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Cheque Bounce Notice- Procedure, Punishment And Penalty

  • Writer: leadindia831
    leadindia831
  • Oct 17, 2023
  • 3 min read

Cheque is an essential part of the financial system in different countries around the globe. A transaction through cheque could be understood as one of the safest ways of steering business as it could be traced back if necessary. When talking about a cheque, if one thing comes to our mind is Cheque Bounce, as at some point of time we have all heard about it. In the following article we are going to discuss the proper procedure to be followed to send a legal notice in case of a cheque bounce-


Parties involved in transaction by a cheque-

  • Drawer- Customer or the account holder who issues the cheque

  • Drawee- Basically the Bank on which the cheque has been drawn, is called the ‘Drawee’.

  • Payee: The person designated on the check as the recipient of the funds.

Cheque Bounce-

It is a term basically used to define the unsuccessful processing of a cheque due to various reasons. Non-sufficient funds in the account of the issuer is one of the major reasons for a bounced cheque. Some of the major reasons for cheque bounce have been mentioned below-

  • Insufficient funds- if your account lacks funds from which the cheque has been issued, it would result in cheque bounce. The issuer of the cheque will then have the choice to either issue a fresh cheque or work out a solution with the cheque's recipient.

  • Wrong date has been mentioned on the cheque- though seem as a small factor, however, it could cause serious issues for your cheque not getting processed. Any difference or problem with the date could lead to cheque dishonour. This may include disfigured or scribbled numbers.

  • Damaged cheque- several banks in India do not entertain disfigured cheques on which details are not visible. Additionally, if your check has stains or markings, it can be returned unpaid.

  • Mismatch of Signature- it is one of the most common reasons for cheque bounce. If a signature is mismatched or doesn’t match with the records of the bank, the cheque issued will be tagged as bounced cheque.

Legal Notice for a cheque bounce-

A legal notice for cheque bounce is generally sent by the advocate on behalf of his/her client as a result of the non- payment of the cheque. Sending a legal notification suggests that, in the event that the cheque's payment is delayed, the intended recipient will file a lawsuit.

The following prerequisites must be met before a legal notice for a bounced check can be issued:

  • The should be issued towards a liability

  • The check needs to be cashed again since the sum is insufficient.

  • The payee of the cheque could make a demand for the payment of the amount due by sending a notice in writing within 30 days of the receipt of the information by him/her from the banks that there are insufficient funds.

  • If the cheque drawer fails to provide satisfactory reply or payment of the said amount within 15 days of the receipt of legal notice for cheque bounce, legal action could be initiated within one month from the date when the legal notice was sent.

Punishment and Penalty in case of a Cheque Bounce

When the drawer pays the cheque amount within 15 days from the date he or she received the legal notice, the drawer in the Cheque Case would not have committed any offence. If the payment has not been made, the payee has one month from the day the notice's allotted 15 days have passed to file a complaint with the jurisdictional magistrate's court.

After having received the complaint, along with an affidavit and relevant paper trail, the court shall issue summons and hear the matter. When found guilty-

  • The defaulter could be punished with a monetary penalty which could be twice the amount written in the cheque or an imprisonment for a term which can be extended to a term extending up to two years or both.

  • The bank would also have the right to stop the cheque book facility and close the account for repeat offences of bounced cheques.

Conclusion

From the explanation above, it should be clear that a legal notice is given to alert the party receiving it of the grievance the sender is experiencing as well as a final effort to resolve the concerns amicably without resorting to litigation.


Before sending a legal notice it is advised to seek legal assistance from an experienced lawyer, as if the case does continue in the court, the legal notice sent would be an important document. Lead India offers you a team of experienced advocates, who have been successfully dealing with cases including the Cheque Bounce Case Solutions as well as initiating cheque bounce cases. Therefore, if you wish to talk to a lawyer or seek free legal advice, you may contact us.


Call Us: +91–8800788535


 
 
 

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