Understanding Cheque Bounce Due to Signature Mismatch
Understanding Cheque Bounce Due to Signature Mismatch
A cheque bounce occurs when a bank cannot process a cheque, leading to its return or dishonor. One common reason for this is a mismatch between the signature on the cheque and the specimen signature the bank has on record. Such discrepancies can arise from changes in one’s signature over time or simple signing errors.
Legal Implications in India
In India, the dishonor of a cheque due to a signature mismatch is addressed under Section 138 of the Negotiable Instruments Act, 1881. The Supreme Court has clarified that a cheque returned for a signature mismatch constitutes an offense under this section. This means that the cheque issuer (drawer) can face criminal proceedings if the issue isn’t rectified promptly.
Steps to Take When a Cheque Bounces Due to Signature Mismatch
Immediate Communication: If you’re the payee (the person expecting the payment), inform the drawer about the bounced cheque as soon as you receive the bank’s return memo.
Issuance of Demand Notice: Legally, you must send a written notice to the drawer within 30 days from the date you received the bank’s return memo. This notice should demand the payment of the cheque amount.
Waiting Period: After the drawer receives your notice, they have 15 days to make the payment. If they fail to do so within this timeframe, you have the right to initiate legal action.
Filing a Complaint: You can file a complaint under Section 138 of the Negotiable Instruments Act. This should be done within 30 days after the 15-day waiting period has lapsed.
Case Example
Consider a scenario where Mr. A lends Rs. 5,00,000 to his friend, Mr. B. To repay this loan, Mr. B issues a cheque to Mr. A. However, due to a discrepancy between Mr. B’s signature on the cheque and the bank’s records, the cheque is dishonored.
In this situation:
Evidence Supporting the Transaction:
- Written Evidence: Promissory notes or letters detailing the loan agreement.
- Digital Evidence: Emails or WhatsApp messages discussing the loan and repayment terms.
- Oral Evidence: Witnesses who were aware of or present during the loan agreement.
Legal Remedies Available to Mr. A:
- Criminal Proceedings: Filing a complaint under Section 138 of the Negotiable Instruments Act for cheque dishonor.
- Civil Proceedings: Initiating a recovery suit under Order 37 of the Civil Procedure Code, 1908, to recover the loan amount.
Important Considerations
Timely Action: Adhere to the specified timelines for sending notices and filing complaints to ensure your legal actions are valid.
Gathering Evidence: Maintain all relevant documentation and communication records to support your claim in court.
Legal Consultation: Given the complexities of legal procedures, it’s advisable to consult with legal professionals to navigate the process effectively.
Conclusion
A cheque bouncing due to a signature mismatch is a serious matter with potential legal consequences for the drawer. As a payee, understanding your rights and the necessary legal steps is crucial to address the issue effectively.
Always consider seeking professional legal advice to guide you through the process and ensure compliance with all legal requirements.
This article is for educational purposes only and does not constitute legal advice. For specific legal concerns, consult with a qualified legal professional.
