A cheque is commonly accepted to be a secure method of accepting or sending money. However, when it rebounds, it causes concern, misunderstanding and even grave legal problems. Cheques bouncing cases are prevalent in a city such as Chennai due to the fact that individuals use the cheque in renting, conducting business payment, loan repayments, and regular daily transactions. Not all people are aware of what to do in case a cheque is sent back unpaid. This guide describes the entire procedure in a simple language such that you are able to manage the situation without any panic.
What Is a Cheque Bounce?
Cheques bouncing occurs when the bank does not accept to process a cheque and returns it to the sender as bad cheque. The reasons may be varied: the absence of money, wrong application of writing cheque or the mismatch of the signatures. Cheque bounce is considered as a law crime in India in the Section 138 of the Negotiable Instruments Act. This implies that the individual who issued the cheque would be subject to prosecution in case he or she fails to pay the amount when they are issued with a notice. A bounced cheque will result in lack of trust, financial delay and even a court case should it not be settled well.
Reasons for Cheque Bounce
The cheque bounce may occur as a result of a number of banking or account-related problems. The most prevalent causes are the following:
Lack of Adequate Account Balance.
The commonest reason is that there is an insufficient amount of money in the bank account to meet the cheque sum. When this occurs, the bank will be automatic in rejecting the transaction.
Signature Mismatch
The cheque is to be returned without payment in case the signature on the cheque is not exactly the same as the signature which was deposited with the bank.
Cheque Damage or Overwriting on the Cheque.
Any correction, scribbling or tearing of the cheque can be invalid. Banks have strict guidelines where they reject cheques that are damaged or overwritten.
Expired Cheque Validity
The duration of a cheque is normally three months. When one deposits it after this time the bank will not process it.
Account-Related Restrictions
The account can also be frozen, closed, or placed on hold as a result of legal or administrative reasons. In these instances, all cheques that come out of such an account will bounce.
Cheque Bounce Case Procedure.
In the event of the bouncing of a cheque in Chennai, the law gives a very clear and time-limited procedure to be undertaken. Here are the key steps that will be undertaken:
Bank Memo and Return Slip
When a cheque is bounced back, the bank sends out a memo as to why the cheque bounced. The significance of this memo is that it serves as the initial evidence necessary to continue on with it. The memo is supposed to be gathered on the same day or the nearest day possible.
Making a Legal Notice to the Issuer.
The payee is supposed to complete within 30 days of the bank memo receipt a legal notice to the sending cheque issuer. This is a notice that has to clearly indicate the cheque details, the amount due and the cause of the bounce. The notice must also require the payment within 15 days, where the issuer will have an opportunity to resolve the issue.
Waiting the 15-Day Payment Period.
The issuer of the cheque has a time constraint of 15 days to complete the payment after getting the legal notice. In case this payment is made in this period, the problem is said to be solved, and no court case is necessary. In the event that payment is not done, the payee is capable of carrying out the subsequent step.
Filing a Complaint in Court
The complainant should be able to file a cheque bounce case within 30 days in case the issuer fails to pay within the 15 days. Such cases are submitted in Chennai in the Metropolitan Magistrate Court. The complainant has to provide evidence in the form of the bank memo, legal notice, postal receipts and cheque details.
Court proceedings and final judgment.
After filing the case, the court summons the issuer of the cheques. Both parties are listened to, evidence is analyzed and statements are taken. In instance where the issuer is convicted by the court, the penalties can be payment of the cheque amount, compensation, fine or imprisonment based on the intensity of the crime.
Conclusion
Chennai cases of cheque bouncing are a subject of strict and time bound legal process. Being aware of the process will allow you to act promptly and eliminate unjustified procrastination. Because of the collection of the bank memo, the receipt of the notice and the ultimate action of filing the case in a court, each step matters as far as guarding your financial rights are concerned.
