Dishonour of cheque most commonly said as cheque bounce occurs when a cheque that is presented in the bank is returned unpaid. It could happen because of lacking assets or insufficiency of funds in the bank account of the individual who has issued the check or has put his signature on the cheque that is not coordinating with the original signature of that person. One can proceed against the individual who has issued such a cheque under different provisions of law. The most essential and helpful arrangement to consider the situation of cheque bounce is Section 138 of The Negotiable Instruments Act.
Section 138 of Negotiable Instrument Act:
It reads as, Dishonour of cheque for insufficiency etc. Funds in the account:
When any cheque is drawn by a person on an account maintained by him with a banker for the payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by the agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice, to other provisions of this Act, be punished with imprisonment for a term may extend to two years, or with fine which may extend to twice the amount the amount of cheque or with both.
Ingredients of offence Under Section 138
- There must be issuance of cheque for discharge.
- The cheque must be presented within the period the 6 months or within its validity period.
- There must be insufficiency of funds.
- The holder should have sent a legal notice within 30 days from the receipt of information regarding the dishonour.
- After receipt of said notice the drawer have failed to pay the cheque within 15 days of the receipt of the notice.
Pre-requisites Documents for proceeding Against Dishonour of Cheque
The following documents are required before filing a cheque bounce case:
1) Original cheque and return memo.
2) Copy of notice and original postal receipts.
3) Evidence affidavit.
Jurisdiction
There has been very long ongoing debate with respect to the jurisdiction of the cheque bounce case. However, various pronouncements of Supreme Court have elucidated the issue. The cheque bounce case ought to be filled in the region where the check was submitted by the aggrieved.
Party that can seek remedy
Normally, the payee of the cheque can file the cheque bounce case. In other situations, the case can also be filled through the power of attorney. Most important thing to be remembered is that, it is necessary for the complainant to be physically present before the magistrate and to be examined under oath.
Alternative Remedy
For the most part, a civil suit for recovery of amount due can be filed in case of cheque bounce. But in the instance of some serious cases where the check amount is enormous and in situations where it is appropriate, a criminal complaint for cheating can also be drafted under section 420 of the Indian Penal Code.
Proceeding against Corporate body
Section 141 provides remedy in case of the offence is committed by the companies.
If an individual wants to file a cheque bounce case against the organization or the firm, the general population can file the individual cheque bounce case against the directors as well as partners of the organization or the firm. One can also proceed against the company or the firm directly.
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