Cheque Bounce Cases
A cheque bounce case is considered as a financial offence in India which can cause legal trouble for the issuer. NRIs settled abroad are required to be well-informed about the implications and legal consequences of a cheque bounce case. Section 138 of the Negotiable Instruments Act, 1881 is the primary law that governs cheque bounce cases in India and lays down punishment for anyone found guilty of cheque bounce.
Reasons For A Cheque Bounce:
Insufficient funds in the issuer’s bank account.
Signature of the issuer that is recorded in the bank does not matches.
- A disfigured or unreadable date is mentioned on the cheque.
- The validity of the cheque has been expired.
- The amount written in numbers and words do not match.
- A damaged or torn cheque.
- Some sort of overwriting or scrawling on the cheque.
- The bank has a suspicion of fraud or forgery related to the cheque.
- The account number to which the cheque is drawn does not match.
NRI clients situations:
- The client is the payee and any cheque issued to him (payable in India) has bounced.
- The client is the issuer and has been charged with cheque bounce case in India.
Two main types of cases that may be filed in lieu of cheque bounce are:
- Facing Criminal Charges: In case the reason for a cheque bounce is insufficient funds in the bank account, it is considered as a criminal offence and the payee (a person or a bank) can file a complaint under Section 138 of the Negotiable Instruments Act. The defaulter is also given a chance to appeal to the court.
- Facing Civil Suit: A separate civil suit can be filed by the payee for recovery of money as a criminal case does not help in recovering the pending dues. A cheating case under Section 420 of the Indian Penal Code may also be filed against the defaulter. The victim can also take a legal recourse.