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Laws for cheque bounce

By: Makemymoney

A chequebook is issued to each account holder who holds an account in the bank. The people who use to issue cheque is known as drawer and person who receive the cheque is known as drawee. Let’s learn about the essential characteristics of the cheque and learn more about the law for cheque bounce. 

  • Banker has to be specified
  • It has to an unconditional order
  • It should be in writing
  • Payable on demand
  • Payment received by a specified person
  • Signature of the drawer is a must
  • Money should be clearly specified

What is Cheque bounce?

Cheque bounce is not a good indication but a sign of quick hurdle. There are so many factories when cheque can bounce. A cheque is said to bounce when it does not fulfil the following mandatory demands:-

  • Some fault in signature
  • overwriting in the cheque
  • The cheque was presented after the lapse of 3 months
  • Closed account
  • Alteration/Crossed cheque
  • Mismatching of account details
  • Insufficient fund in an account
  • Account holder ask to stop payment
  • Opening balance insufficient
  • A mistake in words and figure mentioned in the account
  • Crossing Limit of Overdraft
  • Issuing of cheque against the rule of trust

Legal help for recovering bounced cheque

In India, cheque bounce is a criminal offence. This crime is covered under section 138 of the Negotiable Instrument Act. If you are signing the cheque for making any payment then make sure you are not repeating any of the following by reading this useful guide:-

  • Demand notice
  • Drafting of complaint
  • Court process for filling the complaint

 Important things to be kept in mind

  • A delay in filing the complaint after the lapse of 30 days may be excused by the magistrate only in exceptional circumstances. Only in exceptional cases delay in filling complaint within 30 days will be considered else
  • Cheque bounce due to stop payment is also covered under Section 138 of the NI Act
  • For issuing a cheque for donation or gift a legal obligation is required. As such issued cheque is not counted under section 138 Act.
  • The cheque is valid for three months after that it gets expire from the date of issue.

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