Some customers make use of their overdraft account wherein the banks would cover cheques which would otherwise bounce.
The customer will pay interest on the outstanding balance of an overdraft loan. When availing a home loan, it is important to check if your account has sufficient money. If the processing fee cheque gets bounced, the bank might reject the sanctioned loan immediately.
Thus, ensure you always maintain the minimum average balance and avoid any irregular or unusual bank transactions. Recurring cheque bounces can affect your financial credit history which can make it difficult for you to avail loans in future. If a cheque is bounced citing insufficient funds in bank account, it is a criminal offence and the payee - the person or the bank - can file a complaint under Section of the Negotiable Instruments Act.
The holder is given a chance to resubmit the cheque to the bank within a period of three months of the date mentioned on it. The aggrieved party can also legally prosecute the defaulter by sending a legal notice within 30 days of receiving the cheque return memo.
Mentioning all important facts pertaining to the case in the notice is vital. This includes nature of the transaction, amount, date of depositing the cheque and when it was dishonoured by the bank.
Energy Power. Services Advertising. Sanjeev Sinha. Rate Story. Font Size Abc Small. Abc Medium. Abc Large. ET Online. Kumar, a businessman, always prided himself on being financially well organized. From maintaining a monthly financial budget to keeping accounts, he was sure that he was keeping a tight leash on his numbers, be it personal or business-related. On further research, he learned that an unintended and inadvertent cheque bounce was the culprit Cheque bounce, in fact, is one of the most common financial offences in India that can lead to disastrous consequences for the issuer.
Here is a look at the various ways in which a bounced cheque can affect you: Penalty by the bank: If your cheque happens to bounce due to insufficient funds or any other technical reason like signature mismatch, both the defaulter and the payee are charged by their respective banks. If the bounced cheque is against the repayment of any loan, you would have to additionally bear the late payment charges which vary from Rs to Rs along with the penalty fee charges by the bank.
Securities and Exchange Commission BankBazaar. Under the lens NFRA member under lens for audit gaps in fraud-hit firm; cloud over selection process for regulatory posts. In this regard, it may be pertinent to point out that recently in the case of MSR Leathers v. That such presentation will be perfectly legal and justified was not disputed before us even at the Bar by the learned counsel appearing for the parties and rightly so in the light of the judicial pronouncements on that question which are all unanimous.
Such a decision to defer prosecution may be impelled by several considerations but more importantly it may be induced by an assurance which the drawer extends to the holder of the cheque that given some time the payment covered by the cheques would be arranged, in the process rendering a time-consuming and generally expensive legal recourse unnecessary. It may also be induced by a belief that a fresh presentation of the cheque may result in encashment for a variety of reasons including the vicissitudes of trade and business dealings where financial accommodation given by the parties to each other is not an unknown phenomenon.
If the entire purpose underlying Section of the Negotiable Instruments Act is to compel the drawers to honour their commitments made in the course of their business or other affairs, there is no reason why a person who has issued a cheque which is dishonoured and who fails to make payment despite statutory notice served upon him should be immune to prosecution simply because the holder of the cheque has not rushed to the court with a complaint based on such default or simply because the drawer has made the holder defer prosecution promising to make arrangements for funds or for any other similar reason.
There is in our opinion no real or qualitative difference between a case where default is committed and prosecution immediately launched and another where the prosecution is deferred till the cheque presented again gets dishonoured for the second or successive time. The Supreme Court held thus that the prosecution based upon second or successive dishonour of the cheque is also permissible so long as the same satisfies the requirements stipulated in the proviso to Section of the Negotiable Instruments Act.
An earlier contrary decision of a two-judge bench of the Supreme Court in the case of Sadanandan Bhadran v. Palaniappan case. He is the founder of this law portal. Read more by clicking here. List of his articles. List of his Forum Replies. List of his Quora Answers. List of his YouTube Videos.
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