When someone writes a bad cheque for Rs. 10,00,000/- or any other amount, they usually don’t realize that they need to take action right away. They might think that they will just pay the bill later, or that they will figure something out when they get paid again. In reality, the only safe course is to arrange funds so the cheque is honoured, or to pay the amount within 15 days of the demand notice; instructing the bank to stop payment does not avoid liability and is itself treated as dishonour under Section 138.
Know the Rules.
If you write a bad cheque, you could face serious consequences. You could even go to jail. So before you write a bad cheque for any reason, make sure you understand the rules. Find out whether you’re allowed to write cheques at all. Cheque with your bank to see if there’s anything special about your account. And find out what happens if you bounce a cheque.
Don’t Panic.
A bounced cheque isn’t as big a deal as you might think. In fact, it’s not uncommon for people to bounce cheques every once in awhile. However, bouncing a cheque can cause serious financial damage. That’s why it’s important to learn how to avoid writing bad cheques in the first place.
Contact the Bank.
If you have issued a cheque that is likely to bounce, the safest course is to pay the payee directly and obtain the cheque back, or to arrange funds before it is presented. Instructing the bank to stop payment does not avoid liability under Section 138 if the cheque was issued for a legally enforceable debt, and once the payee’s demand notice arrives you have only 15 days to pay the amount and avoid prosecution.
Know the Basics of Cheque Bounce Case.
Once the cheque is returned unpaid, the payee must send a written demand notice to the person who wrote the cheque within 30 days of receiving the bank’s return memo. The notice tells the drawer that the cheque has been dishonoured and demands payment of the cheque amount. The drawer then has 15 days from receipt of the notice to pay. If the amount is not paid within those 15 days, the payee can file a complaint for cheque bounce under Section 138 of the Negotiable Instruments Act within one month thereafter.
Understand the Cheque Writing Process.
A cheque “bounces” when the drawee bank returns it unpaid. The commonest reasons are insufficient funds in the drawer’s account, a stop-payment instruction, a signature that does not match the bank’s record, an over-written or stale (more than three months old) cheque, or a closed account. Under Section 138 of the Negotiable Instruments Act, a return for insufficient funds or because the amount exceeds the arrangement with the bank is an offence; the courts have also treated “stop payment” and “account closed” returns as falling within the section when the cheque was issued for a legally enforceable debt.
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To more about the complete process of a cheque bounce case and Indian Law
