Cheque Bounce Notice

A cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881 (“Act”) punishable with a fine which can extend to twice the amount of the cheque or imprisonment for a term not more than two years or both. When the payee presents a cheque to the bank for payment, and the cheque is returned unpaid by the bank with a memo of insufficient funds, the cheque is said to have bounced.
Circumstances of Cheque Bounce
The various situations that result in cheque bounce are as follows:
Insufficient account balance –  If there is not enough balance in the drawer’s account to make the payment of the cheque, the bank will reject and return the cheque to the payee with a memo stating insufficient funds to pay the cheque amount.
Expired validity of cheque –  Once the drawer issues the cheque, it must be presented for payment within three months. The cheque expires if it is not presented to the bank within three months. If the expired cheque is given to the bank, it bounces. 
Overwriting –  If the signature of the drawer or cheque amount or any other statement has been overwritten on the cheque, the cheque bounces for overwriting.
Damaged cheque –  If a cheque is damaged or disfigured and the details are not visible or have marks or stains, the cheque will bounce.
Signature mismatch –  If the drawer’s signature is unclear or absent or does not match the one in the bank’s data, the cheque will bounce.
Mismatch of amounts or digits –  If the cheque amount mentioned in words and figures does not match, the cheque will bounce.
Remedies Against Cheque Bounce
Resubmission of cheque
When the cheque bounces due to overwriting, mismatch of signature, mismatch of the figures and words of the cheque amount or damaged cheque, the payee can ask the drawer to submit another cheque to rectify the mistake. If the drawer does not agree to submit another cheque, the payee can initiate civil action against the drawer to pay the cheque amount due to him and not the cheque bounce.
Cheque Bounce Notice under Section 138 of the Negotiable Instruments Act
A cheque bounce notice is issued under Section 138 of the Negotiable Instruments Act when a cheque bounces due to insufficient funds in the drawers’ account to make the cheque amount payment. If the cheque bounces for any other reason other than insufficient funds, the cheque bounce notice cannot be issued, and the payee can demand resubmission of the cheque.
  Issuance of Cheque Bounce Notice
When the cheque bounces due to an insufficient amount, the first step is to demand the payment of the amount by issuing a cheque bounce notice in writing by post under the Negotiable Instruments Act. The payee can issue a cheque bounce notice within 30 days of an intimation sent by the bank and the bounced cheque stating that the bank cannot make the cheque payment due to an insufficient amount.
  After issuing the cheque bounce notice, the payee must give the drawer 15 days time period from the receipt of the cheque bounce notice to pay the cheque amount. If the drawer does not reimburse the cheque amount even after the expiry of 15 days, then legal action can be initiated by the payee against the drawer within 30 days of the expiry of 15 days.
However, a cheque bounce notice cannot be issued if the cheque was issued as a donation, gift or any other obligation that is not legally enforceable. The cheque must be issued to discharge a legally enforceable liability or debt to constitute an offence under the Act.
Jurisdiction of Magistrate for Filing Cheque Bounce Suit
The payee can file the complaint before the Magistrate in any of the following places:
Where the cheque was drawn.
Where the cheque was presented for payment.
Where the payment had to be made.
Where the cheque is dishonoured.
Where the demand notice was served.
The cheque bounce complaint has to be filed before the Metropolitan Magistrate if the cheque bounce suit falls in any metropolitan city. If the suit for cheque bounce falls in any other city, the complaint must be filed before the Judicial Magistrate.
New Cheque Bounce Rule
According to a notice issued by the Reserve Bank of India (RBI) in early August of 2021, customers whose financial activities revolve heavily around cheques or those who even plan to use cheques will have to ensure a minimum bank balance. If this minimum balance is not maintained, the cheque will bounce. In addition to this, the customer who issued the cheque may also have to pay a penalty fee. Along with these changes, the RBI announced that the National Automated Clearing House (NACH) would be operational 24 hours a day.
These changes apply to all national and private banks. The rule change was brought in to make clearing the cheques a faster and generally smoother one. Since the new rule ensures that NACH will be operational on all days of the week, Sundays will also be a day on which the entity can process and clear a cheque.
Procedure to Follow After Issuance of a Cheque Bounce Notice
After 15 days of issuing the cheque bounce notice after the expiry, the payee can initiate legal action against the drawer. The payee should register a complaint under Section 138 of the Act. Under Section 138 of the Act, the offence of cheque bounce is a criminal offence for which the payee can initiate a criminal suit. The payee must file the complaint against the cheque bounce before the Magistrate within 30 days of the expiry of 15 days of issuing the cheque bounce notice.
How to Respond to a Cheque Bounce Case
The first step would be to reply to the legal notice for your defence or pay the cheque amount to avoid any further legal proceedings. But before replying, you must consult a legal practitioner who is an expert in cheque bounce. If the cheque amount is paid at the starting stage, the matter will be resolved then and there.
The reply for the legal notice does not possess any specific format but make sure that you mention the following subjects in the reply:
Address the reply of the legal notice to the lawyer of the drawee.
Your description, name, and address.
Facts of the issue: date of issue, cheque-return memo, etc.
Rebuttal of the allegations made against you.
Refrain from admitting to any allegation against you mentioned in the notice.
Any complaints against the drawee of the cheque.
A summary of your defence against the allegations mentioned in the legal notice for cheque bounce.
The reply to any legal notice must be sent on a lawyer’s letterhead.
The failure to reply to the legal notice or pay the cheque amount within 15 days can motivate the drawee to legally file a complaint at the court, which would initiate the legal proceedings against you. 
Legal Notice to Tenant to Vacate
What’s the Purpose of a Legal Notice to Tenant?
A legal notice to tenant to vacate serves as a formal communication between the landlord and tenant, outlining the reasons for eviction and the time frame within which the tenant must vacate the property. This is essential to ensure both parties are aware of their rights and responsibilities, and that the process remains legally compliant.
Legal Notice Format to Tenant to Vacate
While drafting a legal notice to tenant to vacate, ensure it includes the following:
Tenant’s name and address
Landlord’s name and address
Date of the notice
Reason for eviction
The period given to vacate the property
Rent arrears or damage, if applicable
Landlord’s signature
Section 106 of the Transfer of Property Act
What is the Notice to Tenant under Section 106?
Section 106 of the Transfer of Property Act, 1882, provides guidelines for terminating a lease. It states that a lease can be terminated by either party by serving a written notice at least 15 days before the end of the month for monthly tenancies, or six months before the end of the year for yearly tenancies.
Can a Pagdi Tenant be Evicted?
Eviction of Pagdi Tenants
Yes, Pagdi tenants can be evicted, but only under specific circumstances. The Maharashtra Rent Control Act, 1999, governs Pagdi tenancies, which are predominantly found in Mumbai. Eviction is possible if the tenant has failed to pay rent, caused substantial damage, or violated any terms of the lease agreement.
Eviction Timelines in India

How Long Does it Take to Evict a Tenant in India?
The eviction process in India can vary depending on factors like the nature of the tenancy, grounds for eviction, and the court’s workload. Typically, it can take anywhere from a few months to a couple of years to evict a tenant.
Notice Periods in India
What is the Notice Period for Rental Agreements in India?
The notice period for rental agreements in India is generally specified in the lease agreement. In the absence of a specific period, the default notice periods as per Section 106 of the Transfer of Property Act apply.
Do We Need to Pay Rent During the Notice Period?
Yes, tenants are required to pay rent during the notice period unless the landlord waives this requirement.
How Many Days’ Notice Period is Required?
The notice period depends on the terms of the lease agreement and the applicable laws. Generally, a 15-day notice is required for monthly tenancies and a six-month notice for yearly tenancies.
Legality of Notice Periods in India
Is 90 Days’ Notice Period Legal in India?
Yes, a 90-day notice period is legal in India if it’s agreed upon in the agreement between the landlord and tenant. However, it’s essential to ensure that the notice period is clearly specified and adhered to by both parties.
What Happens if I Don’t Pay the Notice Period?
If a tenant fails to pay rent during the notice period, the landlord has the right to take legal action, which may include eviction proceedings or seeking compensation for the unpaid rent. It’s crucial for tenants to abide by the terms of the lease agreement to avoid legal complications.
Is a Notice Period of 3 Months Legal?
Yes, a notice period of 3 months is legal if it has been mutually agreed upon by both the landlord and tenant in the lease agreement. As long as the specified notice period doesn’t conflict with any applicable laws, it remains legally binding.