Key Provisions of Cheque Bounce Law in India
1. Section 138 of the Negotiable Instruments Act, 1881
If a cheque is dishonored due to insufficient funds or if the amount exceeds the account balance, it is a criminal offense.
The payee must notify the drawer in writing within 30 days of receiving the dishonored cheque from the bank.
The drawer has 15 days to settle the amount after receiving the legal notice.
If payment is not made within this period, the payee can file a criminal complaint in court within 30 days.
2. Punishment for Cheque Bounce
Imprisonment of up to 2 years or a fine up to twice the cheque amount, or both.
The court can order the drawer to compensate the payee for financial loss.
In case of repeated offenses, stricter penalties can be imposed.
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