Kishan Dutt
How to Deal with False Cheque Bounce Case?

How to Deal with False Cheque Bounce Case?

A very reputed businessman, who had established various branches of his brand in different cities across India was accused of false cheque bounce case by a bank. The amount charged on him was huge as well. But he took the right decisions quickly without wasting time thinking about how his reputation is now harmed. He collected all the apposite documents and files and contacted a lawyer to file a legal notice within the timespan of 30 days. And since it was a false allegation on him, it was not much of a task for the bank to be proven guilty. 

If he would not have taken the said actions quickly and did not submit the notice on time ,i.e, within 30 days of receiving the notice from the bank, a warrant might have been issued against him and he would also have had to actually pay the amount for the false cheque bounce imputation. These accusations are generally to affect the reputation of a person and bring him down or go to jail. Although it might end up being a mistake on the banks side or the depositor of the cheque in some cases but mostly it is to bring down the prestige and position of the recipient of the cheque in the market.  

If you also are incriminated by a false cheque bounce case or just want to be aware about such happenings in the real world, this blog is for you. Everything starting from a basic definition of what is a cheque and cheque bounce to what you can do (other than panicking and stressing out )  if ever you are stuck in such a situation. To under false cheque bounce, first you must know what is a cheque, cheque bounce and the reasons for cheque bounce.

Cheque: A Cheque is an important part of the financial system in various countries across the world. A cheque is regarded as an important document which can be used by an individual, company or government for transactions of various amounts. A Cheque is also termed as a negotiable document to transport money in a physical form or even to perform inter-account transfer.

Cheque Bounce: The situation of cheque bounce means that the process of depositing cheque in the bank has been unsuccessful. It might be due to several reasons:

1.     When there are insufficient funds in the account of the issuer. It is therefore advised to be aware and careful while issuing a cheque to ensure that there is sufficient balance in the account of the issuer. 

2.     When the date mentioned on the cheque is disfigured or when the numbers are scribbled or even if the date on the cheque is 3 months old from the present date, then the bank can bounce the cheque.

3.     When the signature does not match with the bank’s records.

4.     When there is a difference in the amounts mentioned in numbers and words.

5.     When the cheque has too many stains or marks.

6.     When there is overwriting, scribbling or correction on a cheque.

False Cheque Bounce: Many people still prefer making their payments through cheques because of various reasons like cheques allow to make payment to people who do not have a bank account or few are not yet comfortable with net banking. But cheque bounce cases are rising in today’s time and the Indians courts are filled with these cases which are filed under Section 138 of the Negotiable Instruments Act,1881. 

These cases are usually to extract money from someone or to harm and spoil his/ her reputation. However, some cheque bounce cases amongst these cases are false cases and are not genuine cases which targets some innocent people who then end up facing legal issues because they lack the knowledge on what should be done.

How would you deal with a False Cheque Bounce Case?

The victim in such cases need not worry much about it as it is a false accusation and generally easily proved with the valid documents that there was enough balance or fund in the bank account of the issuer which would ensure there was no cheque bounce. 

Some important measures to take when a situation of false cheque bounce arises: 

1.     Collecting all the important documents – The most wise and smart thing to do when there is any false accusation to a person is to collect proof which will show him guilty of the charge put on him. Similarly, this case is no different and collecting the relevant documents which would prove me innocent and the bank guilty.

2.     Contact the bank and collect information regarding the dishonour of cheque- If your cheque bounces, the bank would send you notice informing you of the same. You have to then contact them and confirm if it has really happened and if it did what are the reasons.

3.     Hire a lawyer and reply to the legal notice of the bank – It is not easy to draft a legal notice and you should not take it lightly because once the notice is drafted and sent, you would not be able to change its content and have to stick to it. You would not be able to go against the statement written by you in your notice. So you must consult with a lawyer who deals with cheque bounce cases and reply to the notice about the cheque bounce case which you would have got from the check receiver. The reply should be sent within 30 days of receiving the notice. In many such cases of fraud and false accusation, the case is withdrawn once a legal notice is sent.

4.     File a counter case- You are legally allowed to file a counter civil case against the person who has filed a false cheque bounce against you. You can claim compensation for the false accusation. You can also claim the compensation for all the damages and expenses which you might have incurred for dealing with the fraud case with the bank. You can also file a defamation case against the false accuser.

Documents required for filing a counter case  

1.     Payment invoices 

2.     Bill generated when the payment was made

3.     The bank account statement

4.     Copy of the cheque issued

5.     Bank draft cheque

It is always a good idea to keep 2-3 copies of each document because sometimes you might have to submit the copies to the authorities dealing with the case. The process becomes quicker and hassle free when the documents are handy.

Section 138 in The Negotiable Instruments Act, 1881: Section 138 of the Negotiable Instruments Act 1881 provides the legal recourse to handle the situation of cheque bounce or dishonour of cheque.

This section has been very recently decriminalised. On 8 June, 2020 the Ministry of Finance proposed decriminalizing various minor offences “for improving business sentiment and unclogging court processes”, which also include Section 138 of Negotiable Instruments Act, 1881. The main purpose for decriminalising this section is to promote foreign investment in our country. Due to the Coronavirus Disease, the economy of our India has been affected badly and these steps would also help in boosting India’s economy.

But every action has its reaction and this step will lead the creditors to lose their confidence in the credibility of the cheque system.

Punishment for cheque bounce case: Section 138 of the Negotiable Instruments Act states the dishonour of cheque or cheque bounce is a criminal offence and the punishment includes imprisonment up to two years or monetary penalty or with both. 

If the court is convinced that you are guilty and the case of the bank has no merit then it will provide you all the charges.

Conclusion: False Cheque bounce cases along with other frauds cases are rising each passing day. It is very important to be aware about the different types of fraud and especially fraud related to monetary aspects like cheques because money is obviously involved in any job and work. Going by the saying ‘Precaution is better than cure’, it is always good to have knowledge about these frauds so that you can easily prevent that from happening or in some cases when it is not really in the hands of the person to prevent it, you at least know the cure to it. Having knowledge makes you capable of helping out someone stuck in that situation.


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