Cheque Bounce: Causes, Remedies and Procedures

Cheque bounce is a situation that arises when an account holder issues a cheque for withdrawing an amount but the bank dishonors the withdrawal as the account has non-sufficient fund (NSF). The cases related to cheque bounce have till the date been under the jurisdiction of the following acts in Nepal:

  1. Negotiable Instruments Act, 2034
  2. Banking Offences and Punishment Act, 2064

 

Provisions under Negotiable Instruments Act:

The nature of proceeding under this Act is civil nature. Unlike the criminal proceedings that start with filing of FIR, cheque bounce under Negotiable Instrument Act starts off from the filing of complaint (firadpatra) in the concerned District Court.

Limitation:

The aggrieved party must file a complaint within five years from the cause of action.

 

What are the conditions for cheque bounce according to Negotiable Instruments Act?

According to the Negotiable Instrument Act, cheque bounce is a cause of dishonor of cheque. It covers cheque bounce under the term ‘dishonor of cheque’.

These are the reasons for dishonor of cheque according to the Negotiable Instrument Act:

  1. Overwritten cheque,
  2. If the signature is absent, or doesn’t match with the specimen signature kept by the bank,
  3. If the name of the payee is absent,
  4. If the amount written in words and figures doesn’t match,
  5. If the account no. isn’t mentioned clearly or is absent,
  6. If the drawer stops the bank to stop the payment on the cheque,
  7. If the court has given an order to the bank to stop the payment,
  8. If the drawer has closed the account before presenting the cheque,
  9. If the fund in the account is insufficient to meet the payment mentioned in the cheque,
  10. If the bank receives information regarding the death or lunacy or insolvency of the drawer,
  11. If the alteration made on the cheque is not proved by the drawer by giving his/her signature,
  12. If the date is not mentioned or incorrect of the date is of 3months ago.

 

What are the Remedies and procedure for Cheque Bounce under Negotiable Instrument Act?

Remedies Procedure
  1. Recovery of the amount mentioned in the cheque with interest,
  2. Imprisonment up to 3 months or fine up to three thousand or both

In order of the process:

  1. Filing of statement of claim (firadpatra) by the affected party
  2. Statement of defense by the opposite party (pratiuttar patra)
  3. Evidence collection and witness examination
  4. Final hearing and decision
  5. Appeal (punaravedan) if dissatisfied with the court’s decision in High Court as per mentioned by the district court in the decision.

 

 

 

 

 

 

 

 

 

 

 

Provision under Banking Offences and Punishment Act, 2064

Banking Offences and Punishment Act provides affected parties of cheque bounce with criminal proceedings. Under this act the case starts with the registration of complaint (jaaheri) by the plaintiff (victim) in the concerned Police station. However, as it is a state party case the court proceeding begins only after the filing of chargesheet (abhiyogpatra) from the state in the concerned High Court.

Limitation:

The victim must register FIR within 1 year from the cause of action.

What are the causes of cheque bounce according to the Banking Offences and Punishment Act?

This act has specifically pointed the act of cheque bounce under section 3(C). It points out particularly the act of drawing an amount from an account that has insufficient fund to cover the mentioned amount of the cheque.

What are the Remedies and procedure for Cheque Bounce under Banking Offences and Punishment Act?

Remedies

Procedure

  1. Recovery of the claimed amount mentioned in the cheque,
  2. Imprisonment up to 3months
  3. Fine as per the claimed amount of the cheque.

In order of the process:

  1. Registration of FIR
  2. Investigation
  3. Filing of Charge sheet (abhiyogpatra) by the Government Attorney
  4. Bail hearing
  5. Final hearing and decision
  6. Appeal (punaravedan) if dissatisfied with the court’s decision in the Supreme Court.

 

 

 

 

 

 

 

 

 

Disclaimer: This writing is prepared to share general information only and for legal purposes, advice of legal professionals is must. 

RELATED PROFESSIONALS: 

  • ADVOCATE AJAYA SHRESTHA
  • ADVOCATE PRABIN SHRESTHA

FOR DETAIL INFORMATION:

Worldwide Legal Service

Anamnagar, Kathmandu

Phone: +977-9841095964

[email protected]