Cheque Dishonoured? Zippserv Launches Online Service for Cheque Demand Notice!

Bangalore, India, February 8, 2016 (Newswire.com) - ​​​ZippServ launches an online service of sending Demand notice for Cheque Bounce (Cheque Dis-honoured) cases as part of which anyone can share details of the dis-honoured cheque, a demand notice is generated and sent to the defaulter on behalf of the payee by the lawyer.

A "Cheque" is one of the most commonly used instrument for a financial transaction. Cheques help securing proof of payment, reliable yet easy method of transferring money. The "Account Payee" crossed cheques are recommended to avoid misuse and ensuring only the intended party gets the credit. At the time of presentation of cheque to the drawee bank, the bank shall issue the "Cheque return memo" in case cheque is dishonoured. The Cheque return memo shall cite the reasons for dishonouring the cheque. The holder or payee can resubmit the cheque before the expiry time of the cheque if holder believes that it could be honoured the second time. Upon dis-honour of the cheque, the payee can legally prosecute the drawer.

ZippServ launches an online service of sending Demand notice for Cheque Bounce (Cheque Dis-honoured) cases as part of which anyone can share details of the dis-honoured cheque, a demand notice is generated and sent to the defaulter on behalf of the payee by the lawyer.

Abhay, Director

Type of Transactions:

The payee may legally prosecute the defaulter for dishonour of the cheque if the payment was towards any liability defaulter had towards payee like for any services or products bought by defaulter from payee or any repayment of loan or debt etc. If the cheque was issues as a gift or loan to payee, the drawer cannot be prosecuted.

Basics of Rule:

Dis-honour of cheque is criminal offence as section 138 of Negotiable Instruments Act, 1881 with imprisonment up to 2years and/or monetary penalty. The payee is required to send a notice to the defaulter within 30days of receiving the "cheque return memo" from the bank, with mention of 15days period to pay the cheque amount to the payee. If the payment is still not made, one can file a suit for recovery of the cheque amount along with the cost & interest under order XXXVII of Code of Civil Procedure 1908 (which is a summary procedure and) can also file a Criminal Complaint u/s 138 of Negotiable Instrument Act. The payee can file a criminal complaint by registering the same in a Magistrate court within 1month of expiry of the notice period.

On receiving the complaint, along-with other relevant documents, the court shall issue summons and hear the matter.

Demand Notice:

There is no prescribed format for demand notice sent in case of cheque dis-honour, but it is expected to have contained the below information as well as there should be some evidence that the notice was indeed served or received by the defaulter. The demand notice should have:

• Statement that the cheque was presented within its validity period.
• Statement of debt or liability towards which the cheque was issued.
• Reason for dis-honour of the cheque (as per the return memo from bank).
• Statement or call for payment of the due amount.
• Statement of 15days notice to pay up or face legal action.

Important Notes:

• A delay (taking longer than the 30-day time limit) in filing a complaint before a magistrate may result in defaulter getting excused in exceptional circumstances.
• A delay in sending the demand notice will always prevent you starting any future criminal prosecution.
• If during the validity of the cheque, after the demand notice has been sent by the payee, the drawer asks the payee to present the cheque again and it is yet again dishonoured, that doesn't mean that the drawer's time-limit under the demand notice has increased. The payee has to stick to the original timelines.

New Rules to Rescue!

The government has notified the Negotiable Instruments (Amendment) Bill, 2015, which allows filing of cheque bounce cases in a court at the place where it was presented for clearance and not the place of issue. The law provides that cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee (person who receives the cheque) lies. It will also result in fast prosecution of offenders.