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After Ram Gopal Varma was sentenced to three months in jail by a Mumbai court, we delve into the rules and laws surrounding cheque bounce and why it’s crucial for cheque issuers to comply with them
In cases of cheque bounce, action is taken under Section 138 of the Negotiable Instruments Act 1981. (Representative/News18 Hindi)
Filmmaker Ram Gopal Varma has been sentenced to three months in jail by a Mumbai court in a cheque bounce case. Additionally, a non-bailable warrant was issued against him.
While bail is typically granted in cheque bounce cases, the court’s decision to issue a non-bailable warrant highlights the severity of the situation.
This case underscores the importance of understanding the implications of issuing a cheque and the precautions necessary to avoid such consequences.
When a cheque is issued for a specific amount, say Rs 50,000, with a fixed payment date, sufficient funds must be available in the account on that date. If the account holds even Re 1 less than the designated Rs 50,000, the cheque will bounce. This occurs because the bank cannot honour the payment request due to insufficient funds. The returned cheque signifies a bounced cheque, highlighting the importance of maintaining adequate balances to cover issued cheques.
What does the law on cheque bounce say?
In cases of cheque bounce, action is taken under Section 138 of the Negotiable Instruments Act 1981. In such a case, a notice is issued to the cheque issuer, granting them a stipulated time to settle the amount. Failure to comply may result in legal action against the issuer under this section, potentially leading to arrest by court order.
No Need for FIR
Under Indian law, while cheque bouncing is a criminal offence, filing a police report or FIR is unnecessary. The aggrieved party can directly file a complaint with the magistrate or court. The law explicitly states that automatic arrest is not permitted in cheque bounce cases, and the police can only act on a court order. The court has the authority to impose a fine on the accused and order the repayment of the principal amount. Furthermore, the court can also issue a jail sentence to the accused.
Can be imprisoned for up to 2 years
A bounced cheque can lead to imprisonment for up to two years. The cheque bounce law stipulates that such cases should be settled within six months. Under the new law, a complaint of cheque bounce can be lodged at the bank branch or place of issue. A first-time offender is given a chance to settle without legal proceedings. However, repeated offences will result in strict sanctions. If a cheque bounces twice or more, the accused faces imprisonment for up to two years and a fine of up to double the cheque amount.
