Cheque bounce is a term used to describe the situation where a cheque issued by a person is returned by the bank due to insufficient funds in the account or any other reasons. It is a serious offense under the Negotiable Instruments Act, 1881, and can result in both civil and criminal liability for the person who issued the cheque. In this article, we will discuss the legal remedies available to the payee in case of a cheque bounce.
Legal Remedies for Cheque Bounce Cases Mentioned Below:
When a cheque is bounced, the first step that the payee can take is to send a legal notice to the issuer of the cheque. The legal notice must be sent within 30 days of receiving the memo from the bank stating that the cheque has bounced. The legal notice should include details of the cheque, the amount, and the reason for the Cheque bounce. The issuer of the cheque must respond to the legal notice within 15 days.
Filing of a Criminal Complaint
If the issuer of the cheque fails to respond to the legal notice or refuses to make payment, the payee can file a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881. Section 138 of the Act makes it a criminal offense to issue a cheque that is dishonored by the bank due to insufficient funds in the account. The penalty for this offense includes imprisonment for up to two years or a fine that is twice the amount of the cheque, or both.
Filing of a Civil Suit
Apart from the criminal complaint, the payee can also file a civil suit for recovery of the amount due. This remedy is available in cases where the cheque issuer disputes the payment or claims that the payee owes them an amount equivalent to the amount of the cheque. The payee can file a civil suit in the court of competent jurisdiction for the recovery of the amount along with interest and legal costs.
Filing of Summary Suit
In cases where the cheque issuer does not file a response to the legal notice, the payee can file a summary suit for the recovery of the amount due. A summary suit is a simplified procedure for the recovery of money, and the payee can file it in the court of competent jurisdiction.
Negotiation with the Bank
In case the payee is unable to recover the amount due through legal means, they can approach the bank where the issuer has an account and request the bank to pay the amount due. The bank can initiate recovery proceedings against the issuer of the cheque, and if they recover the amount, they will credit it to the payee’s account.
In conclusion, cheque bounce is a serious offense, and the payee has various legal remedies available for recovery of the amount due. The first step is to send a legal notice to the issuer of the cheque, and if they fail to respond, the payee can file a criminal complaint or a civil suit for the recovery of the amount due. In cases where the legal remedies do not work, the payee can negotiate with the bank where the issuer has an account for recovery of the amount. It is important to note that the legal remedies available to the payee may vary depending on the specific facts and circumstances of each case, and it is advisable to seek legal advice before taking any action.