+6 Cheque Bounce Rules of 2024 (for Beginners & Experts)

What Is the Law for Bounced Cheque?

In many countries around the world, it’s considered a serious criminal offense. In fact, the Cheque Bounce Rules specifies that bouncing a cheque is a legal offense under Section 138 of the Negotiable Instruments Act, 1881. Punishment for a bounced cheque can include both a monetary penalty, as well as imprisonment, depending on the circumstances.

Essentially, assuming the cheque wasn’t bounced due to a bank error, the holder of the bounced cheque has the legal right to take the defaulter to court. Cheque Bounce Rules play a very important role in financial transactions, ensuring the integrity of the payment system. Understanding these rules is essential for businesses and individuals alike. Let us look into the various aspects of Cheque Bounce Rules, and learn about the legal framework, consequences, and What happens when a cheque Bounce.

What Happens if Cheque Bounces 3 Times?

If a cheque bounces three times, it certainly isn’t taken lightly. As per the law, if a cheque bounces due to insufficient funds or if it is found that the cheque was issued fraudulently, the bank has the right to close the defaulter’s account, If a cheque bounces three times within a certain period, it may be considered a habitual offense, leading to more severe legal actions. It is very necessary to be aware of the escalation in penalties and consequences as the number of bounced cheques increases.

Some of the Important Cheque Bounce Rules

Following are some of the important cheque bounce rules

The cheque should be deposited within 3 months of the date written on it.

The bank should provide a ‘cheque return memo’ to the payer detailing the reason for the non-payment.
The payee has 30 days from the receipt of the information to file a legal notice to the drawer.
Should the payer fail to settle the bill within 15 days of receiving notice, the payee has the right to take legal action and press criminal charges.

There are various rules in the process of dealing with bounced cheques, right from sending a notice of dishonor to the withdrawal to the time period within which the legal action can be started. It is always suggested to have a proactive approach while dealing with Cheque bounce cases.

What Are the New Cheque Bounce Rules?

New Cheque Bounce Rules( Interim Compensation:)<br />

While the foundation of the Cheque Bounce Rules has been steady over the years, the rules have evolved with the changing times. Recently, The Supreme Court of India laid down certain new rules:

If a cheque is dishonored, interim compensation to the complainant is mandatory.
The drawer must deposit at least 20% of the cheque amount during the trial or case proceedings.
If a person is found guilty, they need to pay over the cheque amount at an interest rate of 9% per annum.

With financial rules always changing, it’s crucial to keep up with the latest cheque bounce regulations. Changes in the legal framework can impact the course of action one needs to take when faced with a bounced cheque situation. Stay updated about the legal formalities to handle the Cheque Bounce Case Effectively

What Is the Court Fee for Cheque Bounce Case?

So, how much would it cost if you’re looking to fight for your rightful dues after a cheque bounce case? Fair question. As per the Cheque Bounce Rules, a check bounce case involves a mandatory court fee which, though it varies from state to state, is generally around 1% of the cheque amount.

What can be the legal action under Cheque Bounce Rules?

Cheque bounce can lead to serious legal consequences If a cheque provided by a person bounces for insufficient funds, the receiver (payee) can file a suit for recovery and a criminal complaint against the defaulting party. Cheque Bounce Rules empower individuals and businesses to take legal action against the drawer of a dishonored cheque. It can either be filing a criminal complaint or even pursuing a civil case for recovery.

How Long Does It Take to Resolve a Cheque Bounce Case?

The duration of resolving a Cheque Bounce Case can vary, influenced by factors such as legal complexities and court proceedings. Generally, resolving a cheque bounce case can take anywhere between six months to two years, often stretching to even five years, depending on the complications of the case. Knowing how long a cheque bounce case might drag on is key if you’re caught up in one. Knowing how to wait and grasping the legal steps involved can shape a far better game plan.

For More Details About Cheque Bounce Rules? Contact M&M Law Partners

Wondering where you can soak in more of this knowledge about Cheque Bounce Rules? Well, you can always reach out to M&M Law Partners. They’ve got some real sharp minds over there.
Just remember, having the right information arms you better in an unfortunate event of cheque bouncing. Arm yourself with the right know-how, and you’ll be well-prepared to tackle any hiccups like cheque bounces head-on.

At M&M Law Partners, we have the best civil lawyers in Delhi who are experts in Cheque bounce rules and can guide you effectively with solutions

ALSO READ : Top 6 Differences Between Dishonored Cheque and Bounced Cheque

FAQs

1. Can a Cheque Bounce Case Be Settled Out of Court?

Absolutely! Like most legal matters, a cheque bounce case can definitely be settled out of court through mutual agreement or mediation. But you’ve got to make sure the agreement’s ironclad and everyone involved is on board.

2. What are the conditions for Cheque Bounce?

There are many reasons why a cheque can bounce, but the most common ones include insufficient funds, mismatch of signature, post-dated cheques, account closed, and alterations in the cheque. that violate the terms of the cheque.

3. What is the time limit for Cheque Bounce Case?

The honorable Supreme Court of India has set a limit of one month for the courts to issue a summons and conclude a trial in cheque bounce cases from the date of filing the complaint.

4. Can Summons be Ignored?

Not responding to a summons can lead to various consequences, the court passing an ex parte order, which is a decision taken by the court in your absence. So, remember, when a summons is called, you have to answer!

5. What Is the Evidence in the Cheque Bounce Case?

Key evidence includes the bounced cheque, the bank’s cheque return memo citing the reason for non-payment, and proof of dispatch and receipt of the legal notice by the drawer. Strong evidence is necessary for a successful legal outcome.

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Top 7 Things to Know On Cheque Bounce Rules