What is Cheque Bounce Notice?

Cheques are an essential aspect of transaction in the modern economic world. Cheques also carry an added tension with them of non fullfilment of the payment due to lack of balance in the account. This is known as the case of cheque-bouncing. Action for recovery of bounced cheques is not rocket science, but requires prompt and timely action. The first step to be taken would be to send a letter (a demand notice,recommended to be done by lawyers as the demand notice is a document of serious contention at trial) to the party who wrote the cheque (the drawer), threatening to initiate proceedings if the amount due is not paid.

The threat of prosecution can often work its magic and result in prompt settlement. Demand notice must contain the following1.Statement that you presented the cheque within its period of validity;2.Statement of debt or legally enforceable liability;3.Information about the reason of dishonour of cheque (Check the memo of the bank returning the cheque for these);4.Calling upon the drawer to pay the amount due; and5.Statement that you are giving the drawer 15 days to pay up or you will initiate legal action.

Cheque Bounce Procedure

Step 1

Information about bouncing of cheque received.Demand notice must be sent within 30 days.The Demand notice provides the drawer 15 days to pay the amount.

Step 2

The notice should be sent by post or in case of paucity of time, by registered post. The proof of service of the notice must be preserved.

Step 3

It is the 15th day and no payment has still been received? You now have no more than 30 days within which to file a complaint before a magistrate.

Step 4

A complaint can be filed before the magistrate at the place where the bank in which the payee has account is located.

FAQs on Cheque Bounce

If during the validity of the cheque, after the demand notice has been sent by the payee, the drawer asks the payee to present the cheque again and it is yet again dishonoured, that doesn't mean that the drawer's time-limit under the demand notice has increased. The payee has to stick to the original timelines.
No, legal proceedings cannot be initiated for cheques that are issued as gifts or doantions as no legal liability exists.
Yes, demand notices can be sent for dishonour of cheque due to stop payment.

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