Cheque Bounce Cases: Safeguard Your Financial Interests with Legal Expertise

We realize that cheque bounce cases are an infuriating and financially exhausting experience for businesses and individuals alike. A bounced cheque is not merely a nuisance—it can have legal repercussions. Whether you have an unpaid cheque or have been accused of writing a bounced cheque, we can assist you. Our experienced legal team specializes in handling cheque bounce cases, ensuring that your rights are protected and the matter is resolved efficiently.

What is a Cheque Bounce?

A cheque bounce occurs when a cheque is presented for payment, but the bank refuses to honor it due to insufficient funds in the issuer’s account or other issues like a closed account, signature mismatch, or technical errors.

According to the Negotiable Instruments Act, 1881 (India), a bounced cheque may lead to drastic legal penalties against the issuer. The payee (recipient to whom the cheque is presented) may file a complaint against the issuer if the cheque bounces.

Legal Consequences of Cheque Bounce

  • Criminal Liability for the Issuer
    If a cheque is bounced, the payer can be prosecuted under Section 138 of the Negotiable Instruments Act. Under this provision, which mandates imprisonment for 2 years or a fine or both for the drawer of the bounced cheque, a fine up to double the value of the cheque is also provided for in certain cases.

  • Civil Liability
    Apart from criminal liability, the issuer can also be held liable for the value of the cheque in a civil action. The payee may sue for recovery of the amount and damages for non-acceptance of payment.

  • Notice Requirement
    Prior to filling a case in court, the payee has to serve a notice on the issuer within 30 days of getting information from the bank regarding the cheque bounce. In case the issuer does not repay the cheque amount within 15 days of getting the notice, the payee can approach court with a complaint.

How AK Legal Mantra Can Help

We at AK Legal Mantra offer professional legal assistance to payees as well as cheque issuers in cheque bounce cases:

           1.For Payees (Seeking Payment)

  • Filing a Complaint: We assist you in preparing and filing a complaint under Section 138 of the Negotiable Instruments Act.
  • Negotiation and Settlement: We also facilitate negotiation of a settlement with the issuer prior to approaching the courts, saving you time and money.
  • Recovering the Sum: In case the matter reaches court, we act as your legal representatives in the process to recover the cheque sum, as well as any resultant damages.

            2. For Issuers (Risk of Legal Proceedings)

  • Defense of Your Case: If you’ve been charged with issuing a bounced cheque, we offer strong legal defense mechanisms to guard your interests.
  • Exploring Defenses: We assess your case to identify potential defenses, such as the existence of a valid reason for the cheque bouncing, like technical errors or insufficient notice.
  • Settlement Options: In many cases, we help facilitate a settlement to avoid prolonged litigation and minimize penalties.

         3. Negotiation and Mediation
             If both of you would rather have an out-of-court solution, we can assist in facilitating mediation among the                     parties to reach an agreement that can be quicker and less expensive than prolonged courtroom battles.

FAQs

1. What do I do if my cheque bounces?
If your cheque bounces, you must receive an immediate notice of demand from the payee. If you’re the payee, you can proceed with legal action after serving a notice.

2. Can I sue for cheque bounce if it is technical?
Yes, the Negotiable Instruments Act permits the payee to sue even if the cheque bounce is technical, unless the issuer has a valid defense.

3. How much time do I have to sue after a cheque has bounced?
You have to issue a demand notice within 30 days of learning about the dishonored cheque, and the issuer has 15 days’ time for making the payment before you are allowed to make a complaint.

4. What is the punishment for issuing a bounced cheque?
The punishment for issuing a bounced cheque may involve imprisonment of up to 2 years, a fine (maximum twice the cheque amount), or both.