Here's a guide to the legal recourse available to you if a cheque bounces....
Bounced cheques are one of the most common offences plaguing the financial world.A
cheque can be dishonoured for various reasons, the most common being insufficient funds in the account of the person drawing the cheque, and a mismatch of signatures with the bank records. But what do you do if you land a bad cheque? Here's a
step-by-step guide to the legal recourse that is available to you.
Filing a criminal complaint
When a cheque bounces the first time, the bank issues a 'cheque return memo', stating the
reasons for non-payment. The holder can resubmit the cheque to the bank within three
months of the date on it, if he believes it will be honoured the second time.
The other option would be to prosecute the defaulter legally. The first step is to send a
legal notice to the defaulter within 30 days of receiving the cheque return memo.
If you fail to file the complaint within this period, your suit will become time-barred and,
hence, not be entertained by the court unless you show sufficient and reasonable cause
for the delay. On receiving the complaint, along with an affidavit and relevant paper trail,
the court will issue summons and hear the matter. If found guilty, the defaulter can be
punished with a prison term of two years and/or a fine, which can be as high as twice the
cheque amount.
Filing a civil suit
While the above-mentioned process is helpful in taking a defaulter to task, it may not
always result in recovery of the pending dues. Hence, one can file a separate civil suit for
recovery of the cheque amount, along with the cost borne and the nlost interest.
Exceptions
These legal remedies are available only where pending debt or liability can be clearly
established. Hence, if a bounced cheque was issued as a donation or as a gift, the holder
cannot legally sue the defaulter.
Source : Economic Times.
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