Yes, you can take legal action if the cheque gets bounced with exceeds arrangement.

You should first inform the person that his/her cheque has been bounced whatever the reason the bank gives.

After that, if the issuer is still not paying, you can go to a lawyer, and the lawyer will issue him a legal notice and inform him that his cheque has been dishonored giving him 15 days to pay it or a criminal case will be filed against him.

The legal notice is to be sent by a registered post so that it will be explicit that he has got the notice and is still at fault.

After sending the legal notice one has to wait for 15 days and then after that period he will have to file the suit within the next 30 days.

A summary suit can be filed against the cheque issuer, and you will have to present original copies of the cheque before the court.

After the registration of the case, a summon will be sent to him and the court will put a charge upon him if he denies that then the court will ask the defendant to present his defense.

If you win then the cheque issuer will be punished with double the amount he owed along with the cost of litigation and 2 years of Imprisonment.

Legal process

After you have the Banker’s memo stating the reason for the dishonor of the cheque  (could be because of insufficient funds, payment stopped, exceeds arrangement, etc.) you should notify the drawer of the cheque to make good the payment of the amount.

If upon subsequent presentation of the cheque to the bank the cheque is still not honourer you shall have to send a legal notice to the drawer within 30 days from the date of dishonor of the cheque.

If the cheque is still not honored within 15 days of the expiry of 30 days you can proceed to file a criminal complaint under section 138 of the Negotiable Instruments Act. by the source of Yashveer Singh Yadav law graduate

What are the reasons to dishonor or bounce a presented cheque?

Bankers return the cheques on account of various reasons which is available in a list of cheque return reasons with numbers and the most seen reasons are-

Insufficient funds

When the balance available in a savings deposit or current deposit account is less than the amount of the cheque, the cheques are returned to the customers with the reason – “Insufficient funds”

Exceeds arrangement

In the case of overdraft or cash credit account, in case the limit is not sufficient to cover the amount of the cheque, the bankers return the cheques with the reasons – “Exceeds arrangement”

The drawer’s signature differs

Sometimes the signature of the drawer on the cheque may not match the specimen signature lodged with the bank and in such cases, the cheque is returned with the reason – “Drawer’s signature differs”.

Stale cheque

The validity period of the cheque is three months and when the date of presentation of the cheque is beyond three months from the date of the cheque, the cheque is returned with the reason – “Stale cheque”

Post-dated cheque

When the date of presentation of the cheque is even one day earlier than the date of the cheque, the banker returns the cheque with the reason – “Post-dated cheque”

Alterations on the cheque require authentication by the drawer

Normally alterations are not permitted on the face of the cheque. However, the drawer can authenticate the alteration if any, on the face of the cheque using additional signatures confirming the alterations made by him in the case of alterations done on the name of the payee, amount written in words, and/or in figures, etc.

In the cases mentioned above where there are no authentications by the drawer for the alteration/s made on the cheque, the cheques are returned for the following reasons – “Alterations on the cheque require authentication by the drawer”

The account is frozen as per court/government orders

In the case of the orders from a court or government thereby freezing the account of the customer, the banker dishonors the cheque presented by any customer/his representative/payee of the cheque, with the reasons – “Account is frozen as per court/government orders”

Mutilated cheque

In case the cheque is found to be damaged on account of oil, water, ink, or fire or some portion of the cheque is found to be missing, the cheque is returned with the reason – “Mutilated cheque”

How to know if the presented cheque is bounced with exceeds arrangement?