Negotiable Instrument Act

If a cheque received by you got bounced, what will you do?
As per the N.I. Act, you have to send a notice within 15 days from the date of intimation. Notice should be send to the Registered office as well as in the name of the proprietor/partners/directors (as the case may be) by Regd. post.

In the notice, one has to mention the details of transaction under which cheque was given, the details of cheque (No., date, amount, name of the bank), when you had deposited the said cheque in your account and when did you receive the intimation about dishonor of the cheque. Don't forget to mention the reason for bouncing of cheque. It is mentioned in the intimation letter issued by your bank. In the concluding para, make the demand to pay the cheque amount within 15 days, filing which, action would be taken under the provisions of N.I. Act. You can download the notice format.

Don't panic and don't rush to the advocate for taking legal action. You've got 15 days time for that. First try to settle the matter amicably through common friends and intermediaries. Keep 7 days for this. If you receive a part of the amount, always obtain an undertaking that the remaining amount would be paid within a stipulated period. If the party is offering Post Dated Cheques, accept it. Try to avoid the litigations as far as possible.

Instead of advocate, you can also draft and send the notice of your own. It is absolutely not mandatory that only an advocate can give the notice. Preserve the acknowledgment receipts.

If you do not receive the amount within 15 days, then you have the option to initiate criminal proceedings under N.I.Act. (Sec. 138 & 142). If the reason for cheque bounce is "A/C Closed," then Sec. 420 of Indian Penal Code can also be included. If the amount is big, discuss your advocate for filing F.I.R. in the concerned police station.

If you forget to give the notice within 15 days, don't worry. The validity of the cheque is 6 months. Just intimate the party by Regd. post that you are re-depositing the cheque on a particular date, so kindly arrange the funds. after receiving the acknowledgment receipt, you can safely send the notice by virtue of fresh cause of action.

As per the Act, the court must dispose the case within 6 months. But practically it is not possible for varied reasons. A recent report says that more than 5 lacs cheque bouncing cases are pending in Maharashtra alone. It is a very time consuming process. Apart from advocate's fee, you have to attend each & every court hearing because it is a criminal proceeding. In civil matters, one can breathe easily as the advocate would take care of all the court proceedings.
Therefore think twice before filing the complaint. Persuade the party by using your channels & contacts. To pressurize, send the notice. But afterwards, make sustained efforts to materialize the issue amicably.

MIND IT, litigations/court proceedings is a vicious & unending game.