How to file a cause against Cheque Bounce (u/s 138 of N.I. Act)

HOW TO FILE CASE AGAINST CHEQUE BOUNCE

Cheque bounce is a criminal offence under The Negotiable Instruments Act which deals with the subject of cheque bouncing, Cheque dishonor or Cheque return matters. Cheque bouncing happens when
a person has issued a Cheque without maintaining sufficient amount in his account as a result of the same when the Cheque is presented for encashment; the same is returned by the bank unpaid which is termed as bouncing of Cheque of Cheque.

STEPS INVOLVED

STEP-I:  NOTICE: Notice against bouncing of Cheque is to be issued within one month of the date of return of the Cheque by the bankers. Service of notice on the person issuing the Cheque is mandatory. Notice should be sent by Registered AD., Speed Post only. The purpose of notice is to make the person issuing the cheque aware that the cheque issued by him has been returned by the bank due to insufficiency of funds etc; in the account and he has to make arrangement for the amount within the stipulated period and intimate the banker as well as the person to whom the Cheque has been given by him.

STEP-II FILING OF COMPLAINT: The next important stage is to file a complaint case against cheque bounce and should be done carefully through an Advocate. The complaint is to be filed before the Magistrate of the area concerned within 30 days from the date of dispatch of notice under Section 138 of the Negotiable Instruments Act.

STEP-III NOTICE TO THE ACCUSED: The court issues notice to the accused in concern who has issued the cheque after the filing of the complaint and the person is required to appear before the court. The accused can further seek for bail in the matter.

STEP-IV EVIDENCE: The evidence should contain the cheque, the return memo issued by the bank and the record showing the service of notice to the accused and all other relevant documents in support of the matter which can prove that the accused is under legal obligation to pay the amount under dispute.

STEP-V PROCESS OF TRAIL: The court takes into consideration the records furnished by the complainant and the evidence in support. During the trial the complainant is asked to lead evidence during which he summons the records from the bank related to the cheque. The accused is given the opportunity to cross-examine. The accused is thereafter asked to lead his evidence and rebut the allegations against him.
The court then proceeds to dispose the matter on merits followed by arguments on all issues and the matter is decided accordingly.

STEP-VI PUNISHMENT: The punishment contained under Section 138 of the NI Act is two years and a penalty of the amount equal to two times of the amount as mentioned on the cheque.

The person who has issued the cheque can be jailed besides the direction to pay double the amount of money as mentioned on the cheque and the court may also impose the penalty on the said person.

ATTENTION: As per the latest judgment of Supreme Court, all cases filed under Negotiable Instruments Act for bouncing of cheques can only be filed within the territorial jurisdiction of the courts where the drawee bank is located. This limits the jurisdiction of filing of the cases against bouncing of cheques at all other places other than the drawee’s branch of the bank.

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