Yes, a cheque bounce case can be filed against a company or a firm, just as it can be filed against an individual. In many legal systems, a company or a firm is considered a separate legal entity distinct from its owners or directors. As a result, it can enter into financial transactions, issue and receive checks, and be held liable for bounced checks. Here are some key points to consider when filing a cheque bounce case against a company or firm: Check Issuer: Determine the legal name of the company or firm that issued the bounced check. This information is crucial for filing the case accurately. Authorized Signatory: Identify the authorized signatory or signatories of the company who have the authority to issue checks on its behalf. These individuals may be held personally responsible if they have signed the bounced check. Legal Representation: It's advisable to engage legal counsel who specializes in commercial or financial disputes, as they can guide you through the process of filing the case against the company or firm. Notice: Before filing the case, you may need to send a legal notice to the company or firm, notifying them of the bounced check and giving them an opportunity to make the payment within a specified period. The notice should clearly state the legal consequences they may face if they do not comply. Court Procedures: The procedure for filing a cheque bounce case against a company or firm typically involves submitting the necessary documents and evidence to the appropriate court, following the legal requirements of your jurisdiction. Jurisdiction: Determine the appropriate jurisdiction in which to file the case. This is usually the place where the bank is located where the bounced check was presented for payment. Corporate Records: Be prepared to provide evidence of the company's existence, such as its registration documents, memorandum, articles of association, and any other relevant corporate records. Personal Liability: In some cases, if the company's directors or authorized signatories are found to be personally responsible for issuing the bounced check, they may be held liable in addition to the company. It's important to consult with a legal expert or attorney who is knowledgeable about the laws and procedures in your jurisdiction when pursuing a cheque bounce case against a company or firm. They can help you navigate the legal process and ensure that your case is filed correctly and effectively.

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Dear client, Consequences of Cheque Bounce Notice A cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881 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. A cheque bounce can occur for several reasons, but if a cheque bounces due to insufficient funds in the drawer’s account, it amounts to an offence under the Act. The bank must reject the cheque presented for payment with a return memo stating the reason as insufficient funds. In such a case, the payee of the cheque can issue a cheque bounce notice to the drawer demanding to pay the cheque amount. 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. 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. 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. 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. Process of Cheque Bounce Suit The process of a cheque bounce suit is as follows: Filing a complaint before the Magistrate after the expiry of 15 days of receipt of cheque bounce notice by the drawer. The payee/complainant has to appear before the court and provide the case details. If the Magistrate is satisfied with the complainant’s statement, he will issue a summons to the drawer for appearing before the court. The drawer will appear and accept or deny the facts stated by the complainant. If the drawer refuses the complaint, then the court will proceed with the criminal trial of the case. The drawer/accused will file his statement, and evidence and arguments of both sides will be presented to the court. If the court finds the drawer guilty of the offence of cheque bounce, the court will pass a judgement of conviction against the drawer for the offence of cheque bounce. The punishment for cheque bounce is imprisonment for a term not more than two years or a fine that can extend to twice the amount of the cheque or both. A civil suit can also be instituted against the drawer to pay the cheque amount. In the case of the institution of a civil suit, the payee cannot issue a cheque bounce notice. The payee can only issue legal notice for recovery of the amount. The offence of cheque bounce under Section 138 of the Act provides criminal punishment for cheque bounce due to insufficient amount. In contrast, the civil suit for recovery does not punish the drawer and provides for only the recovery of the cheque bounce amount. The cheque bounce notice can be issued against the company. A criminal suit can be initiated against a company when it issues the cheque and bounces due to an insufficient amount under Section 148 of the Act. When a criminal suit is initiated under Section 148 of the Act, the company and its directors will be punished for the offence of cheque bounce. However, if the drawer pays the cheque amount to the payee within 15 days of receipt of the cheque bounce notice, no office is committed by him, and legal action cannot be instituted against him for cheque bounce under section 138 of the Act. 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. Should you have any queries, please feel free to contact us!