I Did Not Pay My Loan And My Cheque Bounced. What Legal Action Can The Company Take Against Me?
- Lead india
- Oct 26, 2023
- 3 min read
Although there are many different reasons why a cheque could bounce, the Act considers it to have done so when there is not enough money in the account of the drawer. With a return message citing insufficient funds as the cause, the bank must reject the cheque that was given for payment. In this situation, the drawer of the cheque may receive a notice that the cheque has bounced, requesting payment of the whole amount.
Remedies against Cheque Bounce
Resubmitting a cheque: When a cheque fails owing to overwriting, an incorrect signature, an inconsistency between the amount written in words and figures, or a damaged cheque, the payee may request that the drawer submit another cheque to make up for the error. If the drawer declines to submit a replacement cheque, the payee may launch a civil lawsuit to recover the full amount of the overdue payment, not just the cost of the rejected cheque.
Legal notice for cheque bounce: When a cheque bounces because there isn't enough money in the drawers' account to cover the cheque amount, a notification of cheque bounce is the Negotiable Instruments Act's Section 138, issued. The payee may request resubmission of the cheque if the cheque bounces for any other reason than insufficient money, in which case no notice of cheque bounce can be provided.
Release of a cheque bounce notice
The first step after a cheque bounces owing to inadequate funds is to demand payment by sending a written notification of the cheque bounce by the Negotiable Instruments Act. Within 30 days of receiving notification from the bank and the bounced cheque, the payee may send a notice saying that the bank is unable to pay the amount due to insufficient funds, on the cheque.
The drawer has 15 days from the day the cheque bounce notice is received to pay the amount due after the payee issues the notice that the cheque has bounced. The payee may file a lawsuit against the drawer within 30 days of the expiration of the 15-day grace period if the drawer does not reimburse the cheque amount even after the expiration of the grace period.
A cheque bounce notice, however, cannot be issued if the payment was made as part of a donation, gift, or any other unenforceable obligation. An offense under the Act requires that the cheque be written to discharge a lawfully enforceable claim.
Cheque Bounce Suit Procedure
The following is the procedure for a cheque bounce suit:
Filing a complaint with the Magistrate after the drawer has had 15 days to respond to the legal notice for non-payment of loan.
The payee/complainant must show up in court and present the circumstances of the issue.. If the complainant's testimony satisfies the magistrate that this is the case, he will issue an order compelling the drawer to appear in court.
The drawer will show up and either confirm or refute the information provided by the complaint. If the drawer rejects the complaint, the court will move forward with the case's criminal trial.
The drawer/accused will submit his statement, and both parties' arguments and supporting documentation will be given to the court.
If the drawer is found guilty of the cheque bounce offense, the court will issue a judgment of conviction against the drawer.
Cheque bounces result in a maximum two-year sentence in jail, a fine that can reach twice the value of the cheque, or both. The drawer may potentially be subject to a civil lawsuit to recover the cheque amount. The payee cannot send a notice of a bounced cheque in the event of the filing of a civil lawsuit. Only a legal notification may be given by the payee to demand payment.
Under Section 138 of the Act, checks that bounce due to insufficient money are criminally prosecutable. Contrarily, the civil lawsuit for recovery simply allows for the recovery of the cheque bounce amount and does not punish the drawer.
The corporation may be served with the notice of cheque bounce. According to Section 148 of the Act, a business that issues a cheque that bounces because there is not enough money on it can be sued criminally. The corporation and its directors would be held accountable for the check-bouncing violation when a criminal case is brought under Section 148 of the Act.
Lead India provides several legal services, including online resources and free legal advice. The best course of action is to talk to a lawyer and ask a legal question.
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