Cheque Bounce Charges and Punishment
Cheque Bouncing has become a major issue in the financial world. There are tons of cases filed for dishonour of cheque everyday ! It is important for us to know the consequences of this in such a scenario. Can we go to jail if our cheque bounces someday ? What are the consequences one must face in such a case ?
Well its true , cheque bouncing is a criminal offence in india and may be punishable under the negotiable instruments act , 1881 .
Section 138 of the Ni act clearly states cheque bounce charges as follows :
If the person issuing the cheque does not have enough funds in his account as stated in the cheque causing the banker to return the cheque , the person drawing the cheque is deemed to have committed an offence. But , the following conditions must be met –
- The payee must send a legal notice & demand payment within 30 days of Cheque being rejected.
- The person who has drawn the cheque does not pay after 15 days of getting the notice.
- Cheque must be presented to bank within 6 months of the date it was drawn
A Cheque can be dishonoured due to a lot of other reasons like Account Closed , ‘Stop Payment’ instructions , Refer to drawer , Not a clearing member
What is the Legal Punishment i can be subject to if my cheque bounces ?
You may be subject to a fine of twice the amount stated in cheque or you may be punished with imprisonment of upto 2 years or both. This punishment depends upon the severity of the case and as per the judgement of the judge. There are no other cheque bounce charges other than the ones stated above.
Am i subject to charges even if my cheque is rejected due to signature mismatch ?
We have faced cases when our sign is rejected by the bank many times . Well , we must be aware that we may be subject to legal action even if a cheque is dishonoured due to signature mismatch. But , if the payee does not inform us in a written notice of the mismatch or the person drawing the cheque pays the amount within 15 days of getting the notice , he is not liable or deemed to have committed an offence.
What if the person who has drawn the cheque is dead ?
In such a situation , the case cannot be filed against the legal heirs of the person who has issued the cheque. Therefore no legal action is possible .
Does this law change for post dated cheques ?
Post dated cheques are considered as cheques only on the date written on it . So the 6 months period in which cheque must be submitted in bank is only applicable from the date written on it.