Cheque bounce is one of the most typical issues that individuals confront nowadays. What exactly is a cheque bounce? When does a cheque bounce? What are the causes of cheque bounces? How should that be handled?
Ware the most frequently asked questions about cheque bounce. In this article, I will cover all aspects of cheque bounce and how to deal with them.
What is Cheque Bounce?
Before we get there, what exactly is a cheque? A check is essentially a bill of exchange issued on a chosen banker that is only payable when claimed by the applicant.
Cheque bounce, also known as cheque dishonour, is a failure of payment by the drawer towards the drawee, or an unpaid cheque returned by the bank for one cause or another.
What Are the Reasons for Cheque Bounce?
- A cheque might bounce for a variety of reasons. The following are the causes of cheque bounce:
- The signature on a check differs from the signature on official papers such as a passbook.
- Overwriting on the cheque might also be an issue if it is apparent.
- Cheque was provided three months after the time limit had expired.
- The bank account may have been closed by the account holder or by the bank itself.
- The starting balance is inadequate.
- Insufficient money in the drawer’s account.
- The drawer himself has halted the payment.
- Inconsistency in the figures on the check.
- The amount number on the cheque is inconsistent.
- If the firm presenting the cheque’s stamp is absent.
- If the check is submitted from a joint account and one of the account holders’ signatures is absent.
- Any of the individuals, either the drawer or the drawee, has died.
- Perhaps the drawer has become bankrupt.
- Insanity signs discovered in the drawer.
- Any changes discovered in the cheque.
- Cheque issued in violation of trust regulations.
- The bank is sceptical about the cheque’s legitimacy.
- The drawee handed the cheque at the incorrect branch.
- The amount written on the cheque exceeds the cheque overdraft limit.
Cheque Bounce Case- What and How to Deal With the Problem?
Cheque bounce is a criminal offence under Section 138 of the Negotiable Instruments Act of 1881. Nonetheless, in such circumstances, the injured person may pursue both a criminal and a civil complaint against the guilty.
The following are the steps that can be taken in the event of a cheque bounce:
Resubmitting the Cheque
After becoming aware of the bounced cheque, the issuer of the cheque has another opportunity to fix the error that caused the cheque to bounce and can ask the payee to resubmit the cheque for clearing as long as it is done within 3 months of the date of the cheque bounce.
Notification of Demand
If the cheque bounces for the second time, the recipient may send a demand notice to the issuer of the cheque, requesting that the requisite amount be transferred within the following 15 days. Furthermore, the demand letter is delivered within 30 days of receiving the bank’s notice of a failed cheque.
If, after delivering a demand notice, the issuer of the check does not respond, the drawee has 30 days to file a complaint with the court. You can also submit a case after 30 days provided you can give a plausible cause for the delay and the magistrate thinks it sufficient. Remember that the court must be located near where the check was submitted or returned by the bank.
The complaint might be brought under Provision 138 of the Negotiable Instruments Act, provided that the cheque issued as a gift does not fall under the purview of that section.
Complaint in Civil Court
If a complaint is filed over bounced cheques, the issuer is sentenced to jail but, in most situations, the recipient is not paid. As a result, the beneficiary of the bounced cheque should bring a separate civil claim to recover the money owed to him.