ARREST IN CHEQUE BOUNCE CASE IN INDIA

Certainly cheque bounce cases in India are subjected to arrest as well. Their can be arrest only if the court orders and then only the police can arrest. The Negotiable Instrument Act governs the laws pertaining to cheque bounce cases in India.

Section 138 NI Act, 1881 contains the provisions for cheque bounce.

What is cheque bounce?

Cheque bounces when the bank doesn’t honour a payment. Some common reasons are incorrect signatures, mismatch of figures written on the cheque (in figures and words) and overwriting. These issues are minor and can be solved without the court’s intervention.

However, the major cause of concern is when a cheque bounces due to insufficient funds in the bank account of the person who gives the cheque.

What to do in a cheque bounce case?

Cheque Bounce is defined under Section- 138 of the Negotiable instruments Act, 1881. If you have received a bounced cheque then you have 2 options.

  • You can send the person a notice and if you do not receive any response within 15 days then,
  • You can send them a Legal Notice, by filing a complaint in Court.

What should be in the Demand Notice?

  • You can send them a Legal Notice, by filing a complaint in Court.
  • You must clearly state the value of debt and the legal consequences arising due to failure in payment
  • You must provide information regarding cheque bounce as returned by the bank
  • You must demand the payment of the amount to be paid within 15 days of receiving the Notice

 

Cheque Bounce is a criminal bounce under Section 138 of the Negotiable Instruments Act, 1881. The punishment prescribed for the same is imprisonment which may extend up to 2 years, with or without a fine which may be of value as much as twice the value of the cheque drawn.

You must hire a Cheque Bounce Lawyer to help you file a case if a cheque issued in your favour bounces and get the relief that you deserve.

Section 138 of the Negotiable Instruments Act, 1881, states that the following conditions need to be fulfilled necessarily for prosecution under the Act:

  • The cheque necessarily has to be drawn on any account maintained by the drawer of the cheque.
  • The cheque necessarily has to be dishonored due to insufficiency of funds in the drawer’s account.
  • The cheque necessarily has to be drawn to discharge of a debt or a legal liability.
  • After the dishonour, a notice has to be issued to the payee from the drawer for payment of the amount giving reasonable time for the same (30 days).
  • If the drawer doesn’t make any payment within 15 days, after receiving such notice, a crime under Section 138 is committed.

It is necessary under the Act that reasonable time is provided by the drawer to make the necessary payment. In case of a cheque being dishonoured, firstly, a Cheque Return Memo is sent by the bank of the drawer to the bank of the payee bank.

Then the payee receives the Memo as well as the dishonoured cheque from his/her bank. The drawer is given the option to draw another cheque in favour of the payee, which should be done within three months of the date of the cheque being dishonoured.

In case the drawer continues to default, the payee must issue a notice to the drawer for repayment of the amount making an allowance of 30 days. If after this, the drawers still fails to make the payment, the payee acquires the legal right to prosecute.

The answer is submitted by LexFinanciar, an online & offline platform to access the best legal and accounting solution for any kind of matters in India.

 

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BY KUMAR RAHUL ANAND

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