CHEQUE BOUNCE CASE PROCEDURE

cheque bounce case procedure

CHEQUE BOUNCE CASE PROCEDURE

Authored by: Tanisha Tarun

Meaning of cheque bounce:-

A cheque bounce means a dishonored cheque and this situation arises when a bank rejects the cheque for various reasons, such as:-

  • Incorrect date
  • Mismatched signature
  • Insufficient funds in the account
  • The issuer stops the payment
  • The account number doesn’t match

So, above are some reasons why a bank rejects the declared declaration it is a dishonored cheque and the cheque bounces.

Consequence of Cheque Bounce:

  • Legal issue:- a cheque bounce can be legal trouble and also amounts to a criminal offense
  • Restrictions by the bank:- a cheque bounce often leads to some banking restrictions.
  • Fee charges:- banks charge charges fees from the person who wrote the cheque.
  • Credit score: Continuous cheque bouncing can affect the credit score.

So, above are some consequences for cheque, and if any of these situations happen, the particular bank rejects the cheque from being processed further.

Section 138 of the Negotiable Instruments Act 18811 says or deals with the rejection or dishonor of cheques due to insufficient funds in the bank account.

According to this section in a simple word, if a cheque is returned unpaid for insufficient funds or if the amount exceeds the arrangement made, then the person  who is drawing the cheque shall be deemed to have committed an offence, and shall without prejudice to any other provisions of this Act, shall be punished with imprisonment for a term which may extend up to two years and fine which may be twice the amount of  the cheque or both :

 Provided that nothing in this section shall apply unless—

  • The cheque has been presented to the bank within six months from the date it is drawn or within the period of its validity, whichever is earlier.
  • The payee or the cheque holder in the due courses of the  cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque [within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid] and
  • The drawer of such cheque fails to make the said amount of money to the payee, or the case may be, to the holder in the due course of the cheque, within fifteen days of the receipt of the said notice.

Procedure for Cheque Bounce Case:-

  • Complaint filling- the complaint shall be filed to the jurisdictional magistrate within 30 days of the arrival of the situation. The complainant has to be present before the magistrate during the complaint filling and the required and original documents have to be shown to the magistrate. If the case is found to be prima facie, the magistrate will post the matter further for a sworn statement.

Sworn statement –  At this stage, the complaint has to enter the witness box and give the details regarding the case. After that, if the magistrate is satisfied that the complainant’s details are true then the magistrate will issue a summon to the accused.

  1. Provided in the bare act
  2. Appearance of the accused- on the receipt of the summon, the accused needs to be present in the court and if he is not present in the court then an arrest warrant will be issued against him. After his appearance in the court, the accused is supposed to take bail from the court with or without sureties. If the accused is unable to comply with the surety then he can deposit some cash security instead of surety which will be refundable after the conclusion of the case.
  3. Recording of the plea- In this, the court will ask the accused whether he has committed the crime of cheque bounce or not. If the accused confirms his guilt he will be liable for the punishment and if he pleads innocence then the court will post the case for further evidence and proof.
  4. Evidences – The complainant has to give all the evidence by way of an affidavit which is known as examination-in-chief. He has to give all the required documents in support of his case of cheque bounce or dishonored cheque. After that, the complainant will be examined by the accused. If there are any other witnesses in support of the complainant then they will also be examined.
  5. Record of the statement of the Accused – After the completion of the examination of the witnesses and evidence of the complainant, the Accused will be questioned about his guilt and the accused has to give the details of the same.
  6. Evidence of the Accused- After the statement of the accused, the accused will be allowed to produce his evidence and he can also produce the documents in support of his side in the case. After that, his evidence and witnesses will be cross-examined by the complainant and then his evidence and witnesses will proceed further for the arguments.
  7. Arguments – Both the complainant and the accused will submit their arguments to the court. They can also take the relevance of the judgments of the High Court for their case.
  8. Judgments – After the arguments of both sides, the court will proceed further with the judgments. If the accused is found guilty then he will be punished with imprisonment and fine, and if he is found innocent then the court will acquit the accused. If the accused is convicted, then the accused will have the opportunity to file an appeal before the sessions court within 30 days.

So, above these are the procedures for the cheque bounce or dishonored cheque case that have to be followed. All the steps are important to be carried out for the correct judgment of the case.

For all these steps both the party i.e. complainant and accused can consult any lawyer or legal representative for their justice. A lawyer can help his clients safeguard their rights and ensure that fair judgment is received.

By

Tanisha Tarun

Chandigarh University

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