16 July 2018 03:40PM
HOW IT WORKS:
Cheques should be written for an amount that is less than or equal to the checking account balance at the time the check is deposited or cashed by the recipient. In the event that the checking account balance is lower than the amount of the cheque at the time, it is deposited or cashed, the bank may not honour the check and, in most cases, will return it to the recipient with a penalty fee attached.
For instance, suppose Mr A’s checking account has a current balance of Rs.20000. Bob writes a check to Mr B for Rs.10000 and A withdraws Rs.12500 from his account the same day. When B takes the check to his bank to deposit it the next day, the cheque bounces because A's checking account balance is only Rs.7500 (Rs.20000 – Rs.12500).
Occasionally, a cheque can bounce due to a minor, unintentional mishap. However, there are other more serious situations which can include criminal activity.
REASONS FOR CHEQUE DISHONOR
1. Insufficient Funds:
Lack of funds in the account from which the cheque is issued is among the primary and most regular reasons behind the cheque to bounce. On the off chance that you have issued or have gotten a cheque connected to a record that has less measure of cash than the once composed on the cheque, at that point the bank won't locate enough cash to finish the transaction and subsequently will stop the payment and dishonour the check. It will likewise levy an ostensible punishment and penalty on both the parties –
· the issuer, and
· the depositor.
After this, the issuer can either issue another cheque or settle the issue with the depositor/investor of the cheque, or the beneficiary of the cheque has an alternative to take legal action against the guarantor for non-payment and dishonour of the cheque. Subsequently, it is advised to be careful while issuing the checks and ensure you have adequate balance in the record.
2. Problems with Date of the Cheques:
The date is a critical piece of the cheque and any distinction or issue in the date will prompt your cheque being bounced. Yes, the date can lead to a bounced cheque. An ordinary issue with the date can be that it is distorted or has a few errors, or isn't readable or scribbled , will prompt your cheque bouncing.
Also, the other reason is that the date is expired or in other words, the date on the cheque is more than 3 months old, from the current date. Any cheque is only valid for 3 months from the date that is mentioned in its date column.
For example, if the date on the cheque is mentioned as 12/04/2017 then it will be valid only till 11/07/2017. So with that requirement, if you have a cheque with a date 11/11/2017; that cheque is not valid as of 12 Feb 2018. In such a situation where a cheque with a terminated date is presented, the bank will dishonor the cheque.
3. Signature Mismatch:
An extremely basic drawback behind a cheque to bounce in India is that if the signature is mismatched, or does not coordinate with the bank's records, at that point your cheque will get bounced. In the event that the signature isn't according to the bank records then they will dishonour your cheque quickly. Likewise in the event that you happen to sign on the MICR Band on the cheque, at that point, the cheque will bounce. So be cautious with the signatures.
4. Difference in Amount in Words and Numbers:
In the event that the cheque happens to have any difference in the sum payable specified in words and in numbers, at that point bank will bounce your cheque. This is also valid if the sum said in the words section, has numbers in it in any form and furthermore if the sum in figures/numbers section has any words written in that.
For instance: If you have a cheque wherein the sum written in the 'Words' area says 'Fourteen Thousand four hundred ninety-nine' just and the sum in figures said in the sum section is 13,000/-; your cheque will be bounced since the sums don't match up.
Same would happen if the sum in words is said as '30 thousand' just and in figure's section it is 30,000/ - despite the fact that the sums are same the utilization of numbers in the words section isn't permitted.
5. Scribbling, Overwriting on Cheque:
Any sort of scribbling, overwriting, revision and so on a cheque isn't permitted and if a cheque is discovered that way, it will be dishonored. It is constantly great to issue a new cheque on the off chance that you commit an error while writing it. Additionally while accepting a cheque that has such thing, at that point request for another cheque.
These are ordinarily the purposes behind a cheque to bounce in India and it regards know these, to avoid any undesirable issue or inconvenience. Aside from the above reasons, if the bank observes the cheque to be suspicious or manufactured for reasons unknown, it will dishonor the cheque, bringing about a bounced cheque.
TIME LIMIT FOR FILING A SUIT:
On receipt of the information about the dishonor of the cheque, you immediately issue notice within 30 days from the receipt of the information of dishonor of cheque to the accused.
In the event that the accused does not pay the sum within 30 days from the receipt of the notice, you can file a complaint regarding the same under Section 138 of the Negotiable Instrument Act. The said complaint is to be recorded within a month on the expiry of 30 days time of notice.
If there is a delay in filing the complaint an application for condoning the delay can be filed accompanying the complain otherwise about the oral assurance, you may lose your legal right to claim the dishonored amount under Sec 138 of the Negotiable Instrument (NI) Act.
As per the provisions of the N.I Act in order to bring the case under section 138 one has to present the cheque within a period of six month and if the said cheque is dishonoured then the payee has to issue a notice within a period of 30 days from the date of knowledge of the dishonor of the said cheque and has to demand the cheque amount if the drawer of the cheque failed to make the payment then the payee has to file the complaint within a period of one month 45 days from the receipt of the said notice.
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