Cheque Bounced Due to Signature Mismatch? Legal Light Consulting Explains Your Options.

If you’ve received a cheque that bounced due to a signature mismatch, it can be a frustrating experience, especially when it involves repayment of a loan. Legal Light Consulting is here to help you understand your rights and potential legal remedies.

The Situation:

You lent money to someone (the “principal debtor”). A friend of the debtor, acting as a representative, gave you a cheque for Rs. 5,000,000 as repayment. However, the cheque bounced because the bank determined the signature didn’t match the account holder’s records. You have the following evidence to support your loan transaction:

• Written Evidence:
  • Promissory note
  • Letters
• Digital Evidence:
  • Emails
  • WhatsApp messages
• Oral Evidence:
  • Witnesses

Key Information:

• The cheque return memo date is January 17, 2025.
• The bank branch that issued the return memo is UCO Bank, Supreme Court of India, New Delhi.

When a cheque bounces due to a signature mismatch, it can lead to complications. Let’s break down the scenario and the steps needed to address this issue, especially for a firm like Legal Light Consulting – LLC.

Cheque Bounce Issues

When filing a complaint, only the details of the transaction for which the cheque has been issued should be mentioned. In case of rebuttal by the drawer, the drawee may produce the above evidence to support the transaction.

Probable Remedies and Legal Actions

Criminal Proceedings

1. Criminal Complaint under Negotiable Instruments Act

• Relevant Sections:
  • Section 117: Rules Act to Compensation
  • Section 138: Dishonor of Cheque for Insufficiency of funds
• Territorial Jurisdiction: UCO Bank, Supreme Court of India (Return memo issuing branch).
• Limitation:
  • Notice should be served within 30 days from 17-01-2025.
  • If the cheque is still valid and notice has not been served, it can be re-presented to the bank within 90 days to revive the limitation period and initiate legal proceedings.
• Procedural Aspects:
  • Section 142: Cognizance of Offenses
  • Section 143A: Power to direct interim compensation
  • Section 143: Power of Court to try summarily
  • Section 145: Evidence on affidavit
  • Section 146: Bank’s slip prima facie evidence of certain facts
  • Section 147: Offences to be compoundable

2. FIR for Cheating

• Relevant Sections:
  • Section 318: Cheating (Previously Section 415 of IPC, 1860)
• Territorial Jurisdiction: UCO Bank, Supreme Court of India.
• Limitation:
  • To file a case before 17-01-2026 (1 year).
• Procedural Aspects:
  • Section 516: Exclusion of time in certain cases

3. FIR for Breach of Trust

• Relevant Sections:
  • Section 316: Criminal Breach of Trust (Previously Section 405 of IPC, 1860)
• Territorial Jurisdiction: UCO Bank, Supreme Court of India.
• Limitation:
  • To file a case before 17-01-2028 (3 years).
• Procedural Aspects:
  • Section 516: Exclusion of time in certain cases

Mediation

Mediation notice has been served as mandatory.

• Relevant Sections:
  • Section 28: Challenge to mediated settlement agreement
• Procedural Aspects:
  • Section 13: Territorial jurisdiction to undertake mediation
  • Section 18: Time-limit for completion of mediation
  • Section 21: Non-Settlement report
  • Section 27: Enforcement of mediated settlement agreement
  • Section 28: Challenge to mediated settlement agreement
  • Section 29: Limitation

Recovery Suit under CPC

• Relevant Sections:
  • Order 37: Summary Procedure
  • Section 73 of Indian Contract Act, 1872: Compensation for loss or damage
  • Section 146 of Indian Contract Act, 1872: Co-sureties liable to contribute equally
• Territorial Jurisdiction: UCO Bank, Supreme Court of India.
• Limitation:
  • To file a case before 17-01-2028 (3 years).
• Pecuniary Jurisdiction: District Judge
• Court Fees: Rs. 51,144.00/-
• Procedural Aspects:
  • Order 37 of CPC: Summary Procedure

Legal Light Consulting recommends exploring the following remedies:

1. Criminal Proceedings:

• Complaint under the Negotiable Instruments Act, 1881:
  • This is a common legal step for cheque bounce cases, even those involving signature mismatches.
  • Relevant Sections: Section 138 (dishonor of cheque) and Section 117 (rules for compensation).
  • Time Limit: You must send a legal notice to the cheque drawer within 30 days of the cheque bounce date (by February 16, 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 court procedures.
• FIR for Cheating (Bharatiya Nyaya Sanhita, 2023, Section 318):
  • If you suspect the cheque was given with fraudulent intent, you can file a First Information Report (FIR).
  • Time Limit: You have one year from the cheque bounce date (until January 17, 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 cheque bounce date (until January 17, 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 lawsuit to recover the loan amount.
• 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 cheque bounce date (until January 17, 2028).
• Pecuniary Jurisdiction: This case would fall under the jurisdiction of the District Judge.

Important Legal Advice:

• When filing a complaint, focus on the loan transaction and the bounced cheque.
• Be prepared to present all your evidence, including written, digital, and oral 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 advises seeking professional legal counsel. Signature mismatch cases can be complex, and your specific situation may require tailored guidance.

Notes

• Section 138 & 139 of Negotiable Instruments Act: It is the drawee’s responsibility to prove the existence of liability only if the drawer challenges it.
• Evidence: Can be physical or circumstantial.
• High Courts & Supreme Court Rulings: There are cases where the drawee failed to prove their point when challenged by the drawer.

Conclusion

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.