Cheque Bounce

A bounced cheque happens when the recipient cannot withdraw the amount stated on the cheque. The bank declines the cheque for various reasons, often due to lack of funds in the benefactor's account. A bounced cheque can result from the benefactor's deceit or from an unintentional mistake where the issuer mistakenly thinks there are sufficient funds in their account. The signature on the account holder's cheque often does not match the signature on file at the bank or the bank has been notified in advance that the cheque should not be processed.

Solving the Problem:

The number of bounced cheque cases is increasing in Nepal, highlighting the importance of knowing the available remedies in case of encountering such situations. If you think the bounced cheque was accidental, you can settle it privately. But if the issuer refuses to cooperate or explain, the recipient can take legal action.

Cheque bounce is considered a form of cheque dishonor.

In Nepal, the laws governing bounced cheques are regulated by the following two Acts.

Negotiable Instruments Act 2034 (1977)

Banking Offences and Penalties Act of 2064 (2008)

The process to file a civil lawsuit:

1. File a statement at the District Court not later than 5 years from the date of incident.

2. Witness and evidence examination is carried out.

3. Final decision is made by the District Court.

4. If the applicant or benefactor is not satisfied with the decision, an appeal to the High Court is plausible.

5. Banking Offense and Punishment Act, 2008: This is a criminal lawsuit where the person who is the benefactor of the cheque drawn had knowledge on the unavailability of the denoted amount in his/her account hands over the cheque to the other party. In this case, the benefactor is criminally prosecuted and can be imprisoned up to 3 months. Also, the claimed amount along with fine has to be provided to the effected party.

The process to file the criminal case:

1. Since this is a criminal case, FIR (First Information Report) has to be filed at the Police Office not later than 1 year from the date of incident.

2. Investigation report is sent to Government Attorney.

3. Charge sheet is filed at High Court.

4. Hearing at the High Court.

5. Witness and evidence examination.

6. Final decision is made by the High Court.

7. Appeal to Supreme Court is doable if there is dissatisfaction on the decision.

Depending on the basis of the claimed amount, the following is the provision:

There are other situations as well offering own imprisonment and fine(2). In sum, we can see fine ranges minimum of Rs. 10,000 and a maximum of Rs. 10,00,000, and imprisonment minimum of 1 year and a maximum of 5 years.