The Negotiable Instruments Act, Section 138, imposes legal ramifications on a cheque bounce case. Cheque bouncing is a severe offence for which the person who issued the cheque may be subject to legal prosecution. You can do a few things to escape from cheque bounce case.

A Cheque Bounce Case: What Is It?

Cheque Bounce Case Section 138 of the Negotiable Instruments Act, 1881, is applicable when someone pays a legal debt with a cheque and the cheque is returned unpaid because there are not enough funds to cover it.

A cheque is considered to have bounced for the reasons listed below.

• Stop payment
• Insufficient balance in the account
• Account has been closed 
• Dispute with regards to authenticity of Signature 
• Exceeds the amount agreed between the parties

Cheque bounce case procedure

Cheque bounce case limitation period

The cheque bounce case time limit can be understood through the following two steps:

Cheque Bounce case Notice

A notification sent by cheque bounce lawyers is essential to the legal process for dishonoured cheques. Within 30 days of the dishonour incident, a legal notice must be served in accordance with the guidelines for cheque bounce cases. 

The goal is to provide the bill drawer with appropriate notification of the returned cheque and an opportunity to make amends. This notice gives you 15 days to pay back the sum owed. On the 16th day following the service of this legal notice, the cause of action for the cheque bounce case process arises.

Submission of a Criminal Complaint Following Notice:

A criminal complaint may be brought against the cheque drawer if, within 15 days of receiving the notice, they fail to pay the required amount to release themselves from liability or debt. There is a 30-day window within which to file this kind of complaint. Before filing a legal complaint, knowing which court will receive the complaint also known as the cheque bounce case jurisdiction is important. 

To handle instances involving the location where the cheque was written or presented, where it was returned, or where the payee lodged a demand notice, one should file the case in a criminal court with territorial jurisdiction. A copy of the relevant documents must be included with the criminal complaint when filed. Wondering whether a cheque bounce case is criminal or civil? The complainant may bring both a criminal and civil case against the cheque drawer.

Steps to follow for a Cheque Bounce Case in India:

• Try negotiating with the payee: You could work out a deal with the individual or business that you sent the cheque to. You could work out a payment schedule or resolve the issue out of court.  A different strategy to resolve the matter out of court is to pay the payee the money owed. This will probably need negotiating with the payee or their legal representatives to get a mutually agreeable solution. 
• Hire a lawyer: It is advised that you retain the services of a lawyer with experience handling cheque bounce issues if the case proceeds to trial. A lawyer can advise you on what to do next and assist you in understanding the legal system.
• Contest the case: You can challenge the case in court if you think you are not at fault. To support your case you may need to provide proof of payment or other paperwork.

Grounds to challenge cheque return charges

The bounced cheque was provided as security.

Suppose the checks were not a discharge of any obligation or liability and were solely taken as collateral for timely repayment. There was no obligation or debt on the day the checks were collected. Under the cheque bounce case act or the NI act, section138, the accused cannot be prosecuted.

Loan with respect to unaccounted money

Your lawyer will have to prove that there was no agreement on discharge of legal liability between the parties and thus the demand of payment can be seen as “unaccounted” in nature. This will question the credibility of the cheque.

Disputing the Sign on a Cheque

Should the defendant contest the signature on the cheque? The banker is the most trustworthy source of information to prove that the cheque bounced because the signatures didn’t match. The bank manager must appear in court and provide all documentation pertaining to the accused’s signature, proving that the signatures on the checks don’t match.

Although further defences can be used to refute cheque bounce cases, it is preferable to reach a settlement if the cheque was actually sent to pay off a legally binding debt because these cases can get worse.

Handling Cases of False Cheque Bounce

 It is permissible to refute false allegations. To initiate a countersuit and pursue damages for the false accusation, including criminal and defamation charges, the accused may consult with legal advice. It is crucial to remember that every case is different and that the best line of action will rely on your particular set of circumstances. To make sure that your rights are upheld and that you are handling the situation appropriately, you are advised to get legal counsel and direction. 

FAQs

What is the punishment for cheque bounce case?

According to Section 138 of the Negotiable Instruments Act, 1881 (“Act”), cheque bounce case punishment carries a maximum two-year jail sentence, a fine up to double the value of the cheque, or both.

How to file cheque bounce case?

If a cheque bounces, you can file a complaint under Section 138 of the Negotiable Instruments Act of 1881 to get your money back. Following the filing of the complaint, the accused will receive a summons from the court; if they do not show up, a warrant for their arrest may be issued.

How to get bail in cheque bounce case?

Since it’s a bailable offence, you can be granted bail if the only offence is an instance of a cheque bounce. In order to ensure your attendance at court, the court could ask you to provide a surety or a bail bond. A certain sum of money may be requested to be deposited as security by you or your surety.

What happens if accused died in cheque bounce case?

A complaint filed under Section 138 of the Negotiable Instruments Act ceases to exist and the complainant is not entitled to pursue the appeal if the accused passes away while the complaint is at the appeal stage.