A cheque bounce, also known as a dishonoured cheque, occurs when a bank refuses to process a cheque due to specific reasons, leading to non-payment to the payee. This situation can result in financial losses and legal complications for both the issuer and the recipient. Understanding the causes, charges, implications, and preventive measures associated with cheque bounces is crucial for individuals and businesses alike.
Causes of Cheque Bounce
Several factors can lead to a cheque being dishonoured:
- Insufficient Funds: The most common reason is when the issuer’s account lacks adequate balance to cover the cheque amount.
- Incorrect Date:
- Post-Dated Cheques: Presenting a cheque before its date can lead to dishonour.
- Stale Cheques: Cheques dated beyond their validity period (typically three months) are considered stale and are rejected.
- Signature Mismatch: If the signature on the cheque doesn’t match the bank’s records, the cheque will be dishonoured.
- Account Closure: Issuing a cheque from a closed account results in automatic dishonour.
- Alterations on Cheque: Any unauthorized changes or overwriting on a cheque can lead to its rejection.
- Mismatched Figures and Words: Discrepancies between the numerical and written amounts on a cheque can cause it to bounce.
- Damaged Cheque: Physical damage, such as tears or illegible information, can render a cheque invalid.
- Frozen Account: If the issuer’s account is frozen due to legal reasons, any cheques issued will be dishonoured.
Charges Associated with Cheque Bounce
When a cheque bounce meaning is dishonoured, both the issuer and the recipient may incur charges:
- Issuer Charges: Banks impose penalties on the issuer for presenting a cheque without sufficient funds or other discrepancies.
- Recipient Charges: The payee’s bank may also levy charges for handling a bounced cheque.
The exact fees vary between banks and depend on the cheque amount and the reason for dishonour.
Legal Implications of Cheque Bounce
In India, a bounced cheque is considered a criminal offence under Section 138 of the Negotiable Instruments Act, 1881. The legal consequences include:
- Penalties: The issuer may face fines extending up to twice the cheque amount.
- Imprisonment: The issuer can be sentenced to imprisonment for up to two years.
- Criminal Record: A conviction results in a criminal record, impacting the issuer’s reputation and financial credibility.
Legal Recourse for the Payee
If a cheque bounces, the payee can take the following steps:
- Demand Notice: Within 30 days of receiving the cheque return memo, the payee must send a written notice to the issuer demanding payment of the cheque amount within 15 days.
- Filing a Complaint: If the issuer fails to make the payment within 15 days of receiving the notice, the payee can file a criminal complaint in the appropriate court within one month.
Preventive Measures
To avoid the complications arising from cheque bounce act, consider the following preventive measures:
- Maintain Adequate Funds: Ensure sufficient balance in your account before issuing a cheque.
- Verify Details: Double-check all cheque details, including date, amount in words and figures, and signature, to avoid discrepancies.
- Avoid Overwriting: Do not make corrections or overwriting on a cheque. If an error occurs, cancel the cheque and issue a new one.
- Timely Presentation: Deposit cheques within their validity period to prevent them from becoming stale.
- Communicate with Payee: Inform the payee about any potential issues that might lead to a cheque bounce, allowing for alternative arrangements.
- Use Electronic Transfers: Consider using electronic payment methods, which are faster and reduce the risk of errors associated with cheques.
Seeking Legal Assistance in Navi Mumbai
If you’re dealing with a cheque bounce issue in Navi Mumbai, consulting with a legal expert is advisable. Advocate Pooja Gupta specializes in such matters, offering guidance and representation to navigate the legal intricacies effectively.
Conclusion
A cheque bounce lawyer in navi mumbai is a serious matter with significant financial and legal repercussions. Understanding its causes, charges, implications, and preventive measures is essential for both issuers and recipients. By maintaining diligent banking practices and seeking legal counsel when necessary, individuals and businesses can mitigate risks associated with cheque dishonour.
