A cheque written for payment against a business transaction is never just a cheque. Traders, suppliers, manufacturers, merchants, and service providers associate cheques with credit terms, invoices, contracts, and accounts receivable. There are multiple ongoing operations which rely on the successful processing of cheques. So when a cheque bounces, the effects are felt almost immediately. Accounts receivable balances become unpredictable, business relationships with customers and clients are at stake, and cash flow is disrupted. Many businessmen think that the cheque bounce complaint can be filed at any time they want to initiate legal proceedings. But as per the law of India, cheque dishonour cases are subject to mandatory statutory deadlines. Failing to send the notice on time or misinterpreting the limitation window can lead to technical errors. If you are running a business in Delhi NCR, Ghaziabad, Noida, Gurugram, Mumbai, Bengaluru, Chennai, Hyderabad, Pune, Kolkata, Ahmedabad or any other business hub in India and your cheque issued for business payments has been dishonoured by the bank then you should take quick action as bounced business cheques can hamper your budget and business. BK Singh Advocate helps you with these Cheque Dishonour issues, Notice Requirements, Documentation and Procedure related queries. Transactions in business world are characterised with delayed payments/credit periods/ purchases on arrangements/commitments repeated between parties from time to time. A supplier supplies goods on credit; a service provider may have rendered work prior to payment; or an organisation issues cheque for part payment of outstanding commercial liability. If such cheque gets returned by the bank unpaid, the payee needs to appreciate that filing of complaint under Section 138 does not start automatically on dishonour of cheque. There are certain pre-requisites/ mandatory conditions which need to be satisfied before a cognizable offence under Section 138 could be said to have been committed. Business entity delaying the proceedings can get attacked on plea of limitation, validity of notice, admissibility of evidence and enforceability of underlying liability. A lot of commercial disputes get complicated with parties carrying on negotiations for months together even after cheque was dishonoured. Though negotiations may proceed between the parties, the clock starts running from the date of cheque dishonour with respect to the statutory mandate attached to cheque bounce complaints. BK Singh Advocate constantly advises his clients about the necessity to compute the date accurately from the date of cheque dishonour and keeping good records of business transactions. Businesses are advised to keep records of their transactions from day one as many payment disputes are often heavily scrutinized based on documentary evidence. Issued cheque is the fundamental document that reflects the payment instrument executed by the drawer. A bank return memo states the reason of dishonour and helps you establish calculation of timelines. A copy of demand notice shall assist you in proving that you have fulfilled the statutory mandate. Postal slips, track shipments, couriers, or any other mode of proof of delivery can become useful to prove service of notice. Based on the transaction, following are some of the documents that may be required: Good document trail can go a long way! When cheque bounce on commercial payment obligations/duties one should consult a lawyer when: Business owners usually think about how to recover their money but fail to realize the time limitations to initiate legal action or other missing documents. It’s better to consult a lawyer at the initial stage, he would make you understand the potential issues that you may face in future. BK Singh Advocate can help you with cases related to cheque bounce against business payments/commercial transactions and legal notice as per NI Act. Cheque bounce issues depend upon facts of the case, relevant documents and legal provisions. BK Singh Advocate helps you understand your transaction history, reason for payment dispute, draft the necessary legal notice and guide you on your available legal options. Debt collection disputes are common in all business establishments be it Delhi NCR, Ghaziabad, Noida, Gurugram, Mumbai, Pune or Bengaluru, Chennai, Hyderabad or any other business hub because they affect the core of business. That is why we provide you practical legal advice. BK Singh Advocate will guide you only after analyzing the facts of your situation. We do not predict the result of your issue. When a cheque gets dishonoured, there is monetary pressure on the parties involved. Also, the reputation of your business is at stake. You may be confused about what to do next. With the right legal advice you can face the issue objectively. A cheque holder must send a legal notice within a period of 30 days from the date of knowledge received from the bank regarding cheque dishonour. This provision is mentioned under Section 138 of the NI Act, 1881. Business customers should compute the timeline from the date of bank return information as any delay can complicate the legal position further in cheque bounce cases. Delay in sending a legal notice will impact the maintainability of the proceedings as the NI Act has laid down a timeframe within which the demand notice must be sent. Every matter is based on unique facts. The legal position would vary on facts such as the date of the transaction, supporting documents and reasons for delay. BK Singh Advocate evaluates the information/receipts available to the client before commenting on cheque bounce disputes. Upon receipt of the cheque bounce notice by the drawer, he would have a statutory period of 15 days to make payment against the cheque amount issued. If the drawer still fails to make payment, the cheque holder can think of filing proceedings under Section 138 of NI Act subject to various conditions being satisfied. Yes, companies can initiate cheque bounce cases if the cheque was issued for a debt or liability that is legally enforceable. The company should have supportive documents such as invoice, purchase order, agreement, proof of delivery, account statements to show the existence of a business transaction. The court will look into the reasons for issuing the cheque and facts of the transaction. Remember that a bounced cheque alone will not help you win the case. Some of the aspects that court will look into are: Was the cheque issued against a legally enforceable debt/ liability? Was the notice served within the prescribed period? Are there documents to support your claim? Documents that are required to be produced in business cheque bounce disputes include: Please note that these are just basic documents and facts of the matter can differ from case to case. Proper documentation will help you establish the business background of the transaction. Yes. Businesses can always negotiate a settlement. Commercial disagreements between merchants can be sorted if both parties are willing to come to a mutual agreement. Decision to settle cheque bounce disputes can be taken by the parties after considering the financial loss and legal consequences of the matter. No. As mentioned above, the NI Act applies to entities that issue cheques from their bank account. Companies and firms can also get implicated in cheque bounce litigation. If a company issued a cheque to a payee, the cheque bounce dispute will require you to bring out records of the company, authorised signatories, board resolutions and persons responsible for the transaction. Cheque bounce cases require the parties to act quickly. Notices have to be sent within a month, copies have to be proven. Delay in any of these can affect your rights under the law. BK Singh Advocate helps people understand the language of cheque bounce notices, commercial disputes involving cheque payments and filing of cheque bounce cases. BK Singh Advocate can help you with legal advice if you are a business or individual facing cheque bounce related issues. We provide legal advice on : The aforementioned issues can be dealt differently as every matter is unique. The lawyer would assess the facts, examine the documents you have and advise you accordingly. Business cheque dishonour laws require attention within prescribed timelines. The Courts take a serious view about statutory limitation periods. A cheque bounce notice cannot be served at your convenience. You cannot put it off forever. Businesses need to track the date on which the bank sends them information about dishonour & save all documents related to the transaction. Cheque bounce notice period: In case of business payments, the timeframe within which a cheque bounce notice must be sent is also critical. Time Limit for Cheque Bounce Notice in Business Payment Cases
The limitation period for sending a notice for cheque bounce in business transactions is subject to Section 138 of the Negotiable Instruments Act, 1881. As per Section 138, the holder of the cheque must issue a notice in writing to the payer within a specified duration after being notified by the bank that the cheque was dishonoured. Why Is Cheque Bounce Notice Time Limit Important for Business Payments?
Quick Facts About Cheque Bounce Notice Period
What Documents Are Required for a Business Cheque Bounce Case?
Documents Matter a Lot in Commercial Cheque Transactions
Important Documents to Keep
Cheque
Bank’s Return Memo
Copy of Notice served
Proof of Delivery
Transaction Specific Documentary Evidence
When Should Businesses Consult a Cheque Bounce Lawyer?
How Can BK Singh Advocate Help in Cheque Bounce Matters?
Frequently Asked Questions
How long do I have to send notice for a cheque bounce for business payments?
Can I send a late cheque bounce notice to the business who owes me money?
What should I do after receiving a cheque bounce notice from a business?
Can a company issue a cheque bounce notice for unpaid invoices?
Can I win a cheque bounce case with just a bounced cheque?
What documents will I need for a business cheque bounce matter?
Can businesses avoid cheque bounce litigation and settle the matter?
Does the law of cheque bounce apply to companies?
Why consult a lawyer for cheque bounce matters?
How can BK Singh Advocate help you?
Final Thoughts
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