• Source:JND

Recently, actor Rajpal Yadav was jailed for a cheque bounce case. While most people consider mandate failures and cheque bounces to be minor administrative issues, the reality is far different. Experts say that technically, a single mandate failure or cheque bounce is sufficient to initiate a criminal case under Section 138 of the Negotiable Instruments Act, provided a legal notice is given and the drawer fails to pay within 15 days of receiving it.

How Much Penalty Is Charged If A Cheque Bounces?

According to the rules, if a check bounces, you can face up to two years in jail, a fine of twice the amount of the check, or both. However, the reality is that penalties start to arise even before legal troubles arise. When a check or NACH mandate (such as a SIP) fails, the bank charges a dishonor charge ranging from Rs 250 to Rs 750.

Furthermore, each auto-debit is counted separately, even if it fails multiple times.

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What Can The Cheque Taker Demand?

Experts say that if the check was for EMI, rent, or a credit card payment, the person or firm that collected it may charge you additional fees, such as a bounce fee, late payment fee, or even interest. For example, if three mandates fail, you could be immediately charged Rs 2,000 - Rs 3,000 in bank and lender charges before any legal action is initiated.

Understand Section 138

Only cheque bouncing is illegal under Section 138. Section 138 of the Negotiable Instruments Act, 1881, makes cheque dishonour for insufficient funds a criminal offence, punishable with imprisonment of up to two years, a fine of twice the cheque amount, or both.

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This applies if a cheque is returned unpaid and the drawer fails to make payment within 15 days of a notice sent within 30 days of the dishonour. Experts say that when you know a cheque is about to bounce or a mandate is about to fail, the most important thing is to inform in advance, because once a cheque bounces, it is easier to prove 'intent to default' in court.


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