What is meant by cheque bounce?

When a bank returns a cheque because of Insufficient Funds in the account from which the money is to be drawn. The bank in such cases is said to bounce or return the cheque.

What is the procedure for a cheque bounce case?

The step by step process for this is as follows:

  1. The cheque has been dishonoured,

  2. After receiving the Bank endorsement, you should issue a legal notice to the person concerned.

  3. The notice is to be issued within 30 days by RPAD (REGISTERED POST) and thereon if the notice is received or returned unclaimed then you have to wait for 15 days for him to make the payment.

  4. After expiry of the 15 days, you should file a complaint before the Jurisdictional Magistrate within 30 days, under section 138 of the Negotiable Instruments Act of 1881 read along with Section 200 of the Cr.P.C.

What are some of the possible reasons for a cheque bounce?

  • Insufficient funds in the account of the drawer
  • Crossing the limit of the overdraft
  • Mismatch in the account number
  • An expired validity of the cheque
  • A Post-dated cheque
  • A Crossed cheque
  • Signatures are missing on the cheque
  • The bank is suspicious of a forged cheque
  • The cheque is presented at the wrong branch of the bank concerned
  • The account has been closed by the drawer
  • Payment stopped from the account by the drawer
  • The cheque does not have the seal of the company
  • The drawer is either dead or suffering from insanity
  • Signatures on the cheque mismatch
  • There is some difference in the mentioned amount in words and numbers
  • The cheque is disfigured or damaged
  • Scribbling, Overwriting on Cheque

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