CHEQUE BOUNCING IS A CRIMINAL OFFENCE IN INDIA

B K R RAO
B K R RAO / 5 yrs ago /
  11



CHEQUES

Cheque is a negotiable instrument.  Normally, cheques are issued either for the reason of statutory requirement or for the reason of securing proof of payment.  Crossed and account payee cheques are not negotiable by any person other than the payee.  It has to be deposited into his bank account.  In legal parlance, author of the cheque is called ‘drawer’, the person in whose favour it is drawn is called ‘payee’ and the bank who is directed to pay the amount is called ‘drawee’.  It is always safe to issue crossed “Account Payee Only” cheques in order to avoid its misuse.  Blank cheques are not safe.  It is better to date the cheque invariably.  A cheque is valid for payment only for six months from the date mentioned in the cheque.  After the period of six months, such a cheque is called ‘stale cheque’.

BOUNCING

A cheque becomes due for payment on the date mentioned on it.  Before issuing a cheque author of the cheque should ensure that he has sufficient funds in his account. Lest, it would bounce with remarks ‘insufficient funds’.  Bouncing in common parlance is referred to dishonour of  cheques.

Bouncing of a ball is a fun but bouncing of a cheque is a criminal offence.  The Negotiable Instruments Act, 1881 is applicable for the cases of dishonour of cheque. This Act has been amended many times since 1881 and I am going to discuss the provisions of this Act as it stands today.

WHAT HAPPENS WHEN A CHEQUE IS DISHONOURED?

Immediately upon dishonour the drawee bank issues a ‘Cheque Return Memo’ to the banker of the payee citing the reason for non-payment.  In turn the payee’s banker shall handover the dishonoured cheque and the memo to the payee.  

WHAT IS TO BE DONE THEN?

The payee has an option open to him either to re-present the cheque if and when he thinks the cheque could be honoured but within six months from the date of the cheque or proceed legally to prosecute the drawer.  The payee may prosecute the drawer for dishonour of cheque only if the amount mentioned in the cheque is towards discharge of a debt or any other legal liability of the drawee towards payee.  Mere issuance of a cheque say for the purposes of gift, or towards lending a loan or for unlawful purposes would not amount to legal liability and the drawer cannot be prosecuted in such cases.

TO PROCEED LEGALLY

If he decides to proceed legally, then the drawer should be given an opportunity of making good the cheque amount immediately.  Such an opportunity has to be afforded only by means of a notice in writing. 

LEGAL PROVISIONS

Under Section 138 of the Negotiable Instruments Act, 1881 as amended up to date, the notice has to be sent by the payee to the drawer in writing within thirty days from the date of receiving Cheque Return Memo from the bank and demand the cheque amount to be paid to him within fifteen days from the date of receipt of such a notice by the drawer.

CONDITIONS FOR PROSECUTION

Law prescribes certain conditions to be fulfilled in order to attract provisions of Section 138. 

A)     The cheque should have been drawn by the drawer on an account maintained by him.

B)     It should have been returned unpaid either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank.

C)    Cheque must have been issued towards discharge of a debt or legal liability.

D)    If after receiving the notice, the drawer does not make payment within fifteen days from the date of receiving such a notice, then he commits an offence punishable under Section 138 of the Negotiable Instruments Act. 

PUNISHMENT

Punishment prescribed for such an offence is fine which may extend to twice the amount of the cheque or imprisonment for a term which may be extended to two years or both.

FILING COMPLAINT

If the drawer makes payment of the cheque amount within fifteen days from the date of receipt of the notice, then drawer does not commit any offence.  Otherwise, the payee may proceed to file a complaint in the court of the jurisdictional magistrate within one month from the date of expiry of fifteen days prescribed in the notice. 

If the payee fails to file the complaint within thirty days, the complaint becomes barred by limitation of time.  The jurisdictional magistrate court may refuse to entertain such a belated complaint.  However, if the payee has sufficient reasons to justify delay in filing the complaint, he may make an application before the magistrate along with the complaint, to explain the reasons for delay and seek condoning of delay.  Cognizance of the complaint may be taken if the Court is satisfied that the payee had sufficient cause for not making the complaint within the prescribed period.

After the complaint is filed and taken on record the proceedings against the drawer being.   

CIVIL ACTION

The payee may also initiate money recovery procedure in a jurisdictional civil court apart from prosecuting the drawer for criminal offence.  It is essential in this case to consult an advocate who is well versed and experienced in this area of practice to proceed further in the matter.

FINER POINTS

The procedure of filing complaint and prosecuting the drawer in a court of magistrate involves certain finer points like cause of action, preparation of legal notice and complaint in accordance with legal requirements, modes of sending the written legal notice, service of summons and non-bailable warrants, conducting the criminal case etc.  It is advisable to consult an advocate who is well versed and experienced in this area of practice.





m sridhar / / 2 hrs ago
m sridhar

i have given the cheque in the month of november 2011,is the cheuque is valid to take the amount or not .is their any validity period for the cheque


Jatin Malaviya / / 8 months ago
Jatin Malaviya

I file the cheque bouncing complain in August 2012 and till date there are no result victim is coming there or not but complainer must be there at court - one year is over with Rs. 50000/- bouncing cheque my total expenses with fees / transportation/postage - communication Rs. 35 to 40000 and + 50000 bouncing amount total amount is Rs. 90000.00 in 12 month - I had not count interest, every time day/date as per the court order complainer always there but victim will be note there and does not make in difference because our systems has many loop holes so before proceeding you need good and correct adviser/ advocate - /Jatin


ZIA ABBAS / / 11 months ago
ZIA ABBAS

How Many time cheque should dishonored for legal action...


annesha sikdar / / 12 months ago
annesha sikdar

If a person has given a cheque which dishonored by the bank nd after dat he ran away nd he is not available .. den wht to do ?? can i lodge a FIR ??? nd if yes den under which sec ??


Rathan V / / 12 months ago
Rathan V

Hope our court"s don;t become recovery agents for money lenders who make most use of this act . Legal way of extortion it is the poor people who give posted cheque and fall prey .money lenders are few but their prey are 2.5 crore cases


dhandapany / / 1 year ago
dhandapany

how to overcome from cheque case


shahid / / 12 months ago
shahid

if the payee of the cheque is fraud


shivraj patil / / 1 year ago
shivraj patil

After issuing notice for payment , and lapsing of 15 days of no payment receivables from defaulter , how much time required to handle criminal case ?

Approx time line to complete the procedure to get my money back

If i am moving from one location to another what is the provision to handle this case by my lawyer ?


shivraj patil / / 1 year ago
shivraj patil

can i file complaint after 15 days of notice serve to fast track court. if yeas how much approx time required to see result of this complaint ?

If i am moving from such location to other can i give petition to my lawyer to handle the case up to result?


MY GIGI 13057649 / / 2 yrs ago
MY GIGI 13057649

Can you sugest a good advocate to handle my case in Noida



couples

Monsoon Romance Contest

View Popularity Board

Contest Entries

Priyadarshi Dutta
Monsoon makeover
 By Priyadarshi DuttaNikhila stood in the terrace of her top floor flat in Dadar looking at the waterlogged patches of the road. The rains had heavily walloped the Mumbai the previous afternoon.
1 week ago
Vignesh Karnam
The Dawn of Rain.
 The rain always gathered all of my courage. I always loved the rain. I stepped out on a whim and noticed myself melting in the presence of another being. The presence so divine and lovely , I
1 week ago
Alka Girdhar
Mellowing Monsoons
 The rain fell incessantly in a continuous noisy torrent, but its seemingly immaculate fall was a mere puppet in the hands of angry gushing winds that made it sway this way and that way, this way
1 week ago
MeghnaVinod
THE LOVE OF MY LIFE IS HERE
 THE LOVE OF MY LIFEBangalore. 13 February. 6pm.Samiksha: It was raining. Raining hard. I could hear the raindrops falling on our tilled roof pitter patter. I just stood there enjoying the slight
1 week ago
TheBigThinkg Blog
The Lusty Love..
 I looked at her longingly..There she was, probably with her little son next to her..I am new to this village. I had come here with four of my friends. The sacrifice festival of this village is
1 week ago
DhAmodharan
pardhaeshi ! pardhaeshi !! jAnA naheem!!! mujae choad kae !, mujae choad kae !!... Hopefully, a BhArath-shaking real story !
With the heady mix of train and rain descending on our poor Dhushyanth, the hero of this real story, name changed, who wAs really feeling like an elated yAthri, in that distant land of RAjAsthAn, without the problems of daily life weighing on him, the beat
1 week ago
novelideas
SPEECHLESS
 I waitfor this distant horizonto gather scattered petalsof crimson glory from its canvassinto a spongy blanketbillowing to spread its wingswith the whispering zephyrI wishnow to be let into those
1 week ago
chitra viswanathan
The magic of the rain after a storm
 “Swetha, are you ready ” asked her mother, Prema. “It is getting late. It will not be nice if we go late to receive Venkatesh.” They all got into the car. There was great
1 week ago
Tripti
All I want is you..
  26th June, 2014 Mumbai 18:30 hours"Feeling numb." "As I pen this down, I''m sitting closer to the entrance, staring outside my tent so that the wetness hits me. I''m not enjoying it,
1 week ago
Shalini Prasad
The Magic the Rain Brings - Part 3
 This year, people expected a lot of rain. To say that they were disappointed would be an understatement. The monsoon season was as dry as the summer. The farmers were suffering, the lakes were
1 week ago