Online banking is the most opted mode of transaction nowadays. But some people still transfer money in the traditional way by using cheques. We are sure that every one of you reading this has once in a while given or received cheque. But have you ever wondered what will happen if the cheque bounces or how will you proceed and send a legal notice for cheque bounce.

What is a Cheque bounce?

Cheques are negotiable instruments, which are payable on demand. When there is unsuccessful processing of cheque due to insufficient funds, incorrect amount or mismatch of signature, the cheque bounces. Most of the cheques bounces in India are due to insufficient funds.

What happens if there is a Check Bounces?

When the cheque bounces, the payee has to file a legal notice within 30 days of return memo from bank. After this, if the drawer makes the payment, there is no need to file the case. If he doesn’t make the payment then case has to be filed within 30 days.

Format for Cheque Bounce Notice

Drafting a legal notice is no joke. While drafting the cheque bounce notice, one needs to be extra cautious. Since it is intimation about a future legal action, we need to frame the notice accordingly. Once a notice is sent, we cannot make changes and we cannot go against the statements given in the notice. Only a legal expert can draft a full proof cheque bounce notice.

What are the requirements for legal notice for Cheque Bounce?

Following are the key requirement for Cheque Bounce notice-

• The Cheque should be towards a specific liability.
• Moreover, it should be within a validity period.
• The cheque should be returned due to insufficient funds.
• The notice should be given within 30 days of cheque bounce.
• The drawer has failed to make the payments within 15 days of Cheque bounce notice, legal action can be taken against him within 30 days.

The Procedure for Cheque Bounce Notice

• The Drawee has to firstly send a demand notice to the drawer within 30 days of return memo through a registered post.
• Once the notice is received, the drawer has to make the payment within 15 days.
• If the payments are not made the drawee has the right to lodge a complaint. 
• Once the Court receives complaint, the accused will be summoned.
• Proceeding will be initiated under Section 138 of Negotiable Instrument Act.

Ingredients of Cheque Bounce Notice

A Cheque Bounce Notice should contain the following elements-

• Firstly, it should have the details of the drawer
• Secondly, it should state that the Cheque is for the discharge of debt/liability in whole/part and not given as a gift or loan.
• The Cheque was present within the validity period.
• It should mention the return date of Cheque accompanied with reasons for such return.
• Additionally, one has to send a demand notice within 30 days of intimation of cheque bounce, giving 15 days time period for making payments.
• If the payments are not done accordingly, the drawer can approach the Court and file a criminal complaint under section 138. 
• Lastly, the notice should be sent through registered post.

Time limit for filing a suit

After receiving the bank return memo when a cheque bounces, you have to immediately issue demand notice within the span of 30 days from the receipt of information.

If the accused does not make the payments within 30 days from the receipt of the notice, we can file the complaint under section 138 of the Negotiable Instrument Act. A complaint has to be filed within 30 days.

If complainant delays in filing the complaint, an application for condonation of delay has to be filed stating the reason for delay or else you will lose your right to file a case under section 138.

Conclusion

Banks witness cheque bounce cases on a daily basis. Therefore in India, we have laws in place to help us handle cases of cheque bounce. Everyone should know what to do when a cheque bounces. It is always advisable to hire an expert lawyer who will assist you in filing and drafting of legal notice for cheque bounce.