This Notice is a Notice which shall be given by the unpaid Creditor (Payee) to the defaulting Debtor (Drawer) through an Advocate in case of dishonour of Cheque under section 138 of Negotiable Instrument Act. The Notice here is a sample Legal Notice issued by the Advocate of the Payee specifying a 15 days time given to the Drawer in fault to pay the unpaid Cheque amount. It further specifies that if the amount is not paid within 15 days from the receipt of the Notice, the unpaid Payee has right to file legal complaint and initiate Legal Proceeding against the defaulting Drawer.
ALL ABOUT CHEQUE BOUNCE/DISHONOURED CHEQUE
Parties to the Cheque:
- Drawer : The person who issues the cheque i.e ‘author of the cheque’ is called as Drawee. (Drawer could be the Debtor)
- Payee : The person to whom the amount mentioned in cheque is payable i.e the person in whose favour the cheque is drawn is called as Payee. (Payee could be the Creditor)
- Drawee : The Bank where the Drawer has an account from which the cheque amount shall be paid i.e the bank who is directed to pay the amount is called as Drawee.
- Payee’s Bank : The Bank where the Payee has a bank account in which the cheque amount shall be deposited/credited (especially in case of crossed cheque) or the bank in which payee deposits the cheque is called as ‘Payee’s Banker’
What is meant by Cheque Bounce or Dishonoured Cheque?
Occurring of following event step by step amounts to Cheque Bounce or Dishonour of Cheque:
- A Drawer is liable to pay some amount to the Payee and thus draws a Cheque in name of the Payee.
- The Payee/Holder of the Cheque then deposits this Cheque in the bank where he holds an account or otherwise. The Cheque shall be deposited on or after the date specified on the Cheque but shall not be deposited later than 30 days from the date mentioned on the Cheque, as it becomes invalid.
- After depositing the Cheque in the account, if the Drawee finds it not possible to pay off the amount specified in the Cheque, it send the ‘Cheque Return Memo’ to the Payee’s banker. Payee’s banker then forwards such ‘Cheque Return Memo’ to the Payee informing him that the Cheque is Dishonoured.
Thus, an incapacity of the Drawer to pay off the Cheque amount to the Payee on the due date or when submitted/deposited, is called as dishonour of Cheque.
Step by Step procedure for prosecution in case of Cheque Bounce
Following is the procedure for prosecution in case of dishonour of cheque:
- Firstly, after dishonour of cheque, a chance shall be given to the drawer in a form of written notice to immediately repay the cheque amount. You can find this Notice on our website – LegalDocs.co.in
- Such Notice shall be sent within 30 days of receipt of ‘Cheque Return Memo’ from the banker of the Payee.
- Notice period of 15 days shall be specified in such notice sent to the Drawer.
- No offence is presumed to be committed by the Drawer if the Drawer pays off the complete amount within the said notice period of 15 days.
- If not, the Payee may choose to file a complaint in the competent court against such defaulting Drawee.
- Such complaint shall be made within one month from the expiry of 15 days prescribed in the notice.
Conditions necessary to prosecute the defaulting Drawer
The Drawer can be sued only in the following conditions:
- If the cheque drawn by the Drawer is on the account maintained by or in the name of the Drawer himself.
- If the cheque was dishonoured and returned due to ‘Insufficient funds’ in the Drawer’s account.
- If the amount mentioned in the cheque is for the discharge of some debt or liability of the Drawer towards the Payee.
- If the Drawer fails to make payment of the dishonoured cheque within 15 days from the date of receiving the written notice in this regard.
Only if all the abovementioned conditions exist, the Drawer can be sued or prosecuted for dishonouring of the Cheque.