Dishonored cheque is taboo for a cheque that cannot be managed because the account holder has insufficient fund or better known as non-sufficient funds (nsf). In above mentioned cases there are two option either banks return or bounce these cheque, rather than honoring them, and banks charge the cheque writers non-sufficient fund fees or can penalize as passing bad cheque can be offence, and the crime can ranked from a violation to a crime, depending on the amount and whether the action involved crossing state lines.
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Punishment for dishonor of cheque due to insufficiency of funds:
Section 138 of the Negotiable Instruments Act has prescribed for penalties in case a cheque gets dishonored because of low balance in account or better called insufficiency of funds. When a cheque is withdrawn by any person from his account to give it to another person, it can get dishonored due to the following reasons –
- Low balance in account.
- The cheque amount is crossing the decided amount arranged to be paid from that account.
In the cases which are above mentioned, the person who draws the cheque is considered to be the offender and is liable to be punished under the statute for duration of imprisonment maximum of two years. The individual whose cheque gets dishonored is also accountable to pay a fine which can be up to double the amount of cheque.
Nonetheless, in order to bring the drawer of the cheque for penalty following conditions need to be satisfied –
- Cheque should be accessible to the bank within a period of three months (previously it was 6 months) from the date stated.
- In case the cheque gets dishonored, the holder of the cheque should demand payment by giving anauthorized notice to the drawer in text in the time limit of 30 days of the receipt of evidence of nonpayment by the bank.
- Even after receiving notice if the drawer of the cheque is unsuccessful to make the payment within the limited time, which is 15 days from the receipt of notice.
Cheque bounce laws protect receivers of cheque in the event the cheque is return unpaid for reasons such as insufficient funds or stop payments.
Section 138 of the Negotiable Instruments Act (NI Act) outlines the laws governing cheque bounce matters in India.
But what it seems easy in writing is not feasible for common man in this hectic life and in practical we need a lawyer to drag the drawer and to penalize the concerned person for his offence that can be only done through efficient legal team which is solved by legal resolved by providing Top Lawyer for cheque bounce in Pune.