Cheque Bounce Law

Cheque bounce law in India is governed by the Negotiable Instruments Act, 1881, which provides for the legal framework for the use of negotiable instruments such as cheques, promissory notes, and bills of exchange. Under this act, a bounced cheque is a criminal offense, and the drawer of the cheque can be prosecuted.

Here is a brief overview of cheque bounce law in India:

Reasons for Cheque Bounce: A cheque may bounce due to various reasons such as insufficient funds, mismatched signatures, alterations in the cheque, or if the cheque has been post-dated or stale and if the drawer has stopped payment of the cheque.

Legal Action: If a cheque bounces, the person to whom the cheque is issued (the payee) can send a legal notice to the drawer of the cheque (the issuer) within 30 days of the cheque bouncing, demanding payment of the amount. If the drawer fails to make the payment within 15 days of receiving the notice, the payee can file a criminal complaint against the drawer.

Punishment: The punishment for cheque bounce can range from a fine to imprisonment, depending on the amount of the cheque and the number of times the cheque has bounced.

Jurisdiction: The complaint can be filed in the court within whose jurisdiction the bank that dishonored the cheque is located.

Limitation Period: The complaint must be filed within one month of the expiry of the 15-day notice period.

Overall, cheque bounce law in India aims to deter people from issuing cheques without sufficient funds and to protect the rights of the payee. It is always advisable to seek legal advice if you are involved in a cheque bounce matter.


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