Welcome to the official blog of the Law Offices of Kr. Vivek Tanwar Advocate and Associates, where we are dedicated to providing litigation support services for matters related to cheque bounce. In today’s blog post, we aim to shed light on the prevailing issues surrounding cheque bounce, the legal framework in place for their protection, and the steps we can take as a society to combat these acts. Join us as we explore this critical subject and empower you with the knowledge to protect your rights and safety.
Cheque bounce, also known as a bounced cheque or dishonored cheque, can occur for various reasons. Here are some common causes:
- Insufficient Funds:
- The most common reason for a cheque to bounce is insufficient funds in the issuer’s bank account. If there isn’t enough money to cover the cheque amount, it will be returned unpaid.
- Account Closure:
- If the issuer’s bank account is closed or frozen, any cheques drawn on that account will bounce.
- Post-Dated Cheques:
- Issuing a cheque with a future date, known as a post-dated cheque, can lead to a bounce if the recipient tries to cash or deposit it before the specified date.
- Signature Mismatch:
- A mismatch between the signature on the cheque and the specimen signature held by the bank can result in the cheque being dishonored.
- Stale Cheque:
- Banks have a validity period for cheques, and if a cheque is presented after that period (usually three to six months), it may be considered stale and bounce.
- Overwriting or Alterations:
- Any unauthorized changes, overwriting, or alterations on the cheque without proper authentication may lead to its rejection.
- Payment Stop Request:
- The issuer may request the bank to stop payment on a cheque. If the cheque is presented after such a request, it will bounce.
- Crossed Cheques:
- If a cheque is crossed and the payee tries to cash it over the counter rather than depositing it into an account, it may be rejected.
- Technical Reasons:
- Technical issues such as a mismatch in the encoding of the cheque details, unclear or damaged cheques, or issues with the MICR (Magnetic Ink Character Recognition) code can lead to bouncing.
- Drawer’s Capacity:
- If the issuer does not have the legal capacity to issue a cheque, for example, if the account is in the name of a minor or a person declared legally incompetent, the cheque may bounce.
- Legal Orders or Garnishments:
- Legal actions such as court orders, garnishments, or attachment of funds can lead to cheques being bounced.