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A cheque bounce is a condition that occurs due to non-payment, due to a lack of balance in the account. It is required to recover that amount. First, a letter is sent to the drawer for payment otherwise action will be initiated.
A cheque bounce is a condition that occurs due to non-payment due to a lack of balance in the account. Immediate action to recover the amount is necessary. First, a letter is sent to the drawer for payment or proceedings will be initiated. Sometimes the letter is settled immediately.
Cheque bounce is a serious offense punishable with imprisonment and a fine as stipulated in the Negotiable Instruments Act. The drawer of the cheque must present the cheque within 30 days from the date of dishonor to protect his rights as stipulated in the Negotiable Instruments Act.
In India, according to Section 138 of the Negotiable Instruments Act, the bounce of a cheque or non-payment of a cheque is a serious offense punishable by fine or imprisonment.
A cheque is a "bill of exchange" payable on demand. The person who issues the cheque is known as the 'drawer' while the person on whose behalf the cheque is issued is known as the 'drawee'.
It is used in almost all transactions like loan repayment, salary, bills, fees, etc. Most of the cheques are processed and cleared daily by banks. These cheques are issued to secure proof of payment.
Nevertheless, cheques are another method of payment for many people. On the other hand, it is always advisable to issue an "Account Payee Only" cheque to avoid its misuse.
A cheque bounce notification can be generated through our platform. Once the drafting is done, it needs to be printed on plain paper or business letterhead and then distributed to the issuer of the cheque. A cheque bounce notice must contain the following:
A cheque bounce notice is sent by registered post to formally record the date of issue of the notice. One copy of the letter may be retained by the cheque beneficiary while the other copy is delivered to the cheque issuer by registered post.
The cheque beneficiary issues a cheque bounce notice to the defaulter by registered post within 30 days after the dishonor of the cheque. The cheque bounce notice must be in a proper format containing the nature of the transaction, the amount involved, the date of deposit of the cheque in the bank, the date of cheque bounce, the reason for the cheque bounce, and the information that the beneficiary has requested payment within 15 days.
On receipt of the complaint, along with the affidavit and relevant paper trail, the court will issue a summons and hear the matter. On conviction, the defaulter may be punished with a monetary penalty which may be twice the amount of the cheque, or with imprisonment for a term that may extend to two years or with both.
The bank also reserves the right to close the chequebook facility and close the account for repeated offenses of bounced cheques.
If the drawer pays the amount of the cheque within 15 days from the date of receipt of the notice, the drawer does not commit any offense. Otherwise, within one month from the expiry of the period of 15 days mentioned in the notice, the recipient may proceed to file a complaint in the Court of Magistrate.
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