Almost in every transaction, especially in heavy transactions, we use #cheques. Cheques are issued in order to secure proof of payment. The cheque is considered a reliable method of payment for many people. It is a negotiable instrument.
Let’s understand the parties involved in Cheque:
1. Drawer: The author of the cheque is called ‘drawer’.
2. Payee: The person in whose favour, the cheque is drawn is called ‘payee’.
3. Drawee: The bank that is directed to pay the amount is known as the ‘drawer’.
Cheque bounce is a very common legal trouble faced by many of us. The dishonour of a cheque is a criminal offence and is punishable by imprisonment up to 2 years or with penalty or both.
Now let’s understand what you can do if your cheque got bounced? Firstly, do not panic.
Here is your step-by-step guide to the available legal procedures:
Upon dishonour of cheque, the drawee bank immediately issues a Cheque Return Memo to the banker of the payee and it also mentions the reason for non-payment.
The payee banker gives a dishonoured cheque and memo to the payee.
The holder or payee can again submit the cheque within 3 months of the date on it.
At this time, if the cheque issuer fails to make payment, then the payee has a right to proceed legally against the issuer.
How to file a cheque bounce case?
The dishonour of a cheque is a criminal offence under #section 138 of the #Negotiable_Instrument_Act, 1881. In this case, an aggrieved party can file a criminal and civil suit against the accused.
How to institute the case?
Once the banker gives the dishonoured cheque and memo to the payee, the holder or payee can again submit the cheque within 3 months of the date on it. At this time, if the cheque issuer fails to make payment, then the payee has a right to proceed legally against the issuer.
The party has an option to file a criminal and a separate civil suit in case of cheque bouncing. It is to be advised by the Advocate.
In this, we are going to check what legal measures are taken by the drawee of a cheque.
So the first step toward litigation is to send a demand notice: this formal demand legal notice is to be sent to the drawer within a stipulated time of 30 days from the date the cheque was presented and returned back to the drawee.
The amount must be specified in the legal notice.
The notice must also insist on the consequences of an action if the said amount is not paid within a stipulated time of 15 days.
The drawee must preserve the delivery proof of the notice like RPAD acknowledgement or online status.
If the drawer has not replied to the demand notice, within a period of 15 days from the delivery of the notice or has been delaying payment or refusing to pay such amount, a complaint is to be affected.
If the drawer has not replied to the demand notice, within a period of 15 days from the delivery of the notice or has been delaying payment or refusing to pay such amount, a complaint is to be affected.
Such complaint is to be filed within whose local jurisdiction any of the following events arisen:
- Place where the cheque was drawn
- Place where the cheque was presented
- Place where the bank returned the cheque
- Place where the notice of demand of payment was served by the drawee.
This complaint needs to be filed within the prescribed limit of 30 days from the date of receipt of the demand notice by the drawer.
Once the complaint is filed by the drawee, the court issues summons to the drawer who has failed to make payment.
The important question that arises is of evidence. So what will be the evidence in a cheque bounced cheque?
The complaint must be supported by all the important evidence like the original cheque, cheque return memo, demand notice, acknowledgement of receipt of the legal notice and any other relevant document that can be used as evidence.
This evidence must support the stand of liability to pay the unpaid amount.
As soon as the case is filed and accepted in the court, each and every document is cross-checked by the Judicial Magistrate First Class.
Besides the documents, the limitation period to file the suit is also validated.
Moreover, the Process Form which is popularly known as the Bhatta, is filed by the drawee (complainant) himself or by his lawyer, along with the address of drawer (accused)
The next step is for the court to issue summons to the accused for him to appear in the court on a specified date to be decided by the court.
In case the accused fails to appear in the court on the desired date of hearing, the court has complete authority to issue a bailable warrant against him if requested by the complainant.
And in case the accused again fails to appear before the court, the court in all probability will issue a non-bailable warrant of arrest against him.
The next question raised is about penalty and punishment. So if the accused is found guilty, he can be punished with a monetary penalty which can be double the cheque amount or imprisonment which may extend to 2 years or both.
If the cheque was issued as a gift, or for unlawful purposes, the drawer cannot be prosecuted in such a case.
2020 - present: the Concept of digital NI Courts
In Delhi, the pendency of NI Act cases is enormous. To curb the pendency and dispose of the cases in a speedy manner, in 2020, a bench of the Hon'ble Supreme Court led by then CJI HMJ SA Bobade with HMJ L Nageshwara Rao issued certain directions to set up exclusive digital courts for NI Act cases. This Digital NI Act Court project would require the complainants and their lawyers to file their complaints through the e-filling portal of the e-committee of the Supreme Court of India.
Hope it is useful to you.