Cheque Bounce Case

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Cheque Bounce Case in Nepal: Legal Remedies and Recovery

Introduction

As the number of cheque transactions increases, so does the occurrence of cheque-related issues. A cheque bounce occurs when there are insufficient funds in an account, resulting in the bank refusing to honor the cheque. Whether intentional or unintentional, cheque bouncing is considered a legal offense. In Nepal, remedies against cheque bounces are addressed through two distinct laws:

  1. Negotiable Instruments Act, 2034 (1977):

    • A cheque bounce occurs when a person intentionally transfers a cheque to someone who lacks sufficient funds in their bank account.
    • The drawer (person issuing the cheque) can be held liable for the amount mentioned in the cheque, along with interest.
    • The Act allows the aggrieved party to file a complaint in the concerned District Court within five years from the date of the cause of action.

  2. Banking Offence and Punishment Act, 2064 B.S. (2008):

    • Prohibits drawing a cheque from an account with apparent knowledge that it lacks sufficient balance.
    • Penalties include imprisonment or fines.

 

Common Causes of Cheque Bounce

  1. Insufficient Balance:

    • Lack of funds in the drawer’s account leads to cheque bounces.
    • Banks will not process transactions if the account balance is less than the cheque amount.

  2. Date Issues:

    • Accuracy and legibility of the cheque date are crucial.
    • Any error can result in a bounced cheque.

  3. Signature Mismatch:

    • The drawer’s signature must match the bank records.
    • Discrepancies can lead to dishonoring the cheque.

  4. Amount Discrepancy:

    • Differences between the amount in numbers and words can cause cheque bouncing.

 

Steps to Take in a Cheque Bounce Case

  1. FIR with Police:
      • Register a criminal case by filing a First Information Report (FIR) with the police.
      • The cheque must bounce three times before taking legal action.

2. District Court Petition:

    • File a civil case with the relevant district court.
    • Seek recovery of the cheque amount and interest.

Penalty and Consequences

  1. The drawer may face imprisonment (up to three months), a fine (up to NPR 3,000), or both.



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