Here’s a step-by-step guide to the legal recourse available, in the unfortunate event that you get hit by a cheque that has been dishonoured -

Step 1: Obtain the Cheque Return Memo

On receiving a cheque, your first step will be to deposit it in your bank. On being informed that the cheque has been dishonoured, the drawer bank issues and hands you a “Cheque Return Memo” (which states reasons for non-payment) along with the bounced cheque.

Step 2: Send a Demand Notice

Section 138 of the Negotiable Instruments Act, 1881 provides that before proceeding for legal action, you are required to send a demand notice to the drawer within 30 days of receiving the “Cheque Return Memo”, giving him an opportunity, to pay you within 15 days of receiving such Demand Notice.

Step 3: File a Criminal Complaint

If you don’t receive the payment within 15 days of sending the Demand Notice, you can file a criminal complaint, under Section 138, within 30 days from the date of expiry of the 15 day notice period. The documents you must attach while filing the complaint-

• An agreement between the parties which involves payment through cheque.
• The bill/invoice/agreement against which the bounced cheque was presented.
• Documents providing evidence that you performed your part of the contract.
• Bounced cheque and the Cheque Return Memo.

CIVIL ACTION : The payee may also initiate a recovery procedure through a recovery suit for debt recovery in a civil court within the relevant area, apart from prosecuting the drawer for criminal offence.

Step 4: The Trial

Having filed the complaint, the court gives a notice to the drawer to come before the court. On his appearance, proof is produced; witnesses are examined and cross examined by both parties, arguments are made which ultimately result in a decision. The judge decides whether to acquit or convict.

Know more about Cheque Bounce from Consult & hire top lawyers in India | MyAdvo.in