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Call ExpertIn a Cheque bounce case, an overview typically involves the account holder issuing a cheque to the payee, which is then presented to the bank for payment. However, due to insufficient funds or other reasons, the cheque bounces, causing complications for both the payer and the payee. The bank notifies the account holder about the insufficient funds in their account, leading to potential legal consequences.
The consequences of a dishonoured cheque in India can be financially and legally serious.
Note:Â It is advisable to hire lawyers to assist you with filing a cheque return case. This is because lawyers are familiar with the entire cheque bounce case process and how to fill out the form in the appropriate legal format.
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If you have received a bounced cheque from someone, you have the right to take legal action against the issuer of the cheque. The initial stage in this procedure is to send an official notice of a bounced cheque to the issuer, asking payment of the amount due. Here’s how to send a notice about a bounced check:
It is important to note that cheque bounce notices should be drafted and sent by a legal professional or a person with knowledge of the legal procedures involved.
A cheque bounce notice is a legal document that demands payment of the amount due on a bounced cheque. Here’s a standard format for a cheque bounce notice:
It is important to note that the format of the cheque bounce notice may vary depending on the specific circumstances and legal requirements.
There are many reasons why a cheque might bounce. The most frequent one is that the payer’s bank account doesn’t have enough money when the cheque is presented. This is known as ‘insufficient funds bounce.’
1. Insufficient Funds: If the payer’s account does not hold enough money, the cheque will be returned or ‘bounced.’
2. Signature mismatch: When the signature on the cheque differs from the one registered with the bank, the cheque may be refused.
3. Incorrect account number: If the account number written on the cheque does not correspond with the payer’s account, the cheque could bounce.
4. Damaged cheque: A disfigured or defaced cheque may lead the bank to dishonor it.
5. Dated cheque: If a cheque is presented after its written date, it could result in a bounce.
6. Stop Payment instruction: If the payer requests their bank to halt the cheque payment, it will consequently bounce.
In case a person is filing cheque bounce case, there are certain Cheque Bounce rules they have to follow.
According to a letter the Reserve Bank of India (RBI) handed out in early August 2021, customers who frequently use cheques or who just desire to use cheques will need to maintain a minimum bank balance. If this minimum balance is not maintained, the cheques will bounce. A penalty charge may also be owed by the individual who wrote the cheque. The RBI has made the National Automated Clearing House (NACH), which was also updated.
These reforms apply to all public and commercial banks. The new regulation was implemented to speed up and overall improve cheque clearance. The new regulation ensures that NACH will be open every day of the week, allowing it to process and pass cheque on Sundays.
Cheque bounce notice is issued when the presented cheque bounces due to insufficient funds. It forces the issuer of the check to pay the amount, you can send them a notice that the check has bounced. Before a cheque bounce notification is sent, though, the following requirements must be satisfied:
Once these conditions are met, you can proceed with issuing a cheque bounce notice.
When a cheque bounces, the payee has a legal recourse to recover the amount due from the drawer. The first step in this process is to issue a cheque bounce notice to the drawer. This notice must be issued within 30 days of the date the cheque was dishonored.
The cheque bounce notice must be in writing and must contain the following information:
The notice can be served on the drawer in person or by registered post.
If the drawer does not pay the amount of the cheque within 15 days of receiving the notice, the payee can file a cheque bounce suit against the drawer in the court of the Judicial Magistrate.
The cheque bounce suit can be filed in the magistrate’s court within whose jurisdiction the bank branch where the cheque was deposited is located.
The process of a cheque bounce suit is as follows:
1. Filing a complaint: The payee must file a complaint with the court of the Judicial Magistrate. The complaint must be in writing and must contain the following information:
2. Issuance of summons: The magistrate will issue a summons to the drawer, directing him to appear in court on a specified date to answer the charges.
3. Appearance of the drawer: The drawer must appear in court on the specified date. If he fails to appear, the court may issue a warrant for his arrest.
4. Examination of the complainant: The magistrate will examine the complainant and his witnesses.
5. Examination of the drawer: The magistrate will then examine the drawer. The drawer may plead guilty or not guilty.
6. Judgment: If the drawer pleads guilty, the magistrate will convict him and pass sentence. The sentence may include imprisonment for up to two years or a fine of twice the amount of the cheque, or both. If the drawer pleads not guilty, the magistrate will hear evidence from both sides and then deliver a judgment. If the magistrate finds the drawer guilty, he will convict him and pass sentence. If the magistrate finds the drawer not guilty, he will dismiss the case.
While filing a complaint against a party in a cheque return case, you need to submit an application form along with the following documents:
Cheque bounce is a criminal offence in India, covered under Section 138 of the Negotiable Instruments Act of 1881. So, if a complaint is filed in a court and, if found guilty, the defaulter can be punished with a prison term of two years and/or a fine, which can be as high as twice the cheque amount.
In some cases, the court might grant cheque bounce case punishment, this is usually if the court finds the infraction heinous.
The cheque bounce notice should include the following contents:
It is important to draft the cheque bounce notice carefully, ensuring that it complies with the legal requirements and includes all relevant information. It is highly recommended to get in touch with our Legal Experts to resolve all your queries regarding the process. Our team will draft the legal notice aptly.
The terms ‘dishonoured cheque’ or ‘cheque bounce’ are used when a bank refuses to honour a cheque that was used to pay for something. Additionally, the bank levies a set fee on customers whose checks bounce.
Name of Bank | Type of Account | Charges for Local Cheques | Charges for Outstation Cheques | Charges for Cheque Return |
---|---|---|---|---|
SBI | All | Cheque/bill up to ₹1.00 lakhs – ₹150/- + GST Cheque/bill above ₹1.00 lakhs – ₹250/- + GST | N/A | Cheque returned charges for Cheques drawn on SBI (for insufficient funds only) (for all segments) – ₹500/- + GST (irrespective of the amount) Cheque returned charges for Cheques drawn on SBI (for technical reasons) for all segments when the customer is at fault – ₹150/-+ GST |
HDFC Bank | Savings Account | Outward: ₹100/- Inward: First cheque return in a quarter – ₹350/-. From second cheque return in the same quarter – ₹750/- per return | Outward: ₹100/- Inward: ₹350/- | Dishonour of Outstation Cheques Regular Savings – Outward: ₹100/- Inward: ₹350/- Senior Citizen Account – Outward: ₹80/- Inward: ₹350/- |
HDFC Bank | Current Account | Outward: ₹50/- Inward: ₹300/- | Outward: ₹50/- Inward: ₹300/- | N/A |
ICICI Bank | All | Cheque deposited by the customer – ₹100/- (for every cheque return for financial reasons) Cheque issued by the customer – ₹350/- (for one cheque return per month); ₹750/- per return in the same month for financial reasons. ₹50/- for non-financial reasons except for signature verification for every cheque return for financial reasons. | Outstation cheque deposited by the customer – ₹150/- + other bank charges at actuals per cheque. | N/A |
Axis Bank | All | Return of cheques deposited at the home branch for local clearing – ₹500/- per cheque | N/A | N/A |
Bank of Baroda | All | Cheque (deposited by BOB’s customer and returned unpaid (Inward Return) Up to ₹1 lac – ₹125/- Above ₹1 lac to less than ₹1 crore – ₹250/- Above ₹1 crore – ₹500/- | N/A | Cheque (drawn on BOB) returned (Outward Return)– (Financial Reason) Up to 1 lakh – ₹250/- Above ₹1 lakh to less than ₹1 crore – ₹500/- For ₹1 crore and above – ₹750 per instrument In case the bank remains out of funds; actual interest @ 7.5% over base rate is to be charged extra For other reasons – ₹250/- |
The initial stage is to reply to the legal notice with your defence or pay the requisite sum by cheque in order to halt future legal proceedings. Thus, before answering, you must first consult a lawyer who focuses on cheque bounces. If the cheque amount is paid at the beginning, the issue will be resolved immediately. Despite the fact that the format for the answer to the legal notice is flexible, be sure to address the following points:
If you don’t answer the legal notification or pay the cheque amount within 15 days, the drawee is legally entitled to file a complaint with the court, which will launch legal action against you.
It’s crucial to draft a cheque bounce notice in case of recovering the money. Since the notice serves as the first step towards initiating a legal proceeding, it is advisable to seek the assistance of a cheque bounce lawyer. Our team of expert lawyers can help in case of cheque bounces in the following way:
1. Our professional possesses the required expertise and knowledge to prepare a legally sound notice
2. We can gather crucial information on behalf of their client and draft the notice accordingly
3. Cheque bounce lawyer can ensure that you are on the right track towards achieving justice
4. Our legal team can handle all the necessary legal documentation with efficiency.
Thus, it is crucial to hire an experienced cheque bounce lawyer to ensure that the legal notice is sent appropriately and considering the potential litigation that may follow
Drawer:Â The term ‘drawee’ refers to the person who writes the cheque, or the ‘author of the cheque.’ (The debtor might be the drawer.)
Payee:Â The term ‘Payee’ refers to the party on whose behalf the cheque is drawn and to whom the amount specified in the cheque is payable. (The Payee may also be the Creditor.)
Drawee:Â The bank that must pay the amount on the cheque, or the bank that has been given the order to do so, is known as the drawee
Payee’s Bank: The bank where the payee has a bank account and where the amount of the cheque must be deposited or credited (particularly in the case of a crossed cheque) is referred to as the ‘payee’s banker.’
If a cheque fails owing to overwriting, an incorrect signature, a discrepancy between the amount printed in words and figures, or a damaged cheque, the payee may ask that the drawer issue another cheque to make up for the mistake. The payee may bring a civil lawsuit to recover the whole amount of the overdue cheque, not only the cost of the bounced cheque, if the drawer refuses to produce another cheque.
There are a few things to take care of before mailing a legal notification for a bounced cheque. For those who are unclear of how to send a notification of a bounced cheque so that the court would find in their favour, consider the following tips:
The original copies of the cheque and return memo should be kept in a safe place. Sending the legal notification for a returned cheque can be done in one of the following ways:
This is crucial to remember when utilising the cheque bounce notice type. In line with Section 138 of the Negotiable Instrument Act,1881 , a bounce notification is delivered to the person who drew the dishonoured cheque.
In the event of a company, the Negotiable Instrument Act,1881 cheque bounce is addressed to the company; alternatively, it might be sent to the people in charge of managing the company’s administrative and business operations. The precise amount for which the dishonoured cheque was written should be stated in the legal notification for cheque bounce; however, additional information, such as dishonour fees or legal costs, is permitted.
While the financial transaction against a debt is the emphasis of Section 138 of the Negotiable Instrument Act,1881 , the reason the cheque was drawn should be indicated as well. The transaction must be legal under existing laws, thus the purpose for which the cheque was issued must not be illegal. Despite the fact that the law stipulates a notice period for cheque bounces, it is best to be safe and include this information in the legal notice that is being served.
It should be noted that the statute of limitations for a legal notification under Section 138 of the Negotiable Instrument Act,1881 starts when the cheque is presented for encashment. Hence, if the cheque was initially presented and the deadline for serving legal notice has passed, it may be presented again for encashment in order to acquire another cheque bounce memo, providing the cheque validity permits it.
If you don’t file a complaint within the stipulated 30 days, the case will lapse. However, in certain circumstances, the court may grant you an extension.