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How To?

How to File a case against Cheque Bounce?

A cheque bounce is a commonly used term for when the cheque cannot be processed further by the bank due to a number of reasons, mainly paucity of funds in the account of the holder and other technical issues like overwriting, mismatch of amount or figures or signature, damaged cheque etc. 

By: Nasheet Hamdulay, 1st Year Student (3 Year L.L.B) from ILS Law College, Pune. 

So, what does the Act suggest? 

Section 138 of the Negotiable Instruments Act, 1881, states that the following conditions need to be fulfilled necessarily for prosecution under the Act:

  • The cheque necessarily has to be drawn on any account maintained by the drawer of the cheque.
  • The cheque necessarily has to be dishonoured by reason of insufficiency of funds in the drawer’s account.
  • The cheque necessarily has to be drawn to discharge of a debt or a legal liability.
  • That cheque has been presented to the bank within a period of three months
  • After the dishonour, a notice has to be issued to the payee from the drawer for payment of the amount giving reasonable time for the same (30 days). 

If the drawer does not make any payment within 15 days, after receiving such notice, a crime under Section 138 of the Negotiable Instrument Act, 1881 is committed. Punishment for the same can be imprisonment for a term which may be extended to two years, or with fine which may extend to twice the amount of the cheque, or with both.

Wondering how to file a case against cheque bounce in India? Here’s how:

  • Step 1- Notice

Issue a notice within one month from date of return of cheque by the bankers. 
Note: Notice should be sent via Speed Post or Registered Post with acknowledgment due only. Notice serves as a record which can be admitted as evidence under Indian Evidence Act. 

  • Step 2- File a Complaint 

The complaint is to be filed before the concerned Magistrate of the area within 30 days from date of dispatch of notice.

  • Step 3- Court issues notice to accused 

The accused, on receiving the notice from the court has to appear before the court, seek for bail and contest the matter (if any)

  • Step 4- Evidence

Following can act as evidence-

  1. Cheque
  2. Memo issued by the Bank
  3. Notice served by Complainant 
  4. Documents which prove Defendant is under legal obligation to pay 
  • Step 5- Trial

Court has to take into consideration records furnished by both the parties. Complainant has to summon his records while the accused is given the opportunity to cross-examine. Thereafter, the accused can produce his evidence in order to try and quash the allegations. The Court, then proceeds to dismiss the case based on merits and arguments from both ends. 

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