Cheque Bounce Procedure under Sec. 138 of NI Act.

What is the procedure in a cheque bounce case?

        Section 138 of the Negotiable Instruments Act, 1881 provides for the procedure to be followed in a cheque bounce criminal complaint. According to the act cheque bounce is criminal offence and is punishable with an imprisonment of two years or with fine equal to twice the amount on the cheque or both. Further according to Sec. 141 of NI Act if an offense under section 138 is committed by company, then each and every individual is responsible for the  offense of cheque bounce. 

        Upon dishonour/ bouncing of cheque, as a first step, you have to send a demand notice to the cheque issuer to make the payment within 15 days. If they fail to make payment within 15 days of receipt of the legal notice, you can lodge a criminal complaint in the Court having jurisdiction of the area where your bank account is located. This criminal complaint must be filed within 30 days from the expiry of the 15-day time period.

        Once the complaint is filed, the Court will go through the documents sent and verify them. Once the court is satisfied with your complaint, the accused is summoned by the court for a hearing. If the accused doesn't appear in court, the judge can issue a warrant against the concerned person. Let see, it in details :

Why Cheque get bounce or dishonoured ?

        When a cheque is presented in a bank for payment but it is not paid then it is called dishonoured or bounced. The reasons for bouncing / dishonouring a cheque may be - 

• Signature on cheque is not matching
• Overwriting on cheque
• Cheque get expired (Presented after laps of three months)
• Account was closed
• Insufficient funds
• Opening balance insufficient
• Payment stopped by the Account holder
• Disparty/mismatch in the words and figures mentioned on the cheque
• Mismatch in account number
• Death of customer
• Insolvency of the customer
• Alteration of cheque
• Presented at the wrong branch
• Doubt in genuineness
• Crossing limit of overdraft account
• In case of trust, cheque was issued against rules of the trust
• In case of joint account, only one signature is there
• In case of company account, seal is not there

Consult with our Lawyer for cheque bounce complaint

How to file cheque bounce complaint ?

        The cheque bounce case is covered under section 138 of Negotiable Instrument Act. Following procedure can be applied to file complaint for cheque bounce by the payee.

        Firstly, send a legal notice to the defaulter with the help of Lawyer within 30 days of receiving the cheque return memo. Mention clearly all the relevant fact including nature of transaction, amount, date of depositing the cheque in the bank and date of dishonouring the cheque, etc.

        If no action is taken on the notice and fresh cheque or repayment of due amount is not done by defaulter within 30 days of receiving notice, then payee has right to file complaint under Sec.138 of NI Act. Please take a note that, complaint should be filed in the appropriate Hon'ble Magistrate Court within a month of the expiry period of the notice. 

        After submitting the complaint along with an Affidavit and relevant documents therein in the Court, the Court will issue summons and hear the matter. If defaulter found guilty, can be punished with imprisonment with two years and/or a fine, which can be as high as twice the chque amount. However, the defaulter can appeal to the Hon'ble session’s court within one month of the date of the judgment of the Hon'ble Lower court. If a prolonged court battle is not acceptable to both the parties, an out-of-court settlement can be attempted at any point for the sake of convenience to the parties.  

        In case of non-recovery of the due amount during the long battle of legal dispute, one can separately file a civil suit i.e. Summary Suit under Order 37 of Code of Civil Procedure 1908 with the help of a Lawyer for recovery which would cover the costs borne by the petitioner during the legal battle. A summary suit is different from an ordinary suit as it does not give the accused the right to defend himself. Instead, the defendant has to procure permission from the court to do so. Summary suits can be availed of only in recovery matters, be it promissory notes, bills of exchange or cheques.

Essential Documents for a Cheque Bounce Case

Certain documents for filing of a complaint for cheque bounce have been stated as below :
1. The original cheque.
2. Memo of returning cheque which would contain the reason about non-payment by the bank.
3. Copy of demand notice and the original receipts.
4. An affidavit stating evidences.
5. Documents suggested as per Lawyer at the time of consultation.

        We SS Law Firm have expert cheque bounce lawyers who will help you file the criminal complaint in Court and represent you in the proceedings. In case the drawer fails to make payment of cheque within 15 days of receipt of the legal notice, you may contact to us for filing of criminal complaint. You have to keep in mind that timely action is essential to a cheque bounce case and the criminal complaint must be filed within 30 days from the expiry of the 15 day time period given in the legal notice.
        For more details, or any queries, please contact our Lawyer, we will always happy to help you.ps://twitter.com/niteenath/status/142102622425667994?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1421026224256679944%7Ctwgr%5E%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fsslawfirm.in%2F