Cheque bounce under section 138 NI Act
When a cheque which is presented by a payee to a bank is returned unpaid by the bank because of insufficient funds in the account of drawer, the cheque is said to have bounced. Cheque bounce is an offence under section 138 of Negotiable Instruments Act, 1881. After the cheque is bounced the payee has the right to initiate legal proceedings against the drawer.
The procedure to be followed for initiating case under section 138 of NI Act is-
- After the cheque is returned from a bank along with a memo stating insufficient funds, the payee must send a legal notice to the drawer asking for the payment. The notice must be sent within 30 days from the date when the cheque was returned.
- After sending notice, the drawer must pay back the payee or send a reply to payee within 15 days from the date of receipt of the notice.
- After the expiry of 15 days if the drawer fails to pay the payee, then the payee can file a complaint against the drawer within 30 days.
If the court finds the drawer guilty the drawer can be imprisoned for the period of 2 years or he will be liable to pay twice the amount of the cheque or both.
We here at Chaklan and Associates provide assistance in matters of Cheque Bounce and ensure justice for you.
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