INTRODUCTION
A cheque bounce is a serious financial and legal issue in India. This happens when a cheque submitted by the payee is dishonoured by the bank because of insufficient balance, signature mismatch, or other such reasons. When this happens, the cheque issuer typically receives a legal notice demanding payment. But what if you ignore this legal notice? Understanding the consequences and the legal framework is essential for both the cheque issuer and the payee.
What is a Cheque Bounce Legal Notice?
An IA legal notice for cheque bounce is an official intimation issued by the payee (the person entitled to receive the money) to the drawer (the issuer of the cheque). It notifies the drawer about the dishonor of the cheque and demands payment within 15 days of receiving the notice. This notice serves as a prerequisite under Section 138 of the Negotiable Instruments Act, 1881, a specific law that addresses cheque bouncing and its penalties.
Consequences of Ignoring the Legal Notice:-
Ignoring a cheque bounce legal notice can have serious repercussions. Here’s what typically happens:
- Filing of a Complaint: After the 15-day period from receipt of the legal notice expires without payment, the payee has the right to file a criminal complaint against the cheque drawer under Section 138 of the Negotiable Instruments Act.
- Legal Proceedings: Filing the complaint initiates criminal proceedings, and the drawer becomes liable to appear in court. The accused may face trial, and if found guilty, they can be punished with imprisonment for a term which may extend to two years or a fine which may extend to twice the cheque amount, or both.
- Loss of Reputation and Creditworthiness: A cheque bounce case adversely impacts the individual’s credit rating and reputation in financial circles, which may affect future lending and business transactions.
- Attachment of Property: In some instances, if the court grants permission, the complainant may proceed to attach and sell the property of the cheque issuer to recover the dues.
- Civil Liability: Apart from criminal prosecution, the payee may also pursue civil action to recover the amount through a civil suit for recovery of money.
Why Should You Respond to a Cheque Bounce Notice?
- Avoid Criminal Proceedings: Early payment or amicable settlement after receiving the notice can prevent legal complications.
- Negotiate Settlement: It may be possible to discuss a payment plan or settlement with the payee, avoiding court cases.
- Legal Defense: If there are valid reasons against the cheque bounce (e.g., cheque was post-dated or payments made), responding promptly helps in mounting a defense.
Steps to Take If You Receive a Cheque Bounce Notice:-
- Review the Notice: Cross-check details such as cheque number, transaction amount, and the stated reason for dishonour.
- Consult a Lawyer: Understand your legal position and possible defenses.
- Respond Promptly: Either by clearing the payment or sending a formal reply stating your case.
- Negotiate Settlement: If payment is difficult, try to reach a mutual agreement with the payee.
Precautions to Avoid Cheque Bounce Notices.
- Maintain Sufficient Funds: Always ensure adequate balance in your account before issuing a cheque.
- Verify Cheque Details: Avoid errors in signature or cheque writing.
- Use Electronic Alternatives: Where possible, use electronic payment modes to minimize cheque bounce risks.
- Monitor Bank Statements: Regularly check your account status to avoid accidental bounces.
Conclusion
Ignoring a cheque bounce legal notice can escalate into serious legal troubles, including criminal prosecution and financial liabilities. It is crucial to treat such notices with importance, respond on time, and try to resolve the issue either through payment or negotiation. Being proactive not only helps avoid legal complications but also preserves your financial reputation and creditworthiness. Proper financial management and timely communication remain the best defenses against cheque bounce issues.
FAQs
- How long do I have to respond to a cheque bounce legal notice?
You have 15 days from the receipt of the notice to make payment or respond. - Can a cheque bounce lead to criminal charges?
Yes, under Section 138 of the Negotiable Instruments Act, cheque bouncing is a criminal offense punishable by imprisonment or fines. - What if I genuinely do not have funds when the cheque bounces?
You should communicate with the payee immediately, possibly negotiate settlement or arrange payment to avoid legal action. - Is ignoring the legal notice a good idea?
No, ignoring the notice can lead to criminal prosecution and worsen your legal and financial position. - Can the complainant sell my property if I ignore the notice?
Yes, through court permission, attachment and sale of property can be ordered to recover the dues under legal proceedings.
