Writing a cheque is a common form of payment in India and is considered as legal tender. However, if the cheque is dishonoured, the person who issued the cheque can be held responsible and can be legally prosecuted. This article will discuss the legal action that one can take in the event of a cheque bounce.
What is Cheque Bounce?
Cheque bounce is a criminal offence in India and is defined in Section 138 of the Negotiable Instruments Act, 1881. It occurs when the drawer of the cheque (person who issued the cheque) does not have sufficient funds in his account to honour the cheque. When a person deposits a cheque in the bank and it is dishonoured, the bank sends a cheque return memo to the payee (person to whom the cheque was issued).
Legal Action To Be Taken
Under Section 138 of the Negotiable Instruments Act, 1881, the payee can take legal action against the drawer of the cheque within 30 days of receiving the return memo. The payee has the option of filing a complaint at the local police station or filing a civil suit in a court of law.
Filing a Complaint at the Local Police Station
The payee has the option of filing a criminal complaint at the local police station within 30 days of receiving the cheque return memo. The complaint must contain the details of the cheque, including the date of issue, the name of the drawer, the amount mentioned in the cheque, the date of presentation, the date of dishonour, the reason for dishonour and the name of the bank where the cheque was deposited. It is also important to attach the cheque return memo to the complaint. Once the complaint is filed, the police will investigate the matter and if the drawer is found guilty, he/she can be prosecuted under section 138 of the Negotiable Instruments Act, 1881.
Filing a Civil Suit in a Court of Law
The payee also has the option of filing a civil suit in a court of law within 30 days of receiving the cheque return memo. The payee can file a case in the court of Law seeking compensation from the drawer of the cheque. The payee must produce evidence to prove that the cheque was dishonoured due to insufficient funds in the account. If the court finds the drawer of the cheque guilty, he/she will be liable to pay a penalty which may include the cheque amount, interest, legal costs and any other costs that the payee has incurred due to the dishonour of the cheque.
Conclusion
Cheque bounce is a criminal offence in India and is punishable under Section 138 of the Negotiable Instruments Act, 1881. The payee has the option of filing a criminal complaint at the local police station or filing a civil suit in a court of law within 30 days of receiving the cheque return memo. If the complaint is found to be valid, the drawer of the cheque will be liable to pay a penalty which may include the cheque amount, interest, legal costs and any other costs that the payee has incurred due to the dishonour of the cheque.