Consult Best Cheque Bounce Lawyer/Advocate in Kolkata

How do you avoid Cheque Bounce cases?

Cheques are an accepted mode of payment in India and are used for personal and business transactions. But when the cheque is defined as ‘bounced’, it can open a financial and legal disaster in their financial affairs. Cheque bounce according to the Negotiable Instruments Act (NI Act), 1881 or specifically Section 138 of the Act is a criminal offence provided some conditions are met. There is a clear legal framework in cheque dishonour cases to penalise the issuer who fails to meet his payment obligations. You can avoid Section 138 NI Act cases by ensuring that all EMI payments are paid in time and there is sufficient balance in the account.

What is cheque bounce?

Cheque bounce or dishonour is when a bank returns a cheque for various reasons including lack of sufficient funds, a forged signature, overwritten or account issues. In case the cheque is returned unpaid, the bank gives the payee a “Cheque Return Memo” which among other things gives the reason for the return. This memo acts as a framework from which the payee can write to the drawer demanding his payment and in the event of the drawer’s failure, can proceed with legal action.

Common reasons for cheque bounce

Cheque bouncing has become a common problem in recent years mainly due to the following causes:

• Insufficient funds: The account balance cannot support the amount on this cheque.

• Signature mismatch: The signature on the cheque was forged as per the records of the drawer’s bank.

• Overwriting or alterations: Augmentations on the cheque may lead to dishonour of the cheque.

• Account issues: They can be a current, inactive, frozen or even closed account.

Why my cheque bounce case is in Kolkata although I took loan in another city?

Even if you have taken loan in a city other than Kolkata but the bank or NBFC has its head office in Kolkata and thus the case has been filed in the court in Kolkata.

Why is cheque bounce such a grave offence in India?

Cheque bounce is regarded as a criminal offence mainly because any loss-making business or individual is likely to lose his/her money, and repeated dishonours are likely to impact the proper flow of business. According to Section 138 of the NI Act, to maintain the trust and accountability of cheque payments it has prescribed a criminal offence.

What is cheque bounce, civil or criminal? 

Cheque bounce is a criminal offence under Section 138 of the Negotiable Instruments Act which can involve punitive measures such as fines or imprisonment. But the payee can still seek other civil redressable remedies that would entitle the payee to monetary recovery.

Is a bounced cheque an automatic criminal affair?

Not immediately. Under Section 138, the act becomes a criminal offence only if the payee has followed the complaint process and the drawer has not paid within the stipulated period

What is the objective of Section 138?

Section 138 was intended to curb the misuse of cheques by those who make cheques for reasons prohibited under the NI Act.

Legal Consequences of Cheque Bounce

If found guilty under Section 138, the drawer may face the following penalties:

• Fines : Up to double the amount of the cheque.

• Imprisonment : Up to 2 years at the court’s discretion.

• Settlement options : The parties may settle under Section 147, outside the court.

Additional Consequences

• Banking restrictions : Accidents are likely to be met and banking restrictions can be expected.

• Credit impact: While it is not utilized in the calculation of credit scores, it influences the drawer’s credit with the banking and financial institutions.