Section 138 Notice
Impact of Check Bounce in India
In India, a person issuing a check would be committing a criminal offense if the check is not honored (check jump) due to a lack of funds. A check bounce case has a penalty of imprisonment up to two years or a double penalty of double-checking. Therefore, it is important for small and medium enterprises to understand their rights and obligations to increase checks and maintain the financial discipline to avoid such situations.
If the check is considered bankrupt?
In some cases, the bank may refuse to pay the check or disrespect the check, the check will jump in such cases. If a check is canceled due to a lack of funds in the customer account, such a check jump is considered a liability, and action may be taken under Section 138 of The Negotiable Instruments Act.
What are the steps to initiate prosecution by checking the bill?
To start prosecuting under Section 138, complete the following three conditions below:
Provide the bank with a check within three months of issuance or during its term of office. (The validity of the checks was considered six months earlier; however, the Reserve Bank of India vide Notification No. RBI / 2011-12 / 251DBOD.AML BC.No.47 / 14.01.001 / 2011-12 directed that the verification period for checks will be reduced from one month six to three months from April 1, 2012.).
The payer [Recipient] had to apply to the Taxpayer [Payer] to pay by registered notice after the check has been returned free of charge.
The payer should have failed to pay the amount within 30 days of receiving the notice.
Only by satisfying all three of the above conditions, prosecution may be instituted on a charge under Section 138.
How and when to give notice of disrespect?
The payer must apply for payment from the payer by giving notice to the payer within 30 days of receiving the information from the bank regarding the refund of the check as outstanding. Therefore, in order to protect his or her rights under Section 138, the payer [the party concerned] must apply to the payer within 30 days by giving notice that the person has a legal obligation to pay. As soon as the payer sends the notice to the payer at the correct address, he or she considers fulfilling all the obligations of the payer.
When can persecution be initiated under Section 138?
A person may initiate a Section 138 Taxpayer prosecution if the payer fails to pay the amount within 30 days of receiving notice from the payer. Check Section Bounce notice under Section 138 may be obtained or reproduced using AK taxes.
Who can be prosecuted under Section 138?
A person may be able to prosecute a payer and in the event of a company committing an offense under Section 138, not only the company but also the person who at the time the offense committed, was in charge and liable the company would be held liable and should be prosecuted.
What are some of the effects of a check bubble?
In addition to a criminal offense, counterfeit checks can also affect credit worthiness or credit history. Although paired checks rarely appear in regular credit reports, they do show a bank account statement. Both banks, Nationalized & NBFC’s today require a customer to provide their bank statement for a period of up to 1 year for any type of loan. The occurrence of bumps in multiple checks in a bank statement may affect creditworthiness and creditworthiness.
How can you avoid cheque bounces?
The best policy is to avoid bumps and bills in your account and NEVER write a check without money in your account. Giving a check to someone is a strong financial obligation, one can do it for someone with a lot of responsibility and impact if we are not respected. Therefore, it is best not to give a check to someone who has no money in your account – just too temporarily avoid financial pressure.