Even though internet transactions are increasingly common, many consumers still prefer to pay with cheques. Today, it is regarded as a reliable method of money transfer. Let's learn all the relevant information.
You should be very careful while making a payment through a cheque. If there is a small error, the Cheque may bounce, and you can be required to pay a fine. In some exceptional cases, you may also face criminal charges for a bounced cheque and jail time. Understand the causes of Cheque bounces.
What are the reasons for the Cheque bouncing?
Cheques can bounce for various reasons, but the main ones are generally thought to include a lack of balance or insufficient funds in the account, a change in signature, a typographical error, an incorrect account number, overwriting, etc. In addition to these reasons, a cheque may bounce for various reasons, including cheque expiration, account closure, suspicion of forgery, failure to include the company's stamp on the Cheque, exceeding the overdraft limit, etc.
What happens when a Cheque bounces?
Customers must pay the penalty to banks if a cheque is returned unpaid. Depending on the circumstances, this fine may change. This fine may be between Rs. 150 and Rs. 750 or Rs. 800. In India, it is illegal to bounce a cheque.
A person may face charges if a cheque bounces under the terms of the Negotiable Instruments Act of 1881. He faces a maximum 2-year sentence in prison, a fine equal to the Cheque's value, or both. Yet, this also occurs when the bank refuses to honor the Cheque because there is not enough money in the account of the giver of the Cheque.
When does it come to trial?
The payer is not immediately sued after the Cheque is returned. When a cheque bounces, the bank first issues a receipt to the creditor explaining why the Cheque did not clear.
After then, the creditor has 30 days to notify the debtor in writing. If the debtor doesn't respond to the notice within 15 days, the creditor has one month from the day the 15-day response period expires to file a complaint in the magistrate court.
If the money is still unpaid after this, a lawsuit might be brought against the debtor. The bounce of a cheque is a crime according to Section 138 of the Negotiable Instrument Act of 1881, and in addition, there is a provision for a two-year prison sentence, a fine, or both.