What can one do in case cheque is bounced?
What legal action one can take in case of cheque is bounced ? what can one do in case cheque is bounced?
In case a cheque is bounced, the payee or the person to whom the cheque was issued can take several legal actions against the issuer of the cheque, also known as the drawer. Some of the most common legal actions include:
Filing a complaint under Section 138 of the Negotiable Instruments Act, 1881: This section criminalizes the act of issuing a cheque that is returned for insufficient funds or any other reason. Once a complaint is filed, the drawer can be punished with imprisonment for a term of up to two years or a fine or both.
Filing a civil suit for recovery of the amount due: The payee can file a civil suit in the court of competent jurisdiction for recovery of the amount due under the cheque. The court can order the drawer to pay the amount along with interest and costs.
Filing a complaint for recovery of damages: The payee can also file a complaint for recovery of damages suffered as a result of the cheque being returned. The court can award damages to compensate the payee for any financial losses suffered as a result of the cheque being returned.
Issuing a legal notice: Before filing a complaint, the payee can issue a legal notice to the drawer, giving him a last chance to make the payment and avoid legal action.
Arrest warrant: If the drawer does not appear before the court or does not comply with the court’s order, the court can issue an arrest warrant for the drawer’s arrest.
Attachment of property: The court can order the attachment of the drawer’s property to recover the amount due under the cheque.
It is important to note that the legal action should be taken within the period of limitation, which is typically three months from the date on which the cheque was presented for payment and returned. Additionally, the payee should have a valid cause of action and should be able to prove that the cheque was issued for a lawful consideration and that it was presented for payment within a reasonable time.
It is also essential to note that the payee should have demanded the payment of the cheque amount before filing the complaint under Section 138 of the Negotiable Instruments Act. The payee should also be able to prove that the cheque was issued by the drawer and it was presented to the bank for payment.
It is highly recommended to consult a lawyer before taking any legal action, as the legal process can be complex and may require a thorough understanding of the laws and regulations related to cheque bouncing.