Cheque Bounce Rules: Many people still make payments by cheque. Sometimes the cheque also bounces. In such a case, the person issuing the cheque can be jailed and fined.
Today, banking transactions have become much faster, easier and more convenient than before, especially due to digital payments. UPI, internet banking, mobile wallets and card payments have made transactions a matter of a few seconds. Despite this, payment by cheque is still in vogue. In terms of payment, cheque is also considered an important document, but a large number of cheque dishonour cases are also coming to the fore. What is a dishonoured cheque, what can be the reasons for it, how to avoid it, what can be its effects and if such a case happens to you, how to deal with it? Supreme Court advocate Atul Jain is giving information about this.
What is a cheque?
A cheque is a written order which instructs the bank to pay the amount written in it to a specified person or institution on demand. A cheque is a written proof of payment which can be used as a legal document later. In many businesses and government organizations, cheques are considered more reliable. A cheque is an easy option for transferring a large amount at once.
What is cheque dishonour?
Sometimes the bank refuses to pay the cheque amount due to some reasons. This is called cheque dishonour. In such a case, financial problems can arise for both the issuer/payer/drawer and the payee and legal problems can arise for the person who issued the cheque. When the bank returns the cheque after dishonour, it also attaches a return memo or note with it in which the reason for returning is written. In case of dishonour, legal action can also be initiated against the person who issued the cheque, especially when the cheque is dishonoured intentionally or issued with the intention of fraud.
What does the law say
Section 138 comes under the Negotiable Instruments Act, 1881 under Indian law. This law says that if someone gives a cheque and it gets dishonoured due to lack of money in the bank or any other reason, then it will be considered a crime. There can be punishment for this. The crime under section 138 is considered a kind of quasi-criminal case. This means that this case is actually related to a personal or civil dispute but the law can also give criminal punishment (such as jail or fine) in it. Cheque dishonour usually happens with the intention of fraud, mistakes or negligence.
Difference between dishonour and bounce
The word dishonour is big. It also includes cheque bounce. There can be many reasons for cheque dishonour but if the cheque is returned due to lack of money in the account then it is also called cheque bounce. However, the word dishonor has been used in section 138, while the word bounce is more common.
Check dishonor refers to a process, while dishonored cheque is the cheque which the bank has refused to accept. Both words are used, but dishonored cheque is more appropriate in legal language.
What is the rule for a blank cheque?
If a person just signs a cheque and gives it to someone in a blank form (without filling in the amount, date, name) and gives permission that the person can fill in this information later, then such a cheque is considered valid according to the law. If later that cheque is filled and deposited in the bank and it bounces, then section 138 can be applied on the issuer. Therefore, a blank cheque should be given thoughtfully and responsibly.
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