The reasons for Cheque Bounce for which Cheque Bounce is filed are

Reason 1:

The money being held in that account of the cheque payee is insufficient or less to honour the cheque amount.

Reason 2:

Or the cheque amount exceeds the amount arranged to be paid from that account because of an agreement to that effect,

Then, in both the above, it would be a case of cheque bounce, that is when the cheque is presented by the cheque holder (the person to whom the money by cheque is paid to clear debt) to the bank, the bank would not honour the cheque (dishonour of cheque) and hence the holder would be unable to collect his money which he loaned to the payee. Such a case of cheque bouncing is punishable with imprisonment for a term which may extend to two years, or with a fine, the amount of fine would be double the amount of the cheque.

Cheque Bounce for mismatch of signature is not considered for Cheque Bounce Case.

Penalty or fine can only be imposed in Cheque Bounce Case if the following conditions are satisfied:

Condition 1:

The cheque has been presented by the cheque drawer( the person to whom the cheque is given in order to repay a debt) to the bank within a period 3 months from the date on which it was drawn or within the period of its validity, whichever of the two is earlier.

Condition 2:

The holder of the cheque (that is, to whom the payment is supposed to be given) makes a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque (by whom the payment is made through cheque) within 30 days of the receipt of information by him from the bank that the cheque has been returned without being accepted.

Condition 3:

The drawer of the cheque fails to make the payment of the said amount of money by cheque within 15 days, after receiving the notice by the cheque holder regarding the return of the cheque amount as unpaid, and the cheque being dishonoured.

After the recent judgement of the Supreme Court, keeping in mind the numerous cases of cheque bouncing approaching the courts, it has been decided that:

Delay in Trial Court:

If the matter of cheque bouncing is delayed in the Trial Court, the defaulter (cheque payee) will have to pay penalty up to 10% of the cheque amount to avoid going to jail.

Delay in High Court:

If the matter of cheque bouncing is delayed in the High Court, the defaulter (cheque payee) will have to pay penalty up to 15% of the cheque amount to avoid going to jail.

Delay in Supreme Court:

If the matter of cheque bouncing is delayed in the Supreme Court, the defaulter (cheque payee) will have to pay penalty up to 20% of the cheque amount to avoid going to jail.

If a cheque presented by the ex-employer of the employee has bounced then the employee can take legal action against the ex-employer. Firstly, the person must issue a legal notice in writing to the ex-employer who issued the cheque, demanding him to make the payment of money. But the notice by the person to the ex-employer has to be made within 30days of the receipt of information regarding the return of the cheque as unpaid by the bank to the person.

If within 15 days of the receipt of notice issued by the person regarding return of cheque and non-payment of money to the person, the ex-employer fails to make the payment, the person or ex -employee may proceed against the ex-employer in a District Magistrate Court by filing a criminal case for dishonour of cheque against the ex-employer.

If the person feels aggrieved by the decision of the Magistrate Court, or unsatisfied, the person may then file a case in the District Consumer Court against the ex-employer for payment of amount due to him and also for compensation of damages for delay in payment of amount due and deliberate evasion of payment. Still further, the person also has the option to file a case against the ex-employer in a District Labour Court in order to seek redressal against non-payment of due salary.

The matter can also be taken to the Civil Court by the aggrieved person against the ex-employer under Summary Procedure for fast recovery of salary due to him.