CHEQUE BOUNCE CASE
Cheque is a negotiable instrument. Normally, cheques are issued either for the reason of statutory requirement or for the reason of securing proof of payment. Crossed and account payee cheques are not negotiable by any person other than the payee. It has to be deposited into his bank account. In legal parlance, author of the cheque is called ‘drawer’, the person in whose favour it is drawn is called ‘payee’ and the bank who is directed to pay the amount is called ‘drawee’. It is always safe to issue crossed “Account Payee Only” cheques in order to avoid its misuse. Blank cheques are not safe. It is better to date the cheque invariably. A cheque is valid for payment only for six months from the date mentioned in the cheque. After the period of six months, such a cheque is called ‘stale cheque’.
A Cheque Bounce case is a criminal case envisaged under section 138 of Negotiable Instruments Act. A cheque is said to have bounced because of below mentioned reasons.
1) Signature is not matching
2) There is overwriting in the cheque
3) Cheque was presented after lapse of three months, i.e. after the cheque has expired
4) Account was closed
5) Insufficient funds in the account
6) Payment stopped by the account holder
7) Opening balance insufficient
8) Disparity in the words and figures mentioned on the cheque
9) In case the cheque is issued by a company, the same does not bear the seal of the company
10) Mismatch in account number
11) In case of joint account where both signatures are required, only one sign is there
12) Death of the customer
13) Insolvency of the customer
14) Insanity of the customer
15) Crossed cheque
16) When a cheque is issued against the rules of trust
17) Alteration in cheque
18) Doubt in genuineness of the cheque
19) Presented at the wrong branch
20) Crossing limit of overdraft (OD)
Conditions necessary for cheque bounce
1) The cheque is bounced due to insufficiency of funds or all the above reasons.
2) A Legal notice is given within 30 days.
3) A payment of due amount is not made within 15 days time.
4) The payment was to be made for discharge of legally enforceable debt.
You can get arrested for a cheque bounce in India. As it is an offence under section 138 Negotiable Instruments Act, 1881.