A cheque is a negotiable instrument which directs your bank, to pay money from your account, to the person in whose name, the cheque has been issued. Cheques are used in most of the transactions such as payment of fees, salary and so on. Many people still find cheques, a comfortable method of payment. However, cases of cheque bounces are quite high these days.
The cheque bounce takes place when a person issues a cheque in the name of another person, without maintaining a sufficient balance in his bank account.
The legal action in case of a dishonored cheque is mentioned under Section 138 of the Negotiable Instruments Act, 1881. According to this act, a cheque bounce is a criminal offence in India and is punishable by an imprisonment of up to two years, or with a penalty or both.
1. The cheque must be presented to the bank within the period of validity.
2. The cheque must be issued towards the discharge of some legally enforceable debt or any other liability. You cannot take legal action if the cheque is issued as a gift.
3. You should issue a demand notice to the drawer, within 30 days from the date of receiving the Cheque Return Memo from the bank.
4. The drawer should fail to make the payment within 15 days of receiving the notice. After the completion of 15 days, from the date of issuing the notice to the payee, you will have 30 days to file a complaint before the magistrate.
1. Original bounced cheque.
2. The cheque return memo received by the bank.
3. Copy of the legal notice send by the payee.
4. Any document which acts as a proof
The complaint should be filed within 30 days from the repayment period, of the 15-day expiry. The complaint can be filed in a Magistrate Court.
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