Cheque Bounce: Understanding the Legal Implications and Escaping the Pitfalls

Introduction: Lets understand the meaning of cheque
A cheque is a widely used financial instrument for transactions. A cheque is dishonoured bcos of insufficient funds or other reasons, it leads to a cheque bounce. In this article, we delve into the legal aspects of cheque bounces, including they are criminal or civil cases, the legal notice process, and strategies to avoid falling into this legal trap.

Is Cheque Bounce a Criminal or Civil Offense?

The dishonour of a cheque is governed by Section 138 of the Negotiable Instruments Act, 1881. This section makes cheque bounce a criminal offence. When a cheque issued by a person is dishonoured bcos insufficient funds or other reasons, the drawer (person who issued the cheque) can face criminal prosecution.

Cheque Bounce Legal Notice

• Issuing a Legal Notice: If your cheque bounces, the payee (recipient of the cheque) can send a legal notice to the drawer within 30 days of receiving the dishonoured cheque. The notice demands payment of the cheque amount within 15 days.
• Response to Legal Notice: If the drawer fails to pay within the stipulated time, the payee can initiate legal proceedings.

How to Escape / Avoid from a Cheque Bounce Case

• Maintain Sufficient Funds: Always ensure that your bank account has sufficient funds to cover the cheque amount.
• Avoid Post-Dated Cheques: Post-dated cheques can lead to legal complications. Avoid issuing them unless necessary.
• Promptly Respond to Legal Notices: If you receive a legal notice, consult a lawyer and respond promptly.
• Seek Legal Advice: If you face a cheque bounce case, seek legal advice to navigate the legal process effectively.

Recent Judgments and Updates

Section 143-A: The Negotiable Instruments (Amendment) Act, 2018 introduced Section 143-A, allowing courts to order interim compensation to the payee on trial.
Speedy Disposal: Courts aim for speedy disposal of cheque bounce cases to ensure justice.

LawCrust: Your Trusted & Premium Legal Partner

LawCrust Legal Consulting Services, a subsidiary of LawCrust Global Consulting Ltd., is a trusted premium legal partner in India and Dubai. With over 70 panelled advocates, LawCrust specialises in Negotiable Instruments Act cases, financial frauds, and corporate matters. We provide Litigation Finance to ease the legal burden for our clients.

Remember, understanding the legal nuances of cheque bounces is crucial to safeguard your financial interests. Consult legal experts and stay informed to avoid falling into legal pitfalls.

For premier legal aid in Mumbai’s cheque bounce cases, trust LawCrust, where excellence is guaranteed. Call us at +91 8097842911 or mail us on bo@lawcrust.com for immediate assistance!