A cheque becomes a bounced when, on being presented to the bank, it is dishonoured or returned by the bank due to there being a defect in it, maybe many reasons, they are- a. Insufficient funds; or b. The amount mentioned in the cheque exceeding the amount which has been arranged to be drawn from the account by virtue of a prior arrangement; or c. Mismatch in the signature; d. Post dated cheque; or e. Suspicion of a forged cheque f. Payment stopped by account holder g. Torn in the cheque, h. difference in words & figures of the amount, i. payment stopped by the account holder, j. post-dated cheque deposited by the payee, k. cheque out of date, etc. When a cheque is bounced or being dishonoured by the bank then the following things can happen- 1. Penalty can be imposed by the bank. If a cheque bounces due to insufficient funds or any other technical reason, such as signature mismatch, both the defaulter and the payee are charged by their respective banks. 2. If you have issued a cheque for repayment of any loan and the cheque bounces. Then one would have to additionally bear the late payment charges along with the penalty fee charged by the bank. 3. The penalty charges for cheque outward return are close to Rs. 300 for most banks, while charges for cheque inward return are about Rs. 100. 4. A bounced cheque can have a negative impact on your financial history or CBIL score. 5. One can also take civil and criminal charge for cheque bounce against the issuer of the cheque. You can file civil or criminal case under Section 138 of the Negotiable Instrument Act (NI), 1881 where the provision of this section provides that a cheque is a negotiable instrument, governed under the clauses of Negotiable Instruments Act. Under this section, where an aggrieved party has to send a legal notice to the defaulters. A criminal liability is established under this section too. Here the drawer of a dishonoured cheque may get a jail term of 2 years or fine that may amount up to double the amount of the cheque or both. And also a Criminal case for cheating under the provision of Sec 417 and 420 of the Indian Penal Code (IPC) can also be filed against the defaulter.
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