Cheque Bounce – What you can do

To start with, the very first thing to be kept in mind is to check why the cheque was dishonored. A cheque bounce occurs due to various reasons such as in case of signature mismatch, destroyed cheque, overwriting amounts or digits, in cases where the cheque has expired, or due to insufficient funds.

Except in the case the cheque bounce occurred due to insufficient funds, for all the other cases you can ask the drawer to issue you a fresh cheque but if he refuses to rectify then you can file a civil suit for recovery of your money.

Procedure in case of Cheque Bounce due to insufficient funds

In case the bank returns you the cheque with the reason of insufficient funds, then you have to send a ‘cheque bounce notice’ under section 138 of the Negotiable Instruments Act within 30 days of intimation by the bank to the drawer. The drawer on receiving the notice has 15 days to pay back the whole amount, if he does pay then there lies no offense but if he fails to pay back within the 15 days notice period, then you have the right to file a criminal case under section 138 of the above-mentioned act. 

Place of Jurisdiction

You can file your complaint to the Magistrate either at the place where the cheque was drawn, where the payment was to be done, or where the cheque got dishonored, or where the demand notice was served.

Which Magistrate will hear your case?

The complaint should be filed before the Metropolitan Magistrate if the case falls in any of the metropolitan cities otherwise the case will be filed before the Judicial Magistrate.

Punishment Inflicted

If the drawer is held guilty of the offense, he will be punished with imprisonment for a period of up to 2 years or a fine, double the amount of the cheque or both.

Other Remedy

In case you plan to proceed with a civil remedy then that case, no cheque bounce notice will be issued instead a general legal notice will be issued for the recovery of the amount and no criminal charges will be levied.

Point to remember: In case there are multiple cheques that were dishonored, then you have to file multiple complaints. You can file a complaint by combining maximum 3 dishonored cheques and for any additional, file another complaint.

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