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A cheque bounces or is considered to be dishonoured when it is presented for payment , but due to reasons such as insufficient balance in the account, overwriting, expired validity of the cheque among various others, the payment is rejected by drawee bank and cheque cannot be cleared. Cheque bounce cases are very common in India with close to 30 lakh cheque bounce cases pending as per reports of the Supreme Court.

Some reasons why a cheque is rejected are:

• Due to insufficient balance in the account
• Expired validity of the cheque
• There is overwriting in the cheque
• The cheque is damaged
• There is signature mismatch
• Mismatch of amount or digits

The following remedies are available in case of cheque bouncing:

• The cheque is resubmitted After being informed about the cheque bouncing through ‘cheque return memo’, the issuer of the cheque has an opportunity to rectify the error which has caused the cheque to bounce and can then request the payee to resubmit the cheque. The payee must ensure that the cheque is deposited within three months of being issued.
• Notice of recovery In the event that the cheque bounces for the second time, the payee has the option of sending a recovery notice to the payer. The recovery notice demands that the issuer of cheque transfer the funds due within 15 days, failing which the recipient would file a complaint under Section 138 of the Negotiable Instruments Act. The recovery notice has to be sent within 30 days of receiving the bounced cheque from the bank.
• Filing of complaint In the event that the cheque issuer ignores the recovery notice, the payer has the option of filing a complaint under section 138 of Negotiable Instrument Act, 1881 within 30 days before the Judicial Magistrate. Upon being found guilty, the cheque issuer would be fined or sentenced to imprisonment by the Magistrate.
• Civil complaint Besides a complaint under Negotiable Instrument Act, the aggrieved party can also file a summary suit under Code of Civil Procedure,1908 for recovery of money.

• There is high likelihood of recovering the disputed amount.
• It results in quick recovery of money.
• It is likely that the defendant would be punished by the court.
• The process of recovery of money is not very expensive.

A cheque bounces or is considered to be dishonoured when it is presented for payment , but due to reasons such as insufficient balance in the account, overwriting, expired validity of the cheque among various others, the payment is rejected by drawee bank and cheque cannot be cleared.

Yes, the recovery notice has to be sent within 30 days of receiving bounced cheque.

Is there any deadline for filing a suit under Negotiable Instrument Act, 1881?

Yes, the suit has to be filed within 30 days of sending recovery notice to cheque issuer.

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