A bounced cheque, also known as a dishonored cheque, is a cheque that is not honored by the bank on which it is drawn, typically because there are insufficient funds in the account of the person who wrote the cheque. When a cheque bounces, it is returned to the payee, and the payee may be charged a penalty fee by their bank.
Bouncing a cheque is a serious offense in India, and can result in legal and financial consequences for the drawer of the cheque. Here are some of the possible consequences of bouncing a cheque:
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Criminal charges: Under Section 138 of the Negotiable Instruments Act, 1881, bouncing a cheque is a criminal offense. The payee can file a complaint against the drawer of the cheque, and if the drawer is found guilty, they may be fined or even sentenced to imprisonment.
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Damage to credit rating: Bouncing a cheque can also have a negative impact on the credit rating of the drawer of the cheque. The bank may report the bounced cheque to credit bureaus, which can affect the creditworthiness of the drawer and make it harder for them to obtain loans or credit in the future.
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Legal action by the payee: The payee may also take legal action against the drawer of the cheque to recover the amount owed, along with any penalty fees or other damages incurred as a result of the bounced cheque.
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Blacklisting by banks: Banks may blacklist the drawer of the cheque, which can make it difficult or even impossible for them to open a new bank account or obtain other banking services in the future.
To avoid bouncing a cheque, it is important to ensure that there are sufficient funds in the account before writing a cheque. If there is any doubt about the availability of funds, it is better to use an alternative form of payment, such as a bank transfer or a cash payment.
