New Cheque Bounce Rule

In August 2021, the Reserve Bank of India (RBI) made a new rule about cheque payments. Now, people who use cheques must keep a minimum balance in their bank account. If there isn’t enough money in the account, the cheque will bounce. Also, the person who gave the cheque might have to pay a penalty.

Along with this, the RBI announced that the National Automated Clearing House (NACH) will work 24/7, including Sundays. This means cheques can now be cleared on any day of the week.

This rule applies to all public and private banks. It was made to make cheque processing faster and smoother.

Reasons for Cheque Bounce

A cheque can bounce for many reasons. Here are the common ones:

• Not enough money in the account – If the account doesn’t have enough money, the bank won’t clear the cheque and will return it.
• Cheque expired – A cheque must be used within 3 months. After that, it becomes invalid.
• Overwriting – If there are any writing corrections or changes on the cheque, the bank may reject it.
• Damaged cheque – If the cheque is torn, dirty, or hard to read, it might bounce.
• Wrong signature – If the signature on the cheque doesn’t match the bank’s records, it will bounce.
• Amount mismatch – If the amount written in words and numbers is different, the cheque will bounce.

What You Can Do If a Cheque Bounces

1. Ask to Resubmit the Cheque:

• If the cheque bounced due to a simple mistake like a wrong signature, overwriting, or a mismatch in the amount, you can ask the person to give a new cheque. If they refuse, you can take civil legal action to recover the amount.

2. Send a Legal Notice – Section 138 of the Negotiable Instruments Act:

• If the cheque bounced because of insufficient funds, you can send a cheque bounce notice under Section 138 of the law. But this notice is only allowed if the cheque was given for repayment of a debt or legal payment, not for gifts or donations.

How to Send a Cheque Bounce Notice

After the cheque bounces, you must send a written notice within 30 days of receiving the bank memo and the bounced cheque.

The person who gave the cheque has 15 days from receiving the notice to pay the amount.

If they don’t pay in 15 days, you can file a case in court within 30 days after the 15-day period ends.

What to Do After Sending the Notice

The person who gave the cheque (the drawer) can either pay the money or reply to the notice. It’s best to consult a lawyer before replying.

There is no fixed format for the reply, but it should include:

• Address the reply to the drawee’s lawyer.
• Name and address of the drawer.
• Details about the cheque (issue date, bank memo, etc.).
• Answers to the claims in the notice.
• Any points against the drawee.
• Summary of the defence.

The reply should be on the lawyer’s letterhead.

If the drawer doesn’t reply or pay in time, the payee can file a legal case.

How to File a Cheque Bounce Case

After 15 days of sending the notice, if there’s no payment, the payee can file a case under Section 138 of the Act. This is a criminal offence.

The case should be filed within 30 days of the 15-day period ending.

Where to File the Case

The case can be filed in the Magistrate’s court in places like:

• Where the cheque was written.
• Where the cheque was submitted.
• Where payment was supposed to happen.
• Where the cheque bounced.
• Where the notice was sent.

If it’s in a big city, file before the Metropolitan Magistrate. Else, file before the Judicial Magistrate.

Steps in a Cheque Bounce Case

File a complaint within 15 days of the notice.

• The complainant goes to court and presents the case.
• The court calls the drawer to appear.
• The drawer can accept or deny the claims.
• If denied, the trial begins with both sides presenting evidence.
• If the drawer is found guilty, the court will impose a punishment.

Punishment for Cheque Bounce

• Up to 2 years jail
• Or fine up to double the cheque amount
• Or both

You can also file a civil case just to recover the money. But in that case, you cannot send a cheque bounce notice. You can only send a legal notice for payment.

Stricter Penalties for Cheque Bounce Cases

In accordance with the rule, if someone intentially creates condition of bouncing cheque, then punishment period for those individuals have now increased from one one year to two years in prison. Also, the accused may be asked fo submitting fine of amost double the cheque price.

Under the amended law, if a person intentionally causes a cheque to bounce, the punishment has now been increased from one year to two years of imprisonment. Additionally, the offender may be required to pay a fine up to twice the cheque amount. But there are still exceptions for cases where the cheque bounced due to technical issues or bank errors.

Cheque Bounce Charges by Banks

Banks charge a penalty fee when a cheque bounces. This fee can be between Rs. 100 to Rs. 750, depending on the bank and the cheque amount. Both the person writing the cheque and the one receiving it may be charged.

Also, if a case goes to court, legal costs may also be added.

So, if a cheque bounces, the payee should inform the drawer right away. The drawer should either give a new cheque or ensure there’s enough money in the account. If not, the payee can send a legal notice or file a case to recover the amount.

Techniques Through Which Cheque Bounces Can Be Avoided

Below are listed a few tips following which cheque bounces can be avoided:

• Always mention the current date on the cheque.
• Don’t give out cheques that are torn or damaged.
• Make sure you have enough money in your account before writing a cheque.
• Draw two parallel lines on the cheque (crossing it) so it can’t be cashed directly.
• Write the amount clearly in both words and numbers.

Other Methods of Payment

To overcome the risks related to the cheques, the following digital payment modes can be used:

• UPI
• NEFT
• RTGS

Always check your bank balance before writing a cheque. If you think it might bounce, let the person know ahead of time and try to pay in another way.