Cheque Bounce Notice
A cheque is considered to have “bounced” when it is presented to the bank for payment after being received from the drawer and is turned down and returned unpaid. The person who signs the cheque to authorize payment of the specified sum to the payee is known as the drawer. The individual who receives the cheque and gives it to the bank to be cashed for the amount stated on it is known as the payee.
Overview
The cheque may bounce for a number of reasons, including an incorrect date, an inconsistency in the words and numbers indicating the payment amount, an inconsistency in the signature, or a damaged cheque. However, because these are very minor causes of cheque bounces, the drawer can issue a new cheque to correct the error and pay the payee's account.
The bank will return the cheque along with a return memo outlining the reason for the return when the cheque is presented to the bank for payment and it bounces. If the bank rejects the cheque because there are not enough funds, the drawer may be given notice and may face legal repercussions.
The payee should issue a legal notification to the cheque's drawer requesting payment when the cheque fails owing to insufficient funds and is returned by the bank. In India, violating Section 138 of the Negotiable Instruments Act, 1881 is a cheque bounce offense. The legal notice serves as a warning to the cheque's drawer that failure to pay the specified sum would result in legal action being brought against him under the Negotiable Instruments Act in the appropriate court.
What are the different types of Cheque Bouncing mentioned in the Law?
- Account terminated
- Mismatched signatures
- Insufficient funds
- Cheque overwriting is a problem
- Cheque expiration, which occurs if it is not presented at a bank within three months of the date of the cheque
- The cheque's drawer or countermand blocked the payment.
- Disparity between the text and numbers on the cheque.
- The company's seal is not on the cheque.
- Any discrepancy or inconsistency involving account details.
- Lack of both parties' signatures on a joint account
- The party on the Drawer/Drawee's insolvency, death or insanity
- Crossed cheques or changes to cheques
- If there is a problem with the cheque's validity, etc.
When Is a Notice of Cheque Bounce Issued?
- The first prerequisite is that the cheque must go toward the obligation.
- The beneficiary must produce the cheque within six months of the expiration date.
- The bank must have returned the cheque since there weren't enough money.
- The payee raises a demand by providing a written notice of a cheque bounce within 30 days of receiving notification from the bank that funds are insufficient.
- Drawer fails to make payment of the specified amount within 15 days of receiving the written notice of a cheque bounce.
- Legal action is commenced within one month after the cause of action arose.
How do I send a Notice of cheque bounce?
Through our platform, a Cheque bounce notice can be generated. After the drafting is finished, it must be printed on plain paper or on the company letterhead before being handed over to the person who will be cashing the cheque. The following must be included in a cheque bounce notice.
- Name of the cheque's recipient,
- The cheque's issuer's name and address,
- The cheque's return deadline,
- Reasons for a returned cheque,
- The cheque issuer has been asked for an immediate alternative payment,
- The cheque has been issued in accordance with Section 138 of the Negotiable Instruments Act. To properly record the issuance date of the notice, a notice of cheque bounce is delivered by registered post. One copy of the letter may be kept by the cheque beneficiary, while the other is sent through registered post to the cheque issuer.
What cheque bounce services does Estabizz provide?
The following is a list of our whole range of end-to-end solutions-
- Comprehensive services for cheque bounces.
- On your behalf, we'll create a Legal Demand Notice. Our knowledgeable professionals will get in touch with you to discuss the specifics of the deal and to produce a legal demand notice.
- We will designate a Case Manager who will serve as your point of contact during the period of document preparation and the trial if you have not received the payment within 15 days of the drawer's receipt of the notification.
- To help us provide you the best advice, please provide us with information about the transaction and the default.
- According to your situation and the relevant information, we will locate the ideal advocate for you.
- We will assist you in getting your case ready to be presented to the appropriate court.
- You will be kept informed of the status of the case during the entire trial, up until its conclusion.
- For your protection, we will maintain track of the lawyer who has been assigned to you. -Any fee, stamp duty, and other expenses must be paid separately.
Please contact us if you have any questions about cheque bounces or anything else. Please get in touch with us by asking a question on our website if you want to use any of the aforementioned services.
The Negotiable Instruments Act, Section 138
Cheques that bounce due to inadequate cash are an offense and are subject to jail under Section 138 of the Negotiable Instruments Act. According to the law, if someone writes a cheque on an account, they manage to pay money to someone else and the bank returns it unpaid because there aren't enough funds to honour the cheque, they have committed an offense.
For the discharge of any legally enforceable debt or responsibility, the person must cash the cheque. When the amount of money on the drawer's account is insufficient or exceeds the amount specified in the agreement established with the bank to be deducted from the drawer's account, then the bank is required to return the cheque.
For the offense of a bounced cheque, the drawer may be penalized with up to two years in jail, a fine up to double the amount of the cheque, or both.
The Negotiable Instruments Act, Section 144
According to Section 144 of the Negotiable Instruments Act, anyone in charge or responsible for the company's business operations at the time the offense was committed is guilty of an offense if a company-issued cheque bounces. According to this provision, it is an offense for a corporation to bounce a cheque due to inadequate money.
Every person in control and accountable for managing the company's operations, as well as the company itself, is guilty of the offense of cheque bounce and subject to appropriate sanctions when the drawer of the bounce cheque is a company.
If it can be demonstrated that a firm committed a cheque bounce offense with the knowledge, complicity, or convenience of its director, secretary, manager, or other members, those individuals will be held accountable and subject to the appropriate sanctions.
Is a complaint that was filed based on a second legal notice after a cheque was re-presented maintainable?
The complaint that was filed based on the second legal notice can be upheld. In "Leathers vs. S. Palaniappan and Another," the Hon. Supreme Court ruled in 2013 that-
Nothing in Section 138 of the Negotiable Instruments Act prohibits the holder of the cheque from presenting it again and filing a criminal complaint based on the second or subsequent dishonour of the cheque upon presentation, according to the provisions of that section.
How you can reach us at Estabizz?
- Fill the form.
- Get a call back.
- Submit the required documents.
- Track the progress of your application.
- Get the expected results.
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What are the different types of Cheque Bouncing mentioned in the Law?
When Is a Notice of Cheque Bounce Issued?
How do I send a Notice of cheque bounce?
What cheque bounce services does Estabizz provide?
The Negotiable Instruments Act, Section 138
The Negotiable Instruments Act, Section 144
Is a complaint that was filed based on a second legal notice after a cheque was re-presented maintainable?
How you can reach us at Estabizz?
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