What is a Bounced Cheque?

There are different modes of payment. You get a share of money for the services that you offer to an individual or a company.

However, there are times when the sum that you are supposed to get surpass the ability to be exchanged in terms of liquid cash, and in situations like these, it becomes imperative to use a different mode of payment.

The most popular mode of payment aside from cash is through issuing a cheque in the name of the withdrawer. But, a cheque often comes with certain complications, the most prominent one being bouncing of cheques. In this article, we discuss what your discourse should be if a cheque bounces and if you can press legal charges against the one pays in case the cheque bounces. Take a look:

When Does A Cheque Bounce?

A cheque is rendered as a bounced cheque in two different scenarios. First, if the payer of the cheque has ‘insufficient funds’ in his bank account; and second, if the amount cited in the cheque exceeds a previous amount agreed by the payer and the bank. In these two cases, the cheque can bounce.

Bounced cheques are quite common, especially in the business world, but one shouldn’t forget that it can have dire consequences on the payer. The consequences can range from being charged with criminal charges to an inability in getting loans from the bank in the future.

So, is a bounced cheque a criminal offense in India? Let’s find out.

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Bounced Cheques: Criminal Charges And Penalties

To begin with, a bounced cheque can lead the withdrawer to press legal charges against the payer. So, yes, a bounced cheque is considered as a criminal offense in India. The payee can press criminal charges under Section 138 and Section 141 of the Negotiable Instruments Acts, 1881, of the Indian Penal Code. Once a cheque is ‘dishonored,’ the payee has to send a legal notice to the payer saying that in case the amount is not paid to him/her, then he/she will have to press legal charges. However, if the payee fails to register a complaint against the payer in the first 30 days of the bouncing of a cheque, the jurisdiction might not entertain the case due to the limitation of time.

But, if the payee presses legal charges and the payer is held guilty under Section 138 and Section 141 of the IPC, then he/she will have to pay twice the amount of money cited in the bounced cheque to the payee. One must also remember that a bounced cheque drastically brings down the credit score of an individual. Due to this, he/she may be rendered ineligible for taking up loans in the future.

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So, there you have it. All you had to know about bounced cheques. If you found this article informative, let us know in the comments below.

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