Cheque Bounce Notice
A cheque is a legal document which is common in day-to-day
transactions for making payments. But as common as the use of cheques
is, bounced cheques are even more common. A cheque bounces when you
present it for payment but are not able to receive the payment.
Reasons for a Bounced Cheque
The most common reason is that the cheque-maker does not have enough funds in his account. However, a cheque may also bounce due to many other reasons. Some more reasons for a bounced cheque are:
- The signature does not match.
- There is some overwriting on the cheque.
- Expiry of cheque (it is valid only for six months from the date of drawing).
- Crossing of overdraft limit.
- The cheque does not have the seal of issuing company.
- The person drawing the cheque becomes insolvent.
- When the cheque appears to be fake.
- If there is some alteration in the cheque.
- The payee presents the cheque at the wrong branch.
In India, a bounced cheque can land its drawer into prison. A drawer is the person who signs the cheque and a payee is the person in whose favour the cheque is made. Moreover, the bank liable to pay the amount is the drawee.
Conditions for a Criminal Action against Bounced Cheque
138 of the Negotiable Instruments (NI) Act, 1881 makes it a criminal
offence. If a cheque bounces, then the drawer faces 2 years in prison or
fine. Further, in some cases it may be prison term as well as fine.
However, there are some conditions that must be present before moving on to a criminal case under section 138. They are:
- The drawer must issue the cheque on his own bank account.
- A legal liability or debt exists for which the drawer issued the cheque.
- The cheque has bounced because of a lack of funds.
Thus, it is not possible to bring criminal action against the drawer if he issued the cheque as a gift and there was no liability whatsoever.
Conditions for a Valid Notice
the first step towards a legal action would be to send a notice to the
drawer. The notice must fulfill the below conditions:
- The payee sends it within 30 days of receiving the return memo from the bank.
- It states that the payee presented it within its validity.
- It also mentions the legal debt or liability for which the drawer made it.
- A copy of the return memo accompanies it.
- It also specifies the time within which the drawer must reply to it.
Fee for Preparing a Notice against Bounced Cheque
The professional fee starts from INR 3500.
Timeline for Preparing a Notice against Bounced Cheque
It usually takes around 3-4 business days after we receive all relevant details from your end.
How PocketLawyer Can Help?Do you need help with drafting a bounced cheque notice or drafting a reply to it? You can find a one-stop hassle free solution at PocketLawyer.
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