Theme: Money & Property

Precautions to be taken by customers to avoid cheque bouncing

To avoid cheque bouncing, as a customer who is issuing a cheque you should:

  • Ensure that the cheque has CTS 2010 written on it.
  • Preferably use image-friendly coloured inks like blue and black while writing cheques. Avoid using inks like green and red.
  • You should also avoid any alterations/corrections once you have written the cheque. Preferably, use a new cheque leaf if you need to make any alterations/corrections as the cheque may be cleared through image-based clearing system.
  • Make sure that your signature on the cheque is the same as the signature in the bank records. Otherwise, your cheque may be declined and the bank may penalize you.

Time Period for Filing a complaint for cheque bouncing

There is a specified time period for filing a complaint about cheque bouncing. You must file the case in court within one month after the 15 day notice period has expired. The Court will not entertain your complaint beyond that time period. However, if you can show sufficient cause for why you did not file within the one month period, the Court may excuse the delay and allow the case.

Settlement out of court for cheque bouncing

In a cheque bouncing case, there is a possibility for settlement out of court. When a criminal complaint is filed for a cheque bouncing case, the law allows for settlement. This is done through a legal concept called compounding of offences.

In this process, the payee/holder of the cheque agrees to not file a court case or agrees to withdraw his court case in exchange for some compensation (usually monetary).

This can happen at any stage of the court proceedings.

The law allows such an agreement to reduce litigation and burden on courts.

Punishment for Cheque Bouncing Cases

Cheque bouncing is both a civil and criminal offence. You can file a civil suit to recover your money as well a criminal complaint to punish the person for bouncing your cheque. The proceedings for both will happen in two different cases. You can choose to file only one case or you can file these cases simultaneously.

In a civil suit, the remedy available to you is repayment of the cheque amount along with interest. Whereas, in a criminal complaint, the defaulter/drawer of the cheque can be punished with jail time of up to two years, and/or fine up to twice the amount of cheque.

Arrest for Cheque Bouncing

Cheque bouncing is a criminal offence and you can be arrested by the police. However, it is important to note that the police cannot arrest you without a warrant.

In most cheque bouncing cases, a warrant for your arrest is issued if you do not appear before the Court after being summoned. The crime of cheque bouncing is bailable.

In a scenario of multiple cheque bouncing cases, you can be accused of the crime of cheating under the Indian Penal Code. Then the crime is non-bailable.

Where to file a complaint to recover cheque amount?

Complaint to Recover the Cheque Amount

Such a complaint is a civil complaint. In order to recover your money, you need to file a money suit either in the City Civil Court or the District Court depending on how much amount you are looking to recover.

You have to file this case within three years of the Cheque Return Memo.

For further assistance in filing a money suit, please contact a legal professional.

Complaint to Punish the Issuer of the Cheque

This is  known as a criminal complaint and can be filed before a magistrate where either:

For Crossed Cheques

In the area where your home branch is, i.e. branch of the bank where you have an account.

For Bearer or Order cheques

In the area where the branch of the drawee bank is, i.e. the bank from which the cheque was drawn on.

A criminal case cannot be initiated unless you have a Cheque Return Memo, hence the cheque needs to be deposited in the bank.