When a check is presented to a bank for payment but is not honored for one reason or another, it is referred to as having bounced or been dishonored. In India, the Negotiable Instruments Act's section 138 defines cheque bounce as a crime.
A check is said to have bounced when the payee gives it to the bank for payment and the bank returns it unpaid with a memo indicating insufficient funds. A cheque could bounce for a number of reasons, but it is an act of fraud under the Act if it does so because there is not enough money in the account of the drawer. It is required to deliver a reply note stating the circumstances of the bank's decision to reject the submitted check since there aren't enough funds
New Rule:
Customers who use checks frequently or who merely intend to use checks will need to maintain a minimum bank balance, according to a notice sent by the Reserve Bank of India (RBI) in early August 2021. If you fail to maintain this minimum balance, the check will bounce. In addition, a penalty fee may be owed by the individual who wrote the check. The RBI made the National Automated Clearing House (NACH), which was also updated, and operational around the clock. All national and private banks must comply with these reforms. The rule update was performed to speed up and generally enhance check clearing. Due to the new rule's guarantee that NACH would be available every day of the week, the organization will also be able to process and clear checks on Sundays.
Conditions for Cheque Bounce:
Insufficient account balance: The bank will reject and return the check to the payee with a memo saying insufficient funds to pay the cheque amount if there is not enough money in the drawer's account to cover the amount of the check.
Expired validity of cheque: The cheque must be presented for payment within three months of the drawer issuing it. The cheque expires if it is not delivered to the bank within three months. An expired check will be returned by the bank.
Damaged cheque: A check will bounce if it is scratched or otherwise altered, the facts are obscured, or there are stains or marks on them.
Overwriting: The check bounces due to overwriting if the drawer's signature, the amount of the check, or any other statement has been altered.
Issuance of Cheque Bounce Notice:
The first step after a check bounces owing to inadequate funds is to demand payment by sending a written notification of the cheque bounce in accordance with the Negotiable Instruments Act. Within 30 days of receiving notification from the bank and the bounced check, the payee may send a notice saying that the bank is unable to pay the amount on the check because there is not enough money.
The payee must allow the drawer a 15-day grace period after sending the notice that the check was returned unpaid in order for the drawer to make payment. The payee may file a lawsuit against the drawer within 30 days following the expiration of the 15-day grace period if the drawer still does not reimburse the cheque's amount.
Process of Cheque Bounce Suit:
Filing a complaint with the Magistrate after the drawer has had 15 days to respond to the drawer's notice of a bounced check.
The payee/complainant is required to appear in court and present the case's specifics. If the magistrate is satisfied with the complainant's testimony, he will issue a summons for the drawer to appear in court.
The drawer will show up and either confirm or refute the complainant's claimed facts.
If the court rules that the drawer committed the crime of cheque bounce, the court will issue a verdict of conviction against the drawer.
Cheque bouncing is a crime, and the police have the right to detain you. However, it's crucial to remember that without a warrant, police cannot detain you. If you don't show up for court after receiving a summons, a warrant will typically be issued for your arrest in cases involving failed checks. Cheque fraud is a crime that is subject to bail.
In cases of cheque bounce, it is advisable to appoint a lawyer. If the case has been filed in Delhi then Cheque Bounce Lawyers In Delhi can be appointed. Likewise, Real Estate Lawyers In Delhi can also be consulted if the dispute is related to real estate.
For hiring advocates you can contact Lead India. We have experienced lawyers. Here, you can talk to a lawyer and seek Free Legal Advice. You can also ask a legal question.
Visit Us: - https://www.leadindia.law
Call Us: - +91-8800788535
Email: care@leadindia.law
Facebook: - https://www.facebook.com/leadindialaw
LinkedIn: - https://www.linkedin.com/company/76353439
Twitter: - https://twitter.com/leadindialaw
Pinterest:- https://in.pinterest.com/lawleadindia
Comments