Cheque has become an integral part of today’s every transaction/business/loan etc. & thus everyone has to deal with the issue related to cheque at least at some or the other point of time in a life time. The legal action initiated for cheque bounce case is under section 138 of the Negotiable Instruments Act,1881. The said action initiates a criminal case which if proved has provision of up to two years of imprisonment & up to double the cheque amount against the accused. The cheque needs to be issued by the drawer on an account maintained by him.
Meaning/Definition:
1.Drawer : The author of the cheque is called the drawer
2. Payee – The person in whose favour , the cheque is drawn is called payee
3.Drawee– The bank which is directed to pay the amount is known as the drawee
Reason for issuance of cheque – The cheque should be issued towards discharge of a debt or liability.
Cause Of Action : The drawee bank issues a cheque return memo to the banker of the payee mentioning the reason for non payment & gives the dishonoured cheque & the memo to the payee. The payee can resubmit the said cheque within 3 months from the date on it if he believes it will be honoured the second time.
Process : Action under the aforementioned Act is initiated by issuing a notice in writing to the drawer of the cheque within 30 days from the date of receiving the dishonoured cheque & the memo giving the drawer , 15 day’s time to repay the amount mentioned in the cheque.
If no payment is made within the period specified in the notice , criminal case is filed before the court of concerned Judicial Magistrate First Class . If payment is made by the drawer after issuance of notice, the cause of action ends.
Recently, the Honb’le Supreme Court has held that the security cheque also attracts the provisions of the Negotiable Instruments Act.
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