Cheque Bounce Rules: In India, a check is frequently used as an on-demand bill of exchange. The one who writes and issues the cheque is known as the drawer, and the person who gets the cheque and whose name it is drawn is known as the drawee. The cheque must be deposited into the payee’s bank account. We can examine the Penalty for Cheque Bounce below.
Cheque Honoured vs. Dishonoured
The cheque is considered honoured if it is presented to the bank and you receive the correct amount back. Nevertheless, the cheque is dishonoured if the bank is unable to give the payee the required amount specified in the cheque. According to Section 138 of the Negotiable Instruments Act, a bounced cheque may be the result of a difference in the signature, an inadequate bank balance, etc.
In India, it is illegal to bounce checks, and the punishment is two years in prison and double the amount that was written on the dishonoured check. Furthermore, it is fairly evident from Section 143A that the complainant may be entitled to interim compensation for the problems brought on.
Bank Imposed Fees for Bounced Cheques
In the event that a cheque bounces, banks impose fees. The individual who issued the cheque is responsible for paying the fine. The reasons for this fine may change. The typical fine is between Rs 150 and Rs 750 or Rs 800.
Legal Consequences Under Negotiable Instruments Act
The Cheque Bounced Negotiable Instruments Act, 1881, states that a person may face legal action if a cheque bounces. He faces a maximum two-year prison sentence, a fine equal to twice the amount of the cheque, or both. This only occurs, though, when the bank refuses to honour the cheque because the sender does not have enough money in his account.
Legal Process After Cheque Bounce
If not, a case is brought against the payer as soon as the cheque is returned unpaid. When a cheque bounces, the bank initially provides the creditor with a receipt that explains why the cheque bounced. Following this, the debtor must get a notice from the creditor within 30 days.
Within one month of the notice’s expiration, the creditor may file a complaint in the magistrate’s court if the debtor does not respond within the allotted 15 days. A complaint against the debtor may be brought if, notwithstanding this, the money is still not given to you. The Negotiable Instrument Act of 1881, Section 138, stipulates that bouncing a cheque is a crime that carries a maximum two-year prison sentence, a fine, or both.
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