when a cheque bounces due to insufficiency of funds in the bank account of the one who wrote the cheque, this amounts to a violation of the law on negotiable instruments. The given cheque will be rejected by the bank, and the transaction will be stopped. A supporting invoice or return notice stating the reason for failure of payment will be issued by the concerned bank. Now that the cheque has bounced, the payee has the right to submit a formal notice requesting payment in full from the drawer.

Cheque bounce is named as an offence under Section 138 of the Negotiable Instruments Act, 1881. According to the provisions of Section 138 of the Negotiable Instruments Act, the payee may issue a Notice against the drawer of the bounced cheque. This aforesaid rule is applied when a payment is stopped because there is not enough money in the account. However, If a technical issue rather than an underlying financial problem is the reason for the disruption, the payee must ask the drawer to resubmit the cheque.

 

Reasons for Cheque Bounce in India:

There are many reasons, as to why a cheque can bounce in India. They are below mentioned:

  1. There is no money at all  in your account: The absence of any sum of money  in your account is one of the main grounds  for a cheque to bounce. An individual must have enough money in their account to write a cheque of that amount. However, the cheque is returned in case if your account has no balance at all.
  2. Insufficiency of funds in the bank account: Another major factor is that, in accordance with section 138 of the Negotiable Instrument Act of 1881 is if there is insufficient fund in the person's bank account. According to this, if the person has money in their account but is still writes cheque in their name, the cheque will bounce quickly.
  3. Mistake while writing a cheque: One must be cautious and avoid making any mistakes while engaging in financial transactions. Additionally, while writing a cheque in your name, make sure to write all the details properly and accurately. If you make a mistake, then it has high chances that the cheque will bounce. For instance, mistakes include a mismatched signature, an incorrect date, an incorrect account number etc.
  4. The amount of payment through cheque is more than the set limit: The last and most important basis for a cheque to bounce is when more money has been paid with it than the allowed amount. The person simply needs to withdraw the maximum amount for each transaction. The amount of a cheque payment is also not an exemption. Cheques might bounce if the person exceeds the pre-determined maximum  amount payable by the cheque.

Processes that Take Place After Issuing a Bounce Notice or it's after effects

After the event of a cheque bounce if no restitution is made within 15 days after receiving a notice that a cheque has bounced, the payee may continue to file a civil lawsuit. A claim against the drawer must be made in accordance with Section 138 of the Negotiable Instruments Act.

The payee must present a complaint to the magistrate in one of the following locations from a list of options:

  1. Name of the place where the cheque had been drawn at first,,
  2. Name of the Bank where the drawer presented the cheque for payment,
  3. The address of the receiver where the payment should have reached,
  4. Name of the place where the cheque got dishonor,
  5. Name of the place where the payee served the demand notice.

 

While filing a complaint about a bounced cheque, a Metropolitan Magistrate must be present if such incident occurred in a metropolitan area. However, if a cheque bounce involves a different city the magistrate fills an equivalent role.

The best response to a legal cheque bounce notice does not follow a predetermined structure. However, the following subjects must be discussed in all seriousness:

  1. The reply should be directed towards the legal representative of the payee, as a matter of fact,
  2. The Facts must be stated clearly, which includes the date of problem, cheque return invoice, etc.
  3. The allegations must not be admitted as mentioned in the notice issued by the payee
  4. Must include a description of the transaction, name, address details, etc.
  5. A summary to support your defence against all the allegations.

 

Consequences of Cheque Bounce:

If a cheque bounces you must retain legal counsel. In India, the issue with dishonoured cheque is seen as a crime and you are most likely to end up behind the bars. Cases of Cheque bounce are punishable by up to two years in prison, a fine that can reach double the value of the cheque or both.

Reasons for Hiring a Cheque Bounce Lawyer:

It is advisable that you speak with a lawyer in order  to get the money back if someone sent you a cheque that got dishonoured because there weren't enough funds in the drawer's bank account. By pursuing the proper legal actions in accordance with Section 138 of the Negotiable Instruments Act, a cheque bounce lawyer will help  you in getting the money back with interest.

An experienced lawyer who handles cheque bounces might assist you by sending a statutory notice to the drawer before taking any further action. When they file the petition, there is a chance that they might represent you as well, as the pleader under a Power of Attorney (POA).

If you hire a competent cheque bounce lawyer, you won't need to worry if a cheque you wrote to someone might bounce. However, In accordance with Section 138 of the Negotiable Instruments Act, you will definitely receive a court summons but your attorney  will effectively handle your case in court, protecting you from incurring significant liability.

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