18 July 2018 04:51PM
A cheque bounces when there are not enough funds in the originating account to honor the request to cash it. A cheque typically involves three parties, (1) the drawer who draws the cheque, (2) the payee, to whose order the cheque is made out, and (3) the drawee or payer bank, the bank which has the drawer's cheque account from which the cheque is to be paid.
A bounced cheque results in a penalty fee to both the drawer of the cheque and the receiver of the cheque. Depending on how the originating account is structured (with or without overdraft protection), even a few pennies short can trigger the dreaded message “cheque bounced” when the bank does not honor the request to withdraw funds from that account. This could happen because someone is just careless about keeping track of money, or it could be a case of outright fraud. When a person writes a cheque and he or she doesn’t have the funds in the account when it gets presented, the account will have a negative balance. At that point, the bank will choose to honor the cheque (pay it) or to send it back unpaid. When they are sent back unpaid they call it “bouncing”, because the cheque bounces back to the original depositing financial institution.
Reasons for Cheque Bounce: -
As according to the provision of Section 138 of the Negotiable Instrument Act, 1881 there may be the following reasons for cheque bounce-
· Insufficient funds in the account of the drawer.
· Mismatch in the signature.
· Crossing limit of overdraft (OD).
· Mismatch in the account number.
· The words and figures mentioned on the cheque don’t match.
· Overwriting in the cheque or omissions/deletions without authentication.
· An expired validity of the cheque.
· Postdated cheque.
· Crossed Cheque.
· Missing signatures (A joint account requires both signatures).
· Suspicion of a forged cheque.
· Cheque presented at the wrong branch.
· The account is closed by the drawer.
· Payment stopped from the account by the drawer.
· The cheque does not have the seal of the company (If issued by a company).
· The cheque is issued against the rules of trust.
· The death of the drawer/insanity of the drawer.
The Negotiable Instruments Act, 1881 applies to aggressive cases of cheque. This Act has been amended several times since 1881. According to Section 138 of the Act, bouncing the cheque is a criminal offense and punishable by imprisonment with two years or monetary penalty or both. If the donor decides to proceed legally, then the drawer should be given an opportunity to repay the cheque amount immediately. Such an opportunity is to be given in writing only as a notice. The recipient will have to send a notice to the drawer within 30 days from the date of receiving the "Cheque Return Memo" from the bank. The notice should be noted that within 15 days from the date received by the drawer, the payer has to pay the cheque amount. If the cheque issuer is failed to make a new payment within the 30 days of receiving the notice, the payer has the right to file a criminal complaint under section 138 of the Negotiable Instruments Act. However, within one month of the expiry of the notice period, the complaint should be registered in the magistrates' court. To move forward in this matter, it is necessary to consult a famous and experienced lawyer in this field of practice in this case.
Fine points: Conditions for prosecution
· Legally, to use the provisions of Section 138, some conditions must be met.
· The cheque should have been drawn by the drawer on the account created by him.
· Due to insufficient funds in the drawer's account, the investigation should be returned or degraded.
· The loan is issued for the discharge of any loan or legal liability.
After receiving notice, if the drawer does not pay within 15 days from the day of receiving notice, then he commits a penal offense under section 138 of the Negotiable Instruments Act.
Punishment & penalty
On receiving an affidavit and a complaint with the relevant paper trail, the court will issue summons and will listen to the matter. If convicted, the defaulter can be penalized with a monetary penalty which can be doubled or doubled for cheque or imprisonment for a period of two years or two. The bank has the right to stop the checkbook facility and it has the right to close the account for repeat offenses of bounced cheques.
If the drawer pays the cheque amount within 15 days from the date of receipt of the notice, the drawer does not commit any crime. Otherwise, the recipient can file a complaint in the Regional Magistrates' Court within one month from the date of expiry of the 15 days laid down in the notification. A Delhi court has said that in case of cheque bounce, there will be an immunological penalty to ensure the reliability of a non-disposable device, which is a part of daily life daily.
The court's observation came during an eight-month jail term of a person, who had instructed the magistrate to pay the compensation. In the cheque bounce case, the complainant has 20 lakhs."In case of any type of transaction, on the right side of any person, part of life and parcel, during the course of joining in any type of transaction, to ensure the reliability of the controversial instrument, the preventive principles of penalties apply Accordingly, the appeal (man) is found to be devoid of any merit and therefore eat Mr. Judge said, "the judge said. The court asked the complainant to pay the jail period and the amount of compensation. The amount of compensation was justified so that the cheque was issued on September 30, 2010, and about seven years had passed.
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