A cheque bounce can happen for a number of reasons, but it becomes an offence under the Act(Negotiable instrument Act,1881) if the bounce is caused by insufficient money in the drawer’s account. The cheque that is being presented for payment must be rejected by the bank with a return memo indicating that there are not enough funds. In this situation, the check’s payee may send the drawer a notice requesting payment of the check amount, known as a “cheque bounce.”

Circumstances of Cheque Bounce-

The various situations that result in cheque bounce are as follows:

Insufficient account balance – If there is not enough balance in the drawer’s account to make the payment of the cheque, the bank will reject and return the cheque to the payee with a memo stating insufficient funds to pay the cheque amount.

Expired validity of cheque – Once the drawer issues the cheque, it must be presented for payment within three months. The cheque expires if it is not presented to the bank within three months. If the expired cheque is given to the bank, it bounces.

Overwriting – If the signature of the drawer or cheque amount or any other statement has been overwritten on the cheque, the cheque bounces for overwriting.

Damaged cheque – If a cheque is damaged or disfigured and the details are not visible or have marks or stains, the cheque will bounce.

Signature mismatch – If the drawer’s signature is unclear or absent or does not match the one in the bank’s data, the cheque will bounce.

Mismatch of amounts or digits – If the cheque amount mentioned in words and figures does not match, the cheque will bounce.

Remedies Against Cheque Bounce

Resubmission of cheque- The payee may request that the drawer send another cheque to correct the error if the cheque bounces because of overwriting, a mismatched signature, a mismatch between the amount written on the cheque and its figures, or damage to the cheque. The payee may file a civil lawsuit against the drawer to recover the amount owed to him rather than having the cheque bounce if the drawer refuses to give another cheque.

Cheque Bounce Notice under Section 138 of the Negotiable Instruments Act- A cheque bounce notice is issued under Section 138 of the Negotiable Instruments Act when a cheque bounces due to insufficient funds in the drawers’ account to make the cheque amount payment. If the cheque bounces for any other reason other than insufficient funds, the cheque bounce notice cannot be issued, and the payee can demand resubmission of the cheque.

Issuance of Cheque Bounce Notice- The first thing to do when a cheque bounces because there isn’t enough money is to use the Negotiable Instruments Act to demand payment of the amount by sending a written notice of the bounce by postal mail. Within 30 days of receiving notice from the bank and the bounced cheque, the payee may send a notice of bounce stating that the bank is unable to pay the cheque because the amount is insufficient.

Procedure to Follow After Issuance of a Cheque Bounce Notice

The payee may file a lawsuit against the drawer 15 days after the cheque expires and a bounce notice is sent. The payee is required by Act Section 138 to file a complaint. Cheque bounce is a criminal offence for which the payee may file a criminal lawsuit in accordance with Section 138 of the Act. After the 15-day period has passed since the cheque bounce notice was sent, the payee has 30 days to file a complaint with the magistrate regarding the cheque bounce.

Jurisdiction of Magistrate for Filing Cheque Bounce Suit-

The payee can file the complaint before the Magistrate in any of the following places:

*Where the cheque was drawn.

*Where the cheque was presented for payment.

*Where the payment had to be made.

*Where the cheque is dishonoured.

*Where the demand notice was served.

The cheque bounce complaint has to be filed before the Metropolitan Magistrate if the cheque bounce suit falls in any metropolitan city. If the suit for cheque bounce falls in any other city, the complaint must be filed before the Judicial Magistrate.

Process of Cheque Bounce Suit-

The process of a cheque bounce suit is as follows:

*Filing a complaint before the Magistrate after the expiry of 15 days of receipt of cheque bounce notice by the drawer.

*The payee/complainant has to appear before the court and provide the case details. If the Magistrate is satisfied with the complainant’s statement, he will issue a summons to the drawer for appearing before the court.

*The drawer will appear and accept or deny the facts stated by the complainant. If the drawer refuses the complaint, then the court will proceed with the criminal trial of the case.

*The drawer/accused will file his statement, and evidence and arguments of both sides will be presented to the court.

*If the court finds the drawer guilty of the offence of cheque bounce, the court will pass a judgement of conviction against the drawer for the offence of cheque bounce.

The punishment for cheque bounce is imprisonment for a term not more than two years or a fine that can extend to twice the amount of the cheque or both.

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