Check Bounce Cases (Negotiable Instruments Act, 1881)

WHAT IS CHEQUE BOUNCE ?

In cheque bounce cases under the Negotiable Instruments Act (NI Act), 1881, the primary action a payee (the person to whom the cheque is issued) can take is to file a criminal complaint against the drawer (the person who issued the cheque) under Section 138 of the Act.

Cheques are widely recognized as one of the most used negotiable instruments in India. For lawyers or law students, it is crucial to have a deep understanding of the fundamental aspects and key provisions of any legal statute. For lawyers specializing in cheque bounce cases, the NI Act and relevant case laws serve as their guiding principles.

THERE ARE SEVERAL PARTIES TO A CHEQUE

1.  The person who issued the cheque is called the drawer.
2. The person on whom the cheque is drawn, which is the banker, is called the drawee.
3. The person to whom the payment is being made is called the payee.

REASON FOR CHEQUE BOUNCE

• Insufficient amount in the account to meet the payment amount.
• On the order of the drawer to stop the payment on the cheque.
• Absence of signature or mismatching of signature with the specimen’s signature which the bank is having.
• Absence of the payee’s name or if it not written clearly.
• If there is no match found between the amount mentioned in figures and digits.
• Absence of the account number or if it is not clearly written.
• If any court orders to stop the payment on the cheque.
• Upon the death or unsoundness of mind or insolvency of drawer.
• If the changes made on the cheque are not approved by the drawer.
• Absence of date or mentioning of incorrect date.
• When the date mentioned has expired the duration of 3 months.
• If the cheque comes in tormented state, i.e., torn, wet or spotted.

DOCUMENTS REQUIRED FOR FILING THE COMPLAINT

1. The complaint should have been filed under section 138 of the negotiable instrument act, 1881, containing an outline of the fact.
2. There is also requirement pre-summoning evidence by way of affidavit.
3. At the time of filing the complaint, the complaint should produce a list of witnesses.
4. At the time of filing the complaint, the client should hand over a Vakalatnama in favor of his council which is to empower the advocate to act on behalf of his client.
5. The notice of demand ( legal notice issue by the payee to the drawer under section 138)  along with the original cheque return memo has to be presented with the complaint.

HOW LAWTECH CAN HELP YOU IN CHEQUE BOUNCE CASES

1. Understanding Legal Provisions: We can explain the relevant laws surrounding cheque dishonour (like Section 138 of the Negotiable Instruments Act in India) and how it applies to the case.
2. Evaluating the Case: We assess whether the cheque bounce is due to insufficient funds, technical errors, or other factors. We can also determine if there was any valid defence on the part of the issuer, such as a stop-payment order or a post-dated cheque.
3. Drafting and Sending Notices: The law requires the payee to send a legal notice to the drawer (the person who issued the cheque) within a specific time after the cheque bounces. We can help draft this notice to ensure it complies with the legal formalities and increase the chances of resolving the issue before it goes to court.
4. Filing a Complaint: If the issue isn’t resolved, the consultant can help file a formal complaint with the court or a police station, ensuring all documents and procedures are correctly followed.
5. Representation in Court: We can represent clients in court proceedings, making arguments, presenting evidence, and navigating the legal complexities of the case.
6. Negotiation and Settlement: If the situation is resolvable outside of court, we may help negotiate a settlement or compromise, possibly leading to the payment being made without further legal action.
7. Recovery of Dues: We can also help in pursuing recovery of the amount due, through legal channels or by facilitating settlement.
8. Mitigating Penalties: For the accused party, we can help reduce penalties or fines and provide defence strategies if the dishonour was unintentional or caused by reasons outside the person’s control.