Before we get into details, lets get some simple nomenclature right.
What is a Cheque: “Cheque is a negotiable instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument”
Drawer ,Payee and Drawee: Author of the cheque is called drawer and the person in whose favor the cheque is drawn is called payee and the bank on which the cheque is drawn is called drawee.
Cheque bounce is a legal offene under Negotiable instruments act 1881, If the drawer is individual then the proceeding will done under thesection 138 of negotiable instruments act If the drawer is a company then the managing director of the company will have to face the proceedings under the section 141 of negotiable instruments.
Below is the set of steps you need to do in case of cheque bounces
- A demand note needs to be sent within 30 days of the date of bounce of cheque
- Statement of debt
- Call too drawer for the amount due
- Information about the dishonour cheque with the help of the bank memo.
- Statement sent to the drawer to pay the amount within 15 days or they will have to face legal proceedings.
If the drawer does not make the payment then one can file the complaint in the court. For filing complaint the drawee has to submit various documents to the court:
- Any agreement showing the deal between both the parties
- Bill against the dishonour cheque.
- Evidence of the creation of the debt against the drawer.
- Dishonored cheque
- Bank memo stating the reason for the dishonouring of the cheque.
- Copy of legal notice sent to the drawer.
- Vakalatnama in favour of the lawyer.
After submission of the above statement the case is filed and proceedings takes place.
If found guilty, the defaulter is liable to be punished with monetary penalty twice the amount of the cheque or imprisonment for a term which may be extended to two years or both