Cheque Bounce Notice

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.

Cheque Meaning

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.

The Following Information is Mandatorily Required before Notifying the Maker of the Cheque about Bounced cheque.

• Date of cheque draw.
• Date of presentation of the cheque.
• Reason for non-recovery of payment.

The Validity of a Cheque Bounce Notice requires Consideration

• It should be in terms of Section 138 of the Negotiable Instruments Act
• Information on cheque presentation
• Reason for non-recovery of payment
• Information on the request for immediate payment to the issuer of the cheque
• The issuer of the cheque must submit the notice within 30 days of the return of the cheque.

A cheque bounce notice will be issued

• Cheques must be presented within 6 months from the date of issue.
• The cheque may have been dishonored due to insufficient funds.
• The amount is not paid within 15 days of the cheque bounced notice by the maker of the cheque.
• The payee has informed the cheque maker within 30 days of the bounced cheque.
• A cheque is provided in settlement of any previous liability.

Procedure for Sending Cheque Bounce Notice

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:

• Cheque Beneficiary Name,
• Name and address of cheque issuer,
• Date of return of cheque,
• Reasons for cheque return,
• Requested to cheque the issuer for immediate alternative payment and
• It is issued under Section 138 of the Negotiable Instruments Act.

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.

Reasons for Issuance of Cheque Bounce Notice

• The first condition is that the cheque should be towards the liability.
• It is necessary to be presented by the beneficiary Within 6 months of the validity of the cheque.
• The cheque may have been returned by the bank due to insufficient funds.
• Within 30 days of receiving information from the bank about the insufficiency of funds, payment is made by the payee by giving a written cheque bounce notice.
• If the drawer fails to pay the amount within 15 days of receipt of written notice of bounced cheque.
• Within one month from the date of causation, legal action is initiated.

Initiate the Legal Action if Cheque Bounces

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.

• Within 30 days from the expiry of the 15 days notice period, in case of default in payment by the issuer of the cheque, the payee can file a criminal case in court.
• Cheque bounce complaints should be filed in the court in the city where the cheque was presented.
• Once the case is filed in court, a hearing will be held and a summons will be issued under Section 138 of the Negotiable Instruments Act.
• The cheque defaulter has to appear in court for the adjudication of the case.

Procedure of Cheque Bouncing

• Demand notice is sent within 30 days. On receipt of the demand notice, the drawer has to pay within 15 days.
• A cheque bounce notice is sent by registered post to constitute proof of notice being sent.
• If the payment is not received within 15 days, the recipient can file a complaint before the Magistrate within 30 days.
• A complaint has to be filed in the state where the bank is located.

Punishment and Penalty for Cheque Bouncing

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.