About Cheque Bounce
Cheque bounce, legally known as dishonour of cheque, is the unsuccessful processing of a dispensed cheque. It falls under section 138 of the Negotiable Instruments' Act, 1938.
There are various reasons behind why a cheque bounce occurs:-
a) insufficiency of funds
b) Payment in the discharge of a debt or liability legally enforceable
c) Cheque presented within 6 months from date of issue or within its validity (It should be noted that the validity of a cheque has been reduced to 3 months since 2012)
d) The Payee/Holder in due course demands payment by issuing a notice to the drawer within 30 days of receiving the information that the cheque has been dishonoured
e) The Drawer failed to pay within 15 days of receipt of notice Dishonour of cheque is a punishable offence.
It is punishable with imprisonment, which may extend up to 2 years with or without a fine up to twice the amount of the cheque.
If the dishonour is of a cheque issued by a company, then all of the officers in the company who had been in charge of the business of the company along with the company will be held guilty of the offence.