INTRODUCTION
In the current scenario, most of the lower Courts are burdened with the fake cheque bounce cases, falling under section138 of (Negotiable Instruments) NI Act.
Section 138 of the NI Act, 1881, provides with the legal recourse to deal with the situation of dishonour of cheque. Now, for a better understanding, we need to understand what is a cheque, what is its validity and what are the reasons, due to which gets bounced or becomes the reason of any other legal issue.
To begin with, let us have a quick view of section 138 of the NI Act.
Section 138 of the Negotiable Instruments Act, 1881:
It reads as, “Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both:
Also Read: Presumption under Section 139 of NI Act
Provided that nothing contained in this section shall apply unless—
(a). the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity; whichever is earlier;
(b). the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
(c). the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.
Other Reasons for a Cheque Bounce:
There could be numerous reasons which become the reason of a cheque bounce. It could be insufficient funds in the account on which the cheque is drawn if the cheque exceeds the amount arranged to be paid from that account if the cheque is presented after its validity and many more. Generally, a cheque remains valid for 3 months from the date of the issuance of that particular instrument.
A person who even after having a clear knowledge of the fact that there are no sufficient funds in his bank account or even after the expired validity of the cheque, issues the cheque to any other person, such person shall be held liable to have committed an offence under section 138 NI Act 1881.
Punishment for Committing Offence Under Section 138 NI ACT,1881
A person shall be liable to imprisonment for a term extending to two years, or with fine which may be the double of the cheque amount. Also, a person can be punished with both: depending upon the facts and circumstances of every matter.
Then Comes, how to deal with a situation if you are trapped in a fake cheque bounce case?
Till now, we have understood what is a cheque? its validity, reasons why it gets bounced and much more. Moving further, we will have a quick view of what are the legal remedies available to a person; if he is trapped in a false cheque bounce case.
People who are accused in a fake cheque bounce case in India, unfortunately, end up falling into legal issues. This ultimately lands them paying money as they lack the knowledge of the legal recourse to if a false case is filed against them. Here’s what you can do to defend a cheque bounce case.
A cheque beneficiary must present the cheque issuer intimating him that the cheque issued by him is bounced and you are sending a legal notice also known as the demand notice under Section 138 within 30 days of return of the cheque to protect your rights under section 138 of the NI Act.
A cheque is said to be bounced when it cannot be processed by a bank due to insufficient funds in the account or for various other reasons inclusive of overwriting on the cheque; payment stopped by the account holder, mis-match signature on cheque and, etc.
In case, you have received a legal notice regarding a cheque bounce case; the first thing you should do is to send a prompt reply to the cheque bounce notice.
1. Keep a copy of the relevant documents:
A copy of all the documents proving that the transaction has been made through a cheque issued by you. The payment invoice, copy of cheque, account statement, bank draft cheque etc.
2.Contact your bank:
Once you receive any information regarding the dishonour of cheque, you should contact your bank immediately. It is necessary to check whether the cheque has even bounced or not. If yes, the bank will notify you about the dishonouring of cheque and the reason for the same.
Also Read: Negotiable Instrument Act, 2018 (Amendment)
3. Send a reply to legal notice:
Within a period of 30 days, you can send a reply to cheque bounce notice. If a person is deliberately accusing you, sending them a legal reply usually makes them withdraw their fraud case.
4. File a counter case:
If a person files a false cheque bounce case against you, here are some remedies you can easily opt to:
- File a reply to the case.
- You can file a counter case against the person for filing a false case against you.
- File a civil suit claiming compensation for accusing you in a false case.
- Apart from this, you can also a claim for the damages and expenses incurred for dealing with the fraud case; and a criminal complaint about filing a fraudulent case, also you can sue the person for defaming you.