It is one of the most commonly used financial instruments that help in easy transactions. But there is a scenario called a cheque bounce, which happens when a cheque gets bounced due to lack of funds or other reasons. Cheque bounce means it is not only a financial problem but a criminal offence under Negotiable Instruments Act, 1881. In conclusion, having knowledge of the cheque bounce penalty, the relevant legal consequences of such cases, and the importance of a cheque bounce lawyer can greatly assist individuals and businesses in resolving this type of dispute.
Bounced cheques refer to instances where a bank refuses payment on a presented cheque for various reasons — which can include insufficient funds in the issuer’s account, mismatch of signatures, overwriting, cheque’s expiry date or a frozen account. The act of cheque bouncing can cause financial loss to the payee and initiate legal action against the issuer as per the cheque bounce law.
A cheque may be dishonored for the following reasons:
A cheque bounce can elicit fines from banks and law enforcement as well. Those penalties can range based on the severity of the case and the amount in question.
Banks levy penalties against both the issuer and the payee when a cheque bounces. The fees differ based on the bank’s policies and the reason for the bounce.
Cheque bounce is a criminal offense under Section 138 of the Negotiable Instruments Act, 1881. The legal consequences of cheque bounce are:
In the case of a bounced cheque the payee reserves the right to sue the drawer. The process includes:
Within 30 days of receiving the dishonoured cheque, the first step is to send a legal notice to the cheque writer. The notice should include information such as:
The payment must be made within 15 days, failing which the payee can file a complaint under Section 138 of the Negotiable Instruments Act. The case has to be filed within 30 days of the expiration of the 15-day notice period.
After attorney fees, the case will be filed, and the court will focus on the tangible evidence and listening to each side's argument. In the event that the cheque issuer is found guilty, he is liable to be punished by way of fines, imprisonment or by way of both.
The accused person in a cheque bounce case can defend him or herself by establishing:
This is why the funds should actually be there, and so a cheque bounce lawyer will also help build a strong defense and in proving how the transaction was legitimate in nature.
Best practices for cheque transactions can lead to avoiding legal troubles and financial penalties.
A cheque bounce lawyer is a legal professional who specializes in cases related to cheque dishonor. They assist in:
There are several ways to handle such a situation but a cheque bounce case can cause much harm to one’s both financial and legal aspects. Comprehension of cheque bounce law along with professional legal consultation for a fair settlement. If you are facing such issues, you may take this help from cheque bounce lawyer.