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What is a cheque?
Before digital payment systems were introduced, people used cheques to withdraw and transfer money from their bank accounts. When you open an account with a bank, the bank issues a chequebook along with a passbook, debit card, and other things to the account holder. Issue of a cheque to an individual or entity is a written order to the bank to pay a specific amount from the account holder's account to an entity or individual whose information is mentioned on it.
What is a cheque bounce?
• Filling a cheque is easy, but one must keep a few things in mind before issuing one, as due to some mistakes, your cheque may bounce.
• For example, suppose someone has given you a cheque for payment. You put that cheque in the bank. In such a situation, the person giving the cheque must have the same amount in his account as the cheque has been given. If this does not happen, then the cheque bounces. That is, the amount of the cheque of rupees given, that much amount is not in the bank account. In the language of the bank, it is called a dishonored cheque.
Understand cheque bounce and dishonored cheque:
• A payee issues a cheque to pay an entity or an individual. It is a written commitment by the payer to pay the money. The term "cheque bounced" or "dishonored cheque" is used when a cheque used for payment bounces due to a mistake.
Reasons for dishonored cheque/ cheque bounce
A bank may refuse to make the payment mentioned on the cheque due to various reasons. Some of them are as follows:
• Insufficient funds in the payee's bank account
• Signature mismatch
• Account number mismatch
• The issue with the date of the cheque
• Non-uniformity of the amount of words and figures
• Mutilated cheque
• Overdraft limit
• Scribbling, overwriting, or making a mistake on a cheque without the payee's authorization (signature)
• Cheque Expiration
• Closure of the chequeer's account
• The chequeer stops the payment
• Death or insanity of the chequeer
• Cheque issued by an organization missing the stamp of the company
• Suspicion of a forged cheque.
What happens if the bank dishonors the cheque?
• As per the Negotiable Instruments Act 1881, the bank dishonors the cheque if the payee's bank account does not have sufficient funds. So it is a crime. In such a case, the bank issues a 'Cheque Return Memo' to the payee's bank, mentioning the reason for non-payment. In return, the payee's bank hands over the bounced cheque and memo to the payee.
• The payee can re-present the cheque within three months from the date mentioned on it or prosecute the payee legally. The payee has the right to sue if the payee goes ahead with the first choice and fails to make the payment even for the second time.
Punishment and penalty for a dishonored cheque:
• After receiving the complaint, the Court will initiate the case along with the relevant documents. If the payee is found guilty, he will be liable to imprisonment of up to two years and/or a fine of twice the cheque amount, as per Section 138 of the Negotiable Instruments Act 1881.
• Apart from this, banks also have the right to close the account of the defaulter (on repeated bounced cheque offenses) or close their book facility. The bank may levy a penalty on both the payer and the payee for the inconvenience, additional paperwork, and loss of the bank's time.
Why choose Vakilkaro?
Behind every successful law firm are the hard work of its advocate team and the trust of its clients. Advocates at Vakilkaro are well-experienced with the interpretation of statutes and have vast knowledge about every legal matter. If you have given someone a bounced cheque, you want to defend yourself and send a legal notice. So, you will need the best cheque-bouncing lawyer to fight your case. Nothing to worry about, as you can get India's top cheque-bouncing lawyer only from Vakilkaro. Vakilkaro is the first firm in India to make it possible to 'Send Cheque Bounce Notice Online' with 100% success in cheque bounce cases. Our expert cheque-bouncing lawyers create a strategy based on their vast experience.
Contact the best Cheque Bouncing Lawyer in Vakilkaro today. You can give us a call at 9828123489 or may write an Email also at email@example.com. We are here to serve you 24/7.
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What does cheque bounce mean?
• Suppose a person gives a cheque to another person or organization for payment. The person paying the money has a different amount in his bank account or due to any other reason. In that case, the cheque of that person is rejected. So this situation is called bounce of cheque or cheque dishonor.
How many years can be punished for cheque bounce?
• You may have to pay a fine for cheque bounce, as well as there is a provision for punishment. A case can be filed against cheque bounce under section 138. The person is imprisoned for two years.
If the bank imposes the cheque bounces, how much is the penalty for this?
• Different banks in India impose different penalties in the case of Cheque Bounce. This penalty depends on what was the reason for the cheque bouncing.
Under which law can a case be filed for cheque bounce?
• In the event of a cheque bounce, a case can be filed against the defaulter under Section 138 of the Negotiable Instrument Act 1881.
How to avoid dishonor or cheque bounce?
• If you want to avoid a situation like dishonor or cheque bounce, then while giving a cheque to any person or organization, you have to pay attention to whether the amount you are writing in that cheque is in your bank account or not. Along with this, you should also keep in mind that your signature on the cheque is correct, and the date or amount given in the cheque is written correctly.
For how long is the cheque valid?
• A cheque is valid for three months from the date it is drawn. If you use this cheque after three months, then it will not work. On the contrary, you may have to bear the loss.
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