• When and what kind of legal action can be taken for cheque bounce?

One of our customers has purchased material against 30 days PDC. After 30 days, when we have deposited the cheque, it bounced with a note that party had stopped the cheque. When asked to party, they said, facing fund problem, will shortly RTGS your payment. Now, around 60days have passed, they are not remitting our payment.

When and what kind of legal action can be taken?

PS : Cheque amount is around Rs. 1Lac only.
Asked 4 years ago in Criminal Law
Religion: Hindu

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15 Answers

See since limitation period for notice is over you need to put cheque in bank once again get it dishonored and then you have to give a notice under 138 N I act.

Further on notice if he fails to pay you need to.file a complaint before magistrate court for cheque bounce.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Re deposit the cheque 

 

2)in case of dishonour of cheque issue legal notice to customer to make payment within 15 days of receipt of notice 

 

3) if he fails to make payment file complaint under section 138 of NI act for dishonour of cheque 

Ajay Sethi
Advocate, Mumbai
95146 Answers
7597 Consultations

5.0 on 5.0

- Legally you have two ways to recover your amount from the said customer.

- Since, already , 60 days passed from the date of bouncing , then you will have to re-present the cheque before bank for encashment. 

- If, the cheque has been bounced , then within 30 days of time of bouncing , you should send him a demand notice /legal notice to the said customer.

- Further , if within 15 days of time , from the receipt of the said legal notice , he not paid you , then , you should file a case under section 138 of N.I.Act read with section 420 IPC. 

- If, the said customer avoided to appear before the court,then the court will issue arrest warrant against him . 

- In the mean while , he can settle the matter in dispute , after paying whole amount to you. 

- Out of this, you can also file a suit for recovery as well , specially , when the cheque date already expires. 

 

Good luck and dont forget to rating Positively.

Mohammed Shahzad
Advocate, Delhi
13486 Answers
200 Consultations

5.0 on 5.0

You can file case under section 138 of negotiable instruments Act for cheque bouncing. It's a criminal offence

Prashant Nayak
Advocate, Mumbai
32146 Answers
183 Consultations

4.1 on 5.0

For cheque bounce you can make complaint against him under section 138 of Negotiable Instrument Act.

Ganesh Kadam
Advocate, Pune
12933 Answers
256 Consultations

4.9 on 5.0

1. Cheque Bounce case has to be filed within 45 days of cheque bounce memo date. Now the cheque has become stale. However IF the cheque is still within the 90 days validity  period from date written on cheque, THEN deposit again and if it bounces again, THEN immediately send lawyers notice demanding payment and subsequently file cheque bouncing case in local magistrates court.

2. Other humble alternative is to request payment to the party and TRY to obtain payment. This is more so since cheque bouncing cases in Mumbai takes more than 2-5 years to settle. Further going to police is not going to get your payment. Hence only soft option is to persuade and request the opposite party for payment.

3. INFORM all your circle parties to not to deal with this cheque bounce party, in the best interest of their businesses. This party may come down for settlement.

Hemant Agarwal
Advocate, Mumbai
5612 Answers
25 Consultations

5.0 on 5.0

If the cheque date is within three months as on date then you may present the cheque once again to the bank and get it bounced once again.

After that you may initiate cheque bounce action immediately by first issuing a legal demand notice within 15 days.

After that wait for 15 days from the date of receipt of this notice by the accused, if there is no reply or if he fails to comply with the demand made then you may file the cheque bounce case under section 138 NI act within one month from that date.

 

T Kalaiselvan
Advocate, Vellore
85348 Answers
2227 Consultations

5.0 on 5.0

This is my response to you:

1. You should have sent a legal notice;

2. You will then have to approach the MM court and condone the delay;

3. You will have to act quick;

4. Otherwise you will have to approach the civil court for remedy;

5. Consult a local lawyer, discuss full facts and take steps.

Gowaal Padavi
Advocate, Mumbai
1920 Answers
5 Consultations

5.0 on 5.0

Again bounce the cheque and issue legal notice. If payment not paid within 15 days, file FIR or complaint u/s 138 of N I Act.

Act before cheque expire.

Yogendra Singh Rajawat
Advocate, Jaipur
22698 Answers
31 Consultations

4.4 on 5.0

you can file case under section 138 of Negotiable Instruments Act.

For filing the case you need to send him notice for payment within one month giving him 15 days time.  if expiry of 15 days from the date of your notice, he does not make the payment, then file within next 30 days.Also you can file a case of cheating as well as criminal breach of trust. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

Firstly a legal notice has to be sent within the stipulated time period. In your case there has been a delay. Filing of the case i.e Summary Suit u/s 138 of N.I Act will have to be done along with a delay condonation application showing genuine excuse for delay in taking legal action.

Salome R Dias
Advocate, Vasai Virar
15 Answers

Not rated

You should present the cheque again if the cheque have not become stale. 

Then send legal notice to customer and file complaint case of Section 138 NI act. 

If the cheque have become stale then you can just send legal notice for recovery of funds. And file recovery suit against him.

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

5.0 on 5.0

You have missed the bus. The dishonour of cheque is an offence punishable with an imprisonment of up to 2 years under Section 138 of Negotiable Instruments Act, but to be able to file the criminal complaint under Section 138 of NI Act the payee has to mandatorily send a demand notice to the drawer within 30 days from the date on which cheque returning memo is delivered by the bank. If this is not done then cheque bounce complaint is not maintainable.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

Dear sir,

Yes, you can file cheque bounce case u/s 138 NI Act, 1881

Cheque dishonoured: A step-by-step guide for legal recourse

The dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both

 

 

 

Cheques are used in almost all transactions such as re-payment of loan, payment of salary, bills, fees, etc. A vast majority of cheques are processed and cleared by banks on daily basis. Cheques are issued for the reason of securing proof of payment. Nevertheless, cheques remain a reliable method of payment for many people. On the other hand, it is always advisable to issue crossed “Account Payee Only” cheques in order to avoid its misuse.

A cheque is a negotiable instrument. Crossed and account payee cheques are not negotiable by any person other than the payee. The cheques have to be deposited into the payee's bank account.

Legally, the author of the cheque is called ‘drawer’, the person in whose favour, the cheque is drawn is called ‘payee’, and the bank who is directed to pay the amount is known as ‘drawee’.

However, cases of cheque bounce are common these days. Sometimes cheques bearing large amounts remain unpaid and are returned by the bank on which they are drawn.

The below article provides information on what you may do if your cheque is dishonoured? Here’s a step-by-step guide to the legal procedure that is available to you.

If a cheque is dishonoured

When a cheque is dishonoured, the drawee bank immediately issues a ‘Cheque Return Memo’ to the banker of the payee mentioning the reason for non-payment. The payee’s banker then gives the dishonoured cheque and the memo to the payee. The holder or payee can resubmit the cheque within three months of the date on it, if he believes it will be honoured the second time. However, if the cheque issuer fails to make a payment, then the payee has the right to prosecute the drawer legally. 

The payee may legally sue the defaulter / drawer for dishonour of cheque only if the amount mentioned in the cheque is towards discharge of a debt or any other liability of the defaulter towards payee.

If the cheque was issued as a gift, towards lending a loan or for unlawful purposes, then the drawer cannot be prosecuted in such cases.

Legal action

The Negotiable Instruments Act, 1881 is applicable for the cases of dishonour of cheque. This Act has been amended many times since 1881.

According to Section 138 of the Act, the dishonour of cheque is a criminal offence and is punishable by imprisonment up to two years or with monetary penalty or with both.

If payee decides to proceed legally, then the drawer should be given a chance of repaying the cheque amount immediately. Such a chance has to be given only in the form of notice in writing.

The payee has to sent the notice to the drawer with 30 days from the date of receiving “Cheque Return Memo” from the bank. The notice should mention that the cheque amount has to be paid to the payee within 15 days from the date of receipt of the notice by the drawer. If the cheque issuer fails to make a fresh payment within 30 days of receiving the notice, the payee has the right to file a criminal complaint under Section 138 of the Negotiable Instruments Act.

However, the complaint should be registered in a magistrate’s court within a month of the expiry of the notice period. It is essential in this case to consult an advocate who is well versed and experienced in this area of practice to proceed further in the matter.

Fine points: Conditions for prosecution

Legally, certain conditions have to be fulfilled in order to use the provisions of Section 138.

The cheque should have been drawn by the drawer on an account maintained by him.

The cheque should have been returned or dishonoured because of insufficient funds in the drawer's account.

The cheque is issued towards discharge of a debt or legal liability.

After receiving the notice, if the drawer doesn't make the payment within 15 days from the day of receiving the notice, then he commits an offence punishable under Section 138 of the Negotiable Instruments Act.

Punishment & penalty

On receiving the complaint, along with an affidavit and relevant paper trail, the court will issue summons and hear the matter. If found guilty, the defaulter can be punished with monetary penalty which may be twice the amount of the cheque or imprisonment for a term which may be extended to two years or both. The bank also has the right to stop the cheque book facility and close the account for repeat offences of bounced cheques.

If the drawer makes payment of the cheque amount within 15 days from the date of receipt of the notice, then drawer does not commit any offence. Otherwise, the payee may proceed to file a complaint in the court of the jurisdictional magistrate within one month from the date of expiry of 15 days prescribed in the notice. 

Netravathi Kalaskar
Advocate, Bengaluru
4952 Answers
27 Consultations

4.8 on 5.0

The limitation act will now come into force. You should have approached a lawyer within 15 days and the issue would have been solved.

But now you have to file a summary suit.

Regards 

Rahul Mishra
Advocate, Lucknow
14091 Answers
65 Consultations

5.0 on 5.0

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