How to file case in court of law against cheque bounce ?

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Have your cheque ever bounced or dishonored by the bank? Are you also facing difficulty in recovering payment due from your debtor ? Looking for how to file case in court of law against cheque bounce? This article provide you information on what to do if your cheque is bounced / dishonored by bank? Making payment through cheque is considered to be most convenient and less risky as compared to cash mode of transaction.

But there may be another hurdle of cheque being bounced or dishonored by bank. There may be any reason for dishonor of cheque discussed in our last article “10 common reason for dishonor of cheque”.  Bank may dishonor the cheque if signature on cheque differs, fund is insufficient, alteration or overwriting, payment stopped by drawer, account is closed, dormant account etc.

What is Cheque Bounce or Cheque Dishonor ?

A person issue a cheque to another person to make payment, ordering his/her bank to pay a certain sum of money mentioned in cheque. But bank return the cheque unpaid if fund or balance held in credit of account holder is not sufficient to honor the cheque or they may be another reason as we already discussed. It is known as cheque bounce or cheque dishonor. Bank issued a memo along with returned cheque which is known as Cheque Return Memo in which the reason for dishonor is mentioned.

How to file case in court of law against Cheque Bounce or Cheque Dishonor

Before proceeding you must be clear about the terms – payee, drawee, drawer which are well discussed in details in this article – What is a Cheque – Definition, Types of Cheque and Features

Lets recall these terms, person who write or issue the cheque is known as drawee and the person who is intended to receive the payment of cheque or in whose favour cheque is drawn is called Payee and bank who is directed to pay the amount is known as Drawer.

Legal Aspect of Cheque Bounce

Legal Aspect of Cheque Bounce Punishment Penalty
Legal Aspect of Cheque Bounce Punishment Penalty

Section 138 of “Negotiable Instrument Act 1881” is applicable for cases pertaining to Cheque bounce or Cheque dishonor. As per section 138 under NI Act, dishonour of cheque is a criminal offence and is punishable with monetary penalty or imprisonment up to 2 years or both.

One important point to be noted is that you can file court case only when accused is under obligation to make payment for discharge of legal duty. In case of Gift Cheque, there is no such obligation so you cannot enforce it through court.

Process – Step by Step – How to file court against Cheque Bounce

As per section 138 under NI Act 1881, the complainant can file the case against cheque bounce in the court under whose jurisdiction the bank comes and where the cheque was presented for payment. Following steps to be followed to file court case against cheque bounce :

STEPS TO FILE COURT CASE AGAINST CHEQUE BOUNCE
STEPS TO FILE COURT CASE AGAINST CHEQUE BOUNCE

Demand Notice / Cheque Bounce Notice –

Issuing a demand or Cheque bounce notice to drawer is first step of filing court case against cheque bounce. In this, payee must send the drawer a cheque bounce notice with reference to section 138 by registered post or speed post within 30 days from the date when the cheque was dishonored or bounced. Cheque Bounce Notice is a firm intimation to drawer about cheque bounce and legal action proceeding if payment of cheque is not made immediately and it should be clearly mentioned in the notice.

The following information should be mentioned very clearly in the notice :

  • Statement regarding cheque presentation within its validity period of 3 months
  • Statement of debt / Legal enforceable liability
  • Reason for Cheque Bounce (as mentioned in Cheque Return memo)
  • Demand to make the payment within 15 days and initiation of legal action after this

The proof of sending demand notice and acknowledgement of delivery to drawer should be preserved to present it in court. After receiving demand notice, drawer can make funds arrangement in his/her account within 15 days of receipt of notice to get the cheque honored by bank to avoid legal proceedings against him/her and intimate the same to payee.

File Complaint –

If accused doesn’t reply to demand notice or deny to make payment of cheque. The complaint may be filed before the magistrate of the area within 45 days from the date of notice dispatch under section 138 of NI act, 1881. The complaint against cheque can be filed before the magistrate in any of the following area –

  • Where the cheque was presented
  • Where the cheque was drawn
  • Where the cheque was dishonored
  • Where the demand notice was sent by you

Documents required to file court case against Cheque Bounce

  • Complaint
  • Original bounced Cheque along with Cheque Return Memo (issued by bank)
  • Legal Notice copy issued by Payee (payee is the person who is intended to get the payment or in whose favour cheque is written)
  • Original Receipt from PO for having sent the legal notice and delivery acknowledgment
  • Original Reply Notice issued by Drawer (the person who issue the cheque is known as drawee)
  • Any Proof or document that shows that money is legally recoverable from drawer of cheque

Court Notice to Accused –

After the complaint being filed by payee, court issue summons to the accused person who owe the money to person who filed the complaint.

Evidence –

The complainant put forward all the evidences like Original Bounced Cheque, Cheque Return Memo, Record of sending demand notice to accused and all other relevant documents in support of his/her case to proof that accused is under legal obligation to pay the stated amount in bounced cheque.

Punishment and Penalty –

After the whole trail process If found guilty, the accused can be punished with a monetary penalty which may be double of the amount of cheque or imprisonment up to 2 years or both.

Bank can also stop cheque book facility and close the account as per RBI guidelines.

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