What Should You Do After Receiving a Cheque Bounce Legal Notice in India?
Cheque Bounce legal notice is always troubling. When someone receives such legal notice, they are worried that he may get arrested, a case will be filed against him and his image will get spoiled in market. This happens when cheque was given for business purposes, loan taken by him, buying property or even when he took some money from friends.
You must go through the legal notice and know the truth behind it and act accordingly within the stipulated time period. If you don't act upon receiving a legal notice you may face some trouble. But when you receive a cheque bounce legal notice, you need to know what procedure is being adopted and you are not at fault right away or court has given any orders against you.
When you receive a cheque bounce legal notice you need to pay the cheque amount asked in legal notice within 15 days of receiving statutory notice. Depending upon your scenario you can take different actions if the debt is true, if you have paid off your debt, whether the cheque was issued for lawful debt and whether all formalities are being met.
LEGAL365 will let you know what you can do when you receive a Cheque Bounce Notice. We can let you know all your options and what mistakes were committed in this process. If you live in Delhi NCR or any where in India you can contact us. Contact advocate BK singh of LEGAL365 to know about procedure you can adopt after receiving notice.
Why Does a Cheque Bounce Legal Notice Matter in India?
Generally speaking this is one step away from filing a criminal complaint under section 138. When you receive a cheque bounce notice it's usually to let the drawer of the cheque know that they need to deposit a certain amount of money within the time period. If this isn't met then the payee can normally file a complaint against them.
Take someone who runs a small business and issues cheques. Maybe their cash flow dried up and they weren't able to clear a cheque. Once they receive a statutory notice they will need to look at the balance amount that is owed. They'll also have to find out why their cheque was bounced and how much time they have to remedy the situation.
Whether its in ghaziabad delhi, gurgaon faridabad, meerut or anywhere in India you're going to run into these types of problems. You may also face personal issues if someone you lent money too bounces a cheque. Could be for land, paying back a friend etc.
It can get very expensive and stressful once a case lands on your plate. Whether you have to travel to court or hire a lawyer the repercussions of this are not good for your pocket or relationship with that person. If found guilty of committing this offence under section 138 you could face up to 2 years in prison or a fine which could be double the amount of the cheque.
You've received a notice, which simply means to take notice. It doesn't mean you did anything wrong. LEGAL365 can advise on what course of action to take when receiving these kinds of notices. There can be many differences between a legal notice asking you to pay a sum of money and being taken to court.
Quick Facts
As per Negotiable instrument act 1881 section 138.
- Normally 15 days from date of service of notice.
- When chequed details are received by bank notice to be sent normally within 30 days of such information.
- Limitation for complaint will be one month from date of cause of action subject to provisions of condonation of delay.
- Punishment can be imprisonment up to two years / Fine of double the amount of cheque or both.
It all depends on facts of the case . Liability of parties involved, payments made towards the same if any. Reason of cheque was given. Whether all procedural steps have been carried out as mentioned by statute.
It may be settled as well legally this would depend upon the situation and how the settlement
As mentioned earlier these periods are calculated based on sections 138 and 142 of negotiable instrument act. Depending on the case, what will be your last date to file a complaint.
What Is a Cheque Bounce Legal Notice?
When you receive a cheque bounce legal notice it is usually because the cheque has bounced and the payee/holder in due course has issued you with this demand letter asking you to pay the amount mentioned in the cheque. When issuing a legal notice with intent to take action under section 138 there are certain timelines which have to be adhered to.
A cheque can be returned by the bank if its insufficient balance or arrangement overdrawn etc. There could be various other reason for returning the cheque so check what is stated on the return memo of the cheque.
Just because you received a notice doesn't mean all queries are answered. Whether you are liable is what we have to establish by seeing if all conditions are fulfilled and the cheque was issued in discharge of a debt or any other legally enforceable obligation.
LEGAL365 can assist you in understanding the notice and see if it's for a debt not paid, transaction in dispute, cheque was paid for and cheque disputed.
Which Laws Apply to a Cheque Bounce Notice?
Negotiable Instrument act 1881 is the primary act which talks about dishonor of cheque under situation prescribed by the act. Various provisions talk about presumptions and liability on companies filing complaints and compounding offenses etc.
Section 138:-
This section comes into play when a cheque is issued from a bank account to meet any legally binding debt or obligation. If the cheque is returned unpaid by the bank for any of the reasons mentioned in this provision and the above mentioned conditions are fulfilled then it falls under section 138.
The cheque should be presented within a valid period of time. At present a cheque is valid for a period of 3 months from its date of issue. Once you receive intimation from the bank that your cheque has been dishonored you have to send a notice to the drawer within 30 days of such intimation. The drawer must make the payment within 15 days of such notice.
Section 139:- Presumption in favour of holder
A legal presumption exists that whenever a person receives a cheque it has been given to him towards discharging of debt or liability. Therefore if the person who receives cheque assumes that he can just repudiate the said fact he is mistaken.
Defence that one can take is subject to facts and law that apply in the particular scenario. Some of these could be bank statements, agreement receipts of money paid back letters between the parties and facts explaining why the cheque was issued.
Who Should Seek Guidance After Receiving a Notice?
It doesn't only pertain to individuals who may have intentionally written cheques for which there were no monies available. The notice could have occurred because a payment was missed or you may dispute how much you owe or what the payment was for.
You may find this helpful if you:
- Wrote a cheque for a personal loan.
- Have a supplier/customer that you may owe money to or a debtors that may have written a cheque to you.
- Are a student/working professional and may have entered into an agreement to repay money that you now feel you have been charged incorrectly for.
- Are a director/partner or can sign on behalf of a company that has written a cheque.
- May have paid part or full of the amount requested from you.
- Believe that the cheque has been misused or you may have given it to them as security or they may have deposited it against your instructions.
Each case will differ so if you have been served with this type of notice please contact Advocate BK Singh (LEGAL365). We will be able to inform you as to what questions we would require answered.
Which Documents Should You Keep Ready?
Good documentation often makes it easier to identify the actual dispute and assess the available options. Gather the following records before consulting a lawyer.
- The complete legal notice, including all pages and attachments.
- The envelope, postal tracking details or other proof showing when the notice was received.
- A copy of the cheque, if available, and the bank's cheque return memo.
- The loan agreement, invoice, purchase order or other document explaining the transaction.
- Bank statements and receipts showing payments made.
- For a company matter, the relevant business records and documents identifying the signatory's role.
Keep original documents safe and provide copies for review. Do not alter messages or create documents after the dispute merely to support a defence.
What Happens If You Ignore a Cheque Bounce Notice?
If you don't comply with a statutory notice. There could be further steps initiated by the drawer as long as the requirement of Section 138 is fulfilled. On expiry of the 15 days for payment. A cause of action will vest with the payee to initiate a complaint within the period of limitation.
It is not guaranteed that there would be a conviction. Complainant will have to prove the offence. And Accused will have option to plead all legal defense open to them.
Businesses can incur cost of litigation and time from daily schedule for appearances at Court. For individuals they are unsure of what to expect which could affect their finances and family life. If a notice was sent pertaining to a Cheque of a Company. Then what liability will lie with the Company and who all can be liable for a business depends on Section 141.
Just because you haven't received any notices from Court does not mean that it has come to an end. You can reach out to us at Advocate BK Singh (LEGAL365) to know more.
When Should You Consult a Cheque Bounce Lawyer?
Get legal advice if 15 days are approaching. Especially if the debt is in dispute or you are unsure that the cheque was payable against an owing debt. Getting legal advice as soon as you receive one can also be beneficial if the notice is for a business, relates to an older transaction. If its a security cheque or you made payment before receiving the notice.
Your lawyer will be able to assess the notice, transactions and your bank statements. From this information they will advise you of what to do. It may be to pay the debt, negotiate a settlement. Provide a response to the notice or prepare for Court proceedings.
If a claim has already been lodged then get advice regarding your Court Summons. Whether you need to appear in Court and what options you have. Always remember that your response to the notice will not be the same as what is required at Court.
How Can LEGAL365 Help With a Cheque Bounce Notice?
LEGAL365 will guide you in case you want to know more about Cheque bounce in India. Depending upon documents in hand and amount & situation the case stands at we can suggest you our services.
You can ask us for guidance in checking notice and date's. Transaction which has happened, collecting payment evidence and points to be mentioned in your reply. If settlement is your aim then we will guide you with terms to be documented and due process of law to be followed.
If you are wondering about Court process Advocate BK Singh LEGAL365 can inform you about it. It is always advised to follow summons issued and save evidences.
Wherever you are in Delhi/Noida/Ghaziabad/Gurugram/Faridabad/Lucknow/Mumbai/Bengaluru or anywhere in India. Our first step would be to know your facts and what deadline and choose a lawful response. No lawyer can guarantee a particular outcome, but a timely, evidence-based assessment can help you make an informed decision.
Frequently Asked Questions
1. What action should I take if I received Cheque Bounce Legal Notice?
Firstly you need to look through the notice and see how much money was written on the cheque and take note of the date on which you received the notice. It would be best if you could talk to a lawyer since most cases demand you to pay within 15 days of receiving the statutory notice.
2. Should I pay the notice within 15 days?
When it comes to cheque bouncing as stated in section 138 under the Negotiable Instruments act you usually have 15 days to pay off the cheque which was asked in the statutory notice. But there might be certain things you should consider before proceeding with this.
3. Can I write back to the person who sent me the legal notice for bounced cheque?
Yes you can. Just make sure you state your side of the story and what your stance is as a defendant. A simple response will not count towards your time of repaying the money back to them so make sure you gather enough information before taking action.
4. Will I Go To Jail After Receiving a Bounced Cheque Notice?
If you have received a notice that your cheque has been bounced its not like you will be sent to jail immediately. There could be certain implications that may occur if a case is made against you. Under section 138 you can be sentenced to jail for up to 2 years or a fine equal to the doubled amount of the cheque or both.
5. I have already paid the money can anything still happen?
Make sure to have your bank statement handy to prove that you did in fact pay the money. Have your lawyer assess what will happen next and if there is anything that can be done about the notice.
6. Can you issue a bounced cheque notice for a security cheque?
Just because a cheque was issued as security doesn't mean you cannot receive a legal notice for a bounced cheque. The judge can look into why you issued a cheque as security and determine if there was a legitimate debt to pay.
7. Can a person object to receiving a Bounced Cheque Notice?
Yes there are many ways a person can object to receiving a bounced cheque notice. You could have possibly paid the money off or there could be something else in the transaction. Just speak to your lawyer about this and they will let you know if it's worth challenging the case.
8. Can a cheque bounce notice be settled out of court?
Cheque bouncing can be considered a compoundable offence. Which means you can come to an agreement with the payee of the cheque and pay them what is owed. If there are any current cases going on you will need to speak with your lawyer on how to clear them.
9. What if I don't pay my bounced cheque notice?
The person you owe can decide to press charges against you if their demands are not met within time limit. Not acting on your notice can lead you to more costs and hassle when dealing with this type of dispute.
10. How can LEGAL365 help me with my Cheque Bounce legal notice?
By contacting LEGAL365 they can assist you in understanding your rights when receiving a cheque bounce legal notice. Advocate BK Singh(LEGAL365) will be able to tell you what steps you can take once provided with your notice.
Final Thoughts
A bounced cheque notice can be intimidating and demands an immediate response. However, rushing things never helps. So calm down, check the dates, confirm the amount, safeguard your proof and then assess whether you should pay up, propose a documented compromise or respond with legally advisable action.
Start by understanding that a notice is NOT a judgment against you. What you do next depends on reality on what actually happened when the cheque was presented, on the provisions of the law and on how far the matter has progressed.
Need assistance reading a notice or advising on how best to prepare in the event of legal proceedings being initiated? Contact LEGAL365 today and we'll provide you with a tailored analysis. Advocate BK Singh (LEGAL365) will walk you through your options and highlight deadlines that must be met.
