Cheque Bounce? Know Your Rights with Legal Light Consulting

When a cheque bounces due to insufficient funds, it can be a significant inconvenience. Let’s explore what happens and what steps can be taken to address this issue, especially for a firm like Legal Light Consulting – LLC.

Scenario Overview

Has a cheque you received bounced due to insufficient funds? This can be a stressful situation, especially when it involves payment for goods or services you’ve already provided. Legal Light Consulting is here to help you understand your rights and options.

The Situation:

Let’s say you sold goods or provided services to someone (the “drawer”), and they paid you with a cheque for Rs. 500,000. Unfortunately, the cheque bounced. You have evidence to support the transaction, including:

• Written Evidence:
  • Memorandum of Understanding
  • Invoice
  • Letters
• Digital Evidence:
  • Emails
  • WhatsApp messages
  • Text messages
• Circumstantial Evidence:
  • Account statements

Key Information:

• The cheque bounce (return memo) date is January 27, 2025.
• The bank branch that issued the return memo is UCO Bank, Supreme Court of India, New Delhi.

What Can You Do?

Legal Light Consulting advises you to take the following actions:

1. Criminal Proceedings:

• Complaint under the Negotiable Instruments Act, 1881:
  • This is the most common action for cheque bounce cases.
  • Relevant Sections: Section 138 (dishonor of cheque) and Section 117 (rules for compensation).
  • Time Limit: You must send a legal notice to the drawer within 30 days of the cheque bounce date (by February 26, 2025). Alternatively, if the cheque is still within its validity period, and no notice has been served, you can represent the cheque again to the bank, before the 90 days of the cheque date, to revive the limitation period.
  • Procedural Aspects: Sections 142, 143A, 143, 145, 146, and 147 of the Act outline the court procedures.
• FIR for Cheating (Bharatiya Nyaya Sanhita, 2023, Section 318):
  • If you believe the drawer intentionally deceived you, you can file a First Information Report (FIR).
  • Time Limit: You have one year from the date of the cheque bounce (until January 27, 2026).
• FIR for Breach of Trust (Bharatiya Nyaya Sanhita, 2023, Section 316):
  • If there was a trust based transaction, and that trust was broken, you can file a FIR.
  • Time Limit: You have three years from the date of the cheque bounce (until January 27, 2028).

2. Mediation:

• Mediation is a mandatory step.
• Relevant Act: The Mediation Act, 2023.
• Key Sections: Sections 13, 18, 21, 27, 28, and 29.

3. Recovery Suit under the Civil Procedure Code (CPC), 1908:

• You can file a civil suit to recover the amount owed.
• Relevant Sections: Order 37 of the CPC (summary procedure) and Section 73 of the Indian Contract Act, 1872 (compensation for breach of contract).
• Time Limit: You have three years from the date of the cheque bounce (until January 27, 2028).

Important Advice:

• When filing a complaint, focus only on the transaction related to the bounced cheque.
• If the drawer disputes the transaction, be prepared to present your evidence.
• As per section 138 & 139 of Negotiable Instrument Act, Initially the burden of proof is not on the drawee, but if the drawer challenges the transaction, then the burden of proof shifts to the drawee.
• Legal Light Consulting strongly recommends seeking professional legal advice. Laws can be complex, and your specific situation may require tailored guidance.

This article is for educational and informational purposes only. The information provided here is intended to offer general knowledge about legal matters but does not constitute legal advice. Legal Light Consulting, as a law firm, does not take any responsibility for the accuracy or completeness of the content shared in this article.

Due to the complexity of legal processes and potential variations depending on your work/business type or location, it is highly recommended that you seek professional assistance from legal experts like Legal Light Consulting. Their experienced team of lawyers can guide you through various legal procedures and help ensure a smooth and hassle-free process

Disclaimer:

This article is for informational purposes only and does not constitute legal advice. For personalized legal assistance, contact Legal Light Consulting