Cheque bounce can prove to be costly, know how

New Delhi: If you’ve been waiting for a payment for a long time, don’t rejoice! The happiness of receiving the cheque doesn’t last long. Merely receiving the cheque isn’t enough until it is cleared, as it could bounce. But did you know that in such cases, it can be considered a criminal offence? Yes, recently Bollywood actress Amisha Patel had to pay a hefty penalty in a cheque bounce case. As per an order by Ranchi court, she had to pay penalty amounting to Rs 1.2 crore. If someone gives you a cheque that is dishonoured, then you can demand damages. But before that, understand the potential consequences of it.

According to banking rules, a cheque can bounce for various reasons. The primary reason is insufficient funds in the account of the issuer. Often, discrepancies in the name or overwriting on the cheque can also lead to it bouncing. Another reason for a bounced cheque can be its expiration. According to rules, a cheque can be honoured within 90 days of the date mentioned. Post which, if deposited, the bank will return it. Sometimes, stopping payment by the issuer can also lead to the cheque being considered dishonored.

Among all these reasons, the most important is insufficient funds in the account of the issuer, which can lead to criminal charges.

When a cheque bounces, the bank returns it to the depositor’s address. Along with it, a memo is attached stating the reason for the bounce. In the case of a bounced cheque, legal action can be initiated against the person who issued it within 30 days. If payment is received upon sending a notice, it’s good, otherwise the matter can be taken to court. This involves not just the amount on the cheque but also the cost of sending legal notices. To pursue this, one has to file a case under Section 138 of the Negotiable Instruments Act, 1881, in a civil court.

In cases of bounced cheques, the accused can face up to two years in jail and a fine. Additionally, under Section 420 of the IPC, a case can also be filed for cheating, which can be fought not only in civil but also criminal courts. If proven guilty of fraud, the accused can face up to seven years in prison.

If a cheque issued repeatedly by an account holder keeps bouncing, the bank has the right to either cancel the defaulter’s chequebook or close his account. Upon bouncing of a cheque, the bank also recovers a penalty amount. This amount is deducted from the accounts of both the issuer and the recipient. The penalty amount varies according to the different rules of banks, ranging from 50 to 750 rupees.

Remember, to file a complaint about a bounced cheque, you should have these documents:

To avoid a cheque getting bounced, make sure there are sufficient funds in the account while issuing it. Avoid overwriting on the cheque. Ensure correct information about the account where the money is to be sent and double-check every digit.