A Step-by-Step Guide on Taking Legal Action for Cheque Bounce


Posted On : November 17, 2023
A Step-by-Step Guide on Taking Legal Action for Cheque Bounce
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Table of Contents

Introduction

Cheque bounce is a common issue in India, which can have serious financial implications for both the payer and the recipient. When a cheque is dishonored or bounces due to insufficient funds, it is essential to understand the legal remedies available to protect your interests. This article provides a comprehensive guide on how to take legal action on cheque bounce in India.

Steps by Steps Process on Taking Legal Action on Cheque Bounce

The following are the details of the step by step process of how to take legal action on cheque bounce in India;

  1. Issuing a Legal Notice

    The first step in addressing a cheque bounce is to issue a legal notice to the defaulter. According to Section 138 of the Negotiable Instruments Act, 1881, the payee or holder of the bounced cheque must send a legal notice to the drawer of the dishonored cheque within 30 days of receiving the information about the bounce. The notice should demand the payment of the cheque amount within 15 days from the receipt of the notice.

  2. Filing a Complaint

    If the drawer does not make the payment within 15 days of receiving the legal notice, you can proceed to file a complaint with the concerned jurisdictional magistrate court. The complaint should be filed within one month from the expiry of the 15-day notice period. You will need to provide the following documents when filing the complaint:
    1. The bounced cheque.
    2. The original legal notice.
    3. An affidavit stating that the cheque was dishonored.
    4. A list of witnesses, if any.
    5. Other relevant evidence.

  3. Court Proceedings

    Once the complaint is filed, the court will initiate legal proceedings. The drawer of the bounced cheque will be summoned to appear in court. If the drawer fails to appear, a warrant may be issued for their arrest. During the trial, both parties will present their evidence, and the court will make a decision based on the merits of the case.

  4. Penalties and Compensation

    If the court finds the drawer guilty of a cheque bounce, the drawer can be penalized with imprisonment for up to two years and/or a fine that may be more than the cheque amount. Additionally, the drawer may be ordered to pay compensation to the payee, which can be up to twice the cheque amount as per Section 138 of the Negotiable Instruments Act.

  5. Appeal

    Either party can appeal the judgment within 30 days of the verdict. The appeal process allows for a reevaluation of the case by a higher court if there are legitimate grounds for dispute.

  6. Enforcement

    If the drawer does not comply with the court's order, the payee can take legal action to enforce the court's judgment. This may include the attachment of the drawer's property or bank accounts to recover the cheque amount and compensation.

Leading Case Laws

  1. Bhaskaran v. Sankaran Vaidhyan Balan (1999)

    In this landmark case, the Supreme Court of India clarified the legal principles related to cheque bounce cases. It was held that the complainant, in order to secure a conviction under Section 138 of the Negotiable Instruments Act, 1881, must prove that:
    1. The cheque was issued for the discharge of a debt or liability.
    2. The cheque was presented to the bank within the period of its validity.
    3. The cheque was returned by the bank unpaid.
      This case emphasized that the burden of proof is on the complainant, and they must establish all the essential elements of the offense beyond reasonable doubt.

  2. Dashrath Rupsingh Rathod v. State of Maharashtra (2014)

    In this case, the Supreme Court of India clarified the scope of Section 142 of the Negotiable Instruments Act. It was ruled that once a complaint is filed for a cheque bounce case, the court has the authority to summon the accused. The accused cannot be exempted from personal appearance in court merely on the ground that they are residing outside the court's jurisdiction. This decision emphasized the court's power to enforce the presence of the accused during trial.

Conclusion

Taking legal action on a cheque bounce in India is a well-defined process that involves issuing a legal notice, filing a complaint, and participating in court proceedings. It is essential to follow the legal procedures diligently and provide all necessary documents and evidence to prove your case. Seeking legal counsel from a qualified lawyer can be extremely beneficial in navigating the complexities of the legal system and ensuring a successful outcome in cheque bounce cases. To know more about cheque bounce cases, contact an experienced cheque bounce lawyer.

Written By:
Vidhikarya

Vidhikarya


Recommended Free Legal Advices
question markCheque Bounce Case 7 Response(s)
Good Eve Teja, After reading the above instances you've mentioned, I am of opinion that you have a very strong case u/s 138 of Negotiable Instruments Act and you also may proceed parallelly with 420 IPC Fraud at JMFC Court and also Summary Civil Suit of Recovery, however the strong base of the case can only be casted in the very beginning as initially you are required to file police complaint and issue legal notice/s to the accused and your original story of claiming amounts being complicated has to be newly formed only based upon the remaining 2 blank cheques' you possess, as even bringing small changes to your complaint idea / story in later stages of any suit may result in shattering of your legal right of recovery. some crucial points are to be mentioned by you such as: 1. if signing of any agreement took place either on letter-head or stamp-paper between both parties ? 2. What is the mode of transfer of given loan amount? 3. When were the cheques issued in your favor? 4. Till now, what is mode of payment of interests you have received from borrower? Legal notice and police complaint here are going to form very basis dealing with crucial future trajectory of your cases so future amendments leading to loosening of case can be avoided, I am a High-court level Law-Practitioner based in Maharashtra, India, Specialized in Negotiable Instruments cases, I try to empower people by helping them know about their legal rights as much as much as for free-under my capacity, if you do happen to like my answer you may procced to get the the Strong Legal Notice served on accused at a highly economic fee possible, feel free to reach me out for further advise vide finding me on google, or by contacting the Vidhikarya for my details. Have a lovely day. __Adv. Yogesh Tahiliani (ADVOCATE, BOMBAY HIGH COURT, NAGPUR BENCH)
question markWhether Cheque can be transferable to other irrelevant person 3 Response(s)
Dear Sir, It all depends upon the facts and circumstances of the case however since there is no provision for discharge so drawer of the cheque has to face trial unless he goes to High Court and get such criminal case quashed.
question markCheque Bounce 7 Response(s)
Dear Sir/Madam Nothing to worry. issue strong legal notice and as on date of issuance cheque owe him nothing. Thus not liable to pay thing. Some experienced advocate must issue reply notice
question markCheque bounce 6 Response(s)
Dear Sir, It is better to challenge such proceedings before High Court and get a stay order. It appears the said cheques were taken before delivery of the car that means before consideration is passed to you. There are so many technical points which will be argued before the High Court. Thanks.
question markCheque bounce due to mismatch signatire 2 Response(s)
Dear client, Jurisdiction: If the party decides to file a case against you for the bounced cheque, they will typically need to do so in the appropriate jurisdiction where the cheque was presented or where the cause of action arose. In this case, it could be in Chennai since the person to whom you owe money resides there. Generally, the case needs to be filed in the appropriate court having jurisdiction over the matter. Criminal case for cheque bounce: In India, cheque bounce cases can fall under the purview of Section 138 of the Negotiable Instruments Act, 1881. This offense is generally considered a criminal offense, and the party may choose to file a complaint with the police. The complaint is usually filed in the jurisdiction where the cheque was presented or the bank where the payee holds an account. Summons and appearance: If a case is filed against you, you may receive a summons or notice to appear in court. It's essential to take such notices seriously and consult with a lawyer. In some cases, your lawyer may be able to represent you in court without your personal appearance, depending on the circumstances and the advice provided by your legal counsel. Negotiate or settle: It's generally advisable to try and negotiate a resolution or settle the matter amicably with the party to whom you owe money. This could involve discussions on payment plans, reaching a settlement agreement, or exploring alternative dispute resolution methods like mediation. Resolving the matter outside of court can save time, costs, and potential legal complications.