Plan of Action in a Cheque Bounce Case

When a cheque is presented for payment at the bank but is not honored due to various reasons, it is known as a cheque bounce or dishonor of cheque. Cheque bounce cases are governed by Section 138 of the Negotiable Instruments Act, of 1881. Adhering to the prescribed timelines is crucial to recover the money in such cases. Here is a detailed plan of action for handling a cheque bounce case:

Step 1: Demand Notice to the Bounced Cheque Issuer

The first step is to send a Demand Notice to the person who issued the bounced cheque. This notice must be sent within 30 days from the date of cheque dishonor. The notice should inform the issuer about the cheque bounce and demand the payment of the cheque amount within 15 days of receiving the notice. This step is vital as it sets the legal process in motion.

- Timeframe: Notice must be sent within 30 days of cheque bounce.

- Response Time: The issuer has 15 days to respond and settle the matter.

Step 2: Filing a Legal Complaint in Court

If the issuer does not settle the matter or ignores the notice within 15 days, the cheque holder can file a criminal complaint in the appropriate court. This complaint must be filed within 30 days after the expiry of the 15-day response period.

- Timeframe: Complaint must be filed within 30 days after the 15-day response period.

- Advice: It is advisable to hire a lawyer to assist with the legal process.

Step 3: Trial and Hearing

The court will conduct a criminal trial, which includes the verification of documents, examination of witnesses, and presentation of arguments by both parties. The court will review all the evidence and testimonies to make a judgment.

 Documents Needed to File a Cheque Bounce Case

To file a cheque bounce case in India, the following documents are generally required:

1. Copy of the Notice: The notice served to the drawer of the cheque.

2. Proof of Service of Notice: Courier receipt or registered post acknowledgment.

3. Original Cheque: The bounced cheque itself.

4. Cheque Return Memo: A notice from the bank stating the reasons for cheque dishonor.

5. Proof of Legal Liability: Documentation proving the existence of a legal liability.

Cheque Bounce Laws in India

The dishonor of a cheque is explained under Section 138 of the Negotiable Instruments Act (NI Act). When a cheque is returned unpaid on being presented to the bank, it constitutes a cheque bounce.

- Criminal Remedy: Under Section 420 of the Indian Penal Code (IPC) 1860, a criminal remedy is available for the offense of cheating, which can be filed within three years from the date of cheque issuance. This remedy is applicable if the drawer had a dishonest intent to cheat at the time of cheque issuance.

Consumer Forums for Dispute Resolution

If the cheque bounce involves a consumer dispute, the following forums can be approached based on the value of goods/services and compensation claimed:

1. District Forum: For claims up to INR 20 lakh.

2. State Commission: For claims exceeding INR 20 lakh but not more than INR 1 crore.

3. National Commission: For claims exceeding INR 1 crore.

Penalty for Cheque Bounce

Issuing a bounced cheque is a criminal offense under Section 138 of the Negotiable Instruments Act, of 1881. The penalty for such an offense includes:

- Imprisonment: Up to 2 years.

- Fine: Up to twice the amount of the cheque value.

- Both: Imprisonment and fine.

Conclusion

Dealing with a cheque bounce case involves a systematic approach to ensure the recovery of the owed money. By following the above steps and adhering to the prescribed timelines, the chequeholder can effectively pursue legal action against the issuer of the bounced cheque. Legal advice and assistance from a qualified lawyer can further enhance the chances of a successful resolution.

This detailed plan of action can be implemented to address cheque bounce issues effectively, ensuring that legal recourse is pursued promptly and efficiently. If you would like more information on legal procedures and assistance, please feel free to contact us.