There have been several request of Consumers of Era to know what they can legally do to safeguard their interest in case of cheque bouncing by Era.. there are several Home buyers who were promised return if Era failed to provide allotment but these consumers who have parted with a considerable amount towards Era, today face a peculiar problem of bounced cheques. So to help them understand and also to make other consumers aware; here is a extraordinary article, which I would like to share with you all.. kindly go through this:-
What if a cheque bounces? Here's a guide
to the legal recourse available to you
Sakina
Babwani, ET Bureau Jun 24, 2013, 10.24AM IST
Bounced cheques are one of the most common offencesplaguing the financial world. According to the
Supreme Court, there are over 40 lakh such pending cases in the
country. A cheque can be dishonoured for various reasons, the most
common being insufficient funds in the account of the person drawing the cheque, and a mismatch of signatures
with the bank records. But what do you do if you land a bad cheque? Here's a step-by-step guide
to the legal recourse that is available to you.
Filing a criminal complaint
When a cheque bounces
the first time, the bank issues a 'cheque return memo', stating the reasons for
non-payment. The holder can resubmit the cheque to the bank within three months
of the date on it, if he believes it will be honoured the second time.
The other option would
be to prosecute the defaulter legally. The first step is to send a legal notice
to the defaulter within 30 days of receiving the cheque return memo. All the
relevant facts of the case, including the nature of transaction, amount, date
of depositing the instrument in the bank, and subsequent date of dishonouring,
should be clearly mentioned in the notice. If the cheque issuer fails to make a
fresh payment within 30 days of receiving the notice, the payee has the right
to file a criminal complaint under Section 138 of the Negotiable Instruments Act.
However, the complaint should be registered in a magistrate's court within a
month of the expiry of the notice period.
If you fail to file
the complaint within this period, your suit will become time-barred and, hence,
not be entertained by the court unless you show sufficient and reasonable cause
for the delay. On receiving the complaint, along with an affidavit and relevant
paper trail, the court will issue summons and hear the matter. If found guilty,
the defaulter can be punished with a prison term of two years and/or a fine,
which can be as high as twice the cheque amount.
However, the defaulter
can appeal to the sessions court within one month of the date of judgement of
the lower court. If a prolonged court battle is not acceptable to both the parties,
an out-of-court settlement can be attempted at any point. "You can also
file a case of cheating under Section 420 of the Indian Penal Code, but the
above recourse is preferred as it is faster and specially dedicated to this
particular offence (bounced cheques)," says Ravi Goenka, advocate, Goenka
Law Associates.
Filing a civil suit
While the
above-mentioned process is helpful in taking a defaulter to task, it may not
always result in recovery of the pending dues. Hence, one can file a separate
civil suit for recovery of the cheque amount, along with the cost borne and the
lost interest.
This is where a summary suit under Order 37 of the Code of Civil Procedure (1908) comes in. A summary suit is different from an ordinary suit as it does not give the accused the right to defend himself. Instead, the defendant has to procure permission from the court to do so. However, remember that summary suits can be availed of only in recovery matters, be it promissory notes, bills of exchange or cheques. "Since a summary suit is a civil proceeding that does not have the force of a criminal charge, the chances of imprisonment are remote in such matters," says Goenka.
Exceptions
These legal remedies
are available only where pending debt or liability can be clearly established.
Hence, if a bounced cheque was issued as a donation or as a gift, the holder
cannot legally sue the defaulter.
Risk faced by defaulters
A jail term or heavy
penalty isn't the only consequence faced by the issuer of a dishonoured cheque.
The bank has the right to stop the chequebook facility and close the account
for repeat offences of bounced cheques. However, the RBI clearly states that
such action can be taken only if the default has taken place at least four
times on cheques valued at over Rs 1 crore. Says Aakanksha Joshi, senior
associate, Economic Laws Practice: "If the bounced cheque was for
repayment of loans, banks also have the collateral offered as security. They
are bound to issue a notice before they auction such property to recover the
money." According to her, a bank can also deduct money from the
defaulter's account if there is an explicit contract giving the bank such a
right.
Changes
in the pipeline
The option of dragging
an offender to court under Section 138 of the Negotiable Instruments Act may
not be available for long. If the amendment proposed by an interministerial
group—set up last year to look into policy and legislative changes to tackle
the large number of pending cases—are accepted, all cases of dishonoured
cheques will have to be decided only through arbitration, conciliation or
settlement by lok adalats. If the matter is referred to an arbitrator, the
latter will hear both the parties and pass an award binding on both. This can
only be appealed on grounds that it is invalid or the defendant was not given
adequate time to present the case, or was not given notice about the
arbitrator's appointment.
If the matter is
referred for conciliation, a third person has to help the parties come to a
settlement. Lok adalats function on similar lines. In both these cases, if the
disputing parties are unable to settle, the matter can be taken to court again.
Banks, however, are not happy with these developments. "This is a backward
step in terms of recovery mechanism," says Meenakshi A, head, operations,
ING Vysya Bank.
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