Understanding Cheque Bounce (Insufficient Funds) – A Guide by Legal Light Consulting

At Legal Light Consulting, we understand that dealing with a bounced cheque can be frustrating and stressful. If you’ve received a cheque that bounced due to insufficient funds, it’s important to know your rights and the legal steps you can take. This article explains the process in simple terms to help you understand your options.

What is a Cheque Bounce?

A cheque bounce occurs when a bank cannot process a cheque because the person who issued it (the drawer) does not have enough money in their account. In this case, the drawer of the cheque is also the buyer, and the cheque was given to you in exchange for goods or services you provided.

Evidence to Support Your Case

To prove that the cheque was issued for a valid transaction, you can use the following types of evidence:

1. Written Evidence
   • Memorandum of Understanding (MOU)
   • Invoice
   • Letters
2. Digital Evidence
   • Emails
   • WhatsApp messages
   • Text messages
3. Circumstantial Evidence
   • Bank account statements

When filing a complaint, only include details of the specific transaction for which the cheque was issued. If the drawer denies the transaction, you can present the above evidence to support your claim.

Key Details of the Case

• Cheque Amount: Rs. 500,000/-
• Return Memo Date: 27-01-2025 (the date the bank informed you the cheque bounced)

Legal Remedies Available

If a cheque bounces, you have several legal options:

1. Criminal Proceedings

• Under the Negotiable Instruments Act, 1881
  • Section 138: This section deals with the dishonor of cheques due to insufficient funds.
  • Steps to Take:
    • Serve a legal notice to the drawer within 30 days of receiving the return memo (by 26-02-2025).
    • If the cheque is still valid, you can re-present it to the bank within 90 days of the cheque date to restart the legal process.
  • Territorial Jurisdiction: UCO Bank, Supreme Court of India, New Delhi.
• Filing an FIR for Cheating (Under Bharatiya Nyaya Sanhita, 2023)
  • Section 318: Cheating
  • Time Limit: File before 27-01-2026 (1 year from the return memo date).
• Filing an FIR for Breach of Trust (Under Bharatiya Nyaya Sanhita, 2023)
  • Section 316: Criminal Breach of Trust
  • Time Limit: File before 27-01-2028 (3 years from the return memo date).

2. Mediation

• Mediation is a process where both parties try to resolve the dispute with the help of a neutral mediator.
• Under the Mediation Act, 2023:
  • Mediation is mandatory if a notice has been served.
  • If mediation fails, you can proceed with legal action.

3. Recovery Suit (Under Civil Procedure Code, 1908)

• You can file a civil suit to recover the cheque amount.
• Time Limit: File before 27-01-2028 (3 years from the return memo date).
• Court Fees: Rs. 7,224/-

Important Advice

• Under Sections 138 and 139 of the Negotiable Instruments Act, the drawer is presumed to be liable unless they challenge the claim.
• If the drawer challenges the liability, you must provide evidence to prove your case. This can include written, digital, or circumstantial evidence.
• Many court cases have been decided in favor of the drawer when the drawee (you) failed to provide sufficient evidence.

Why Seek Professional Help?

Legal processes can be complex, and the outcome often depends on the quality of evidence and proper legal representation. At Legal Light Consulting, our team of experienced lawyers can guide you through every step, ensuring your case is handled smoothly and effectively.

Disclaimer

This article is for educational and informational purposes only. It does not constitute legal advice. For personalized guidance, consult the legal experts at Legal Light Consulting. We are here to help you navigate the legal system with confidence.

If you’re facing a cheque bounce issue, don’t hesitate to reach out to us. Legal Light Consulting is committed to providing you with the support and expertise you need to resolve your legal matters.