According to the section 138 of the Act laments that any Bounce in a cheque is legally punishable.
When you receive a check from the drawer and if it gets rejected and returned by the bank unpaid it is said to be bounced. The very first step to take action is to send a letter, demanding notice to the party who wrote the cheque intimidating to do proceedings, if the due amount is not paid.
9-Jun-2020: Dishonouring of cheques to be decriminalised
Yesterday, the Finance Ministry announced decriminalisation of 39 minor economic offences, as a part of the COVID-19 relief measures. Among others, such offences included dishonouring of cheques under Section 138 of the NI Act, 1881. This section earlier levied criminal liability, punishable with imprisonment up to 2 years and/or a fine up to twice the cheque amount.
Banks Opposes Ministry of Finance Proposal
21st July: Bankers are saying legal action is taken only in those cases where a borrower wilfully default on the loan. They opposed the ministry’s move to decriminalise cheque-bounce offence.
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