Cheque Bounce Case in Nepal: Cheque Bounce Law in Nepal

Cheque Bounce Law in Nepal

Cheque Bounce Cases also known as dishonored Check happens when a bank refuses to honor/accept the presented cheque to receive payment. According to the prevailing Cheque Bounce Law, the most common cause of Cheque Bounce in Nepal is insufficient Funds. It can also occur because of Mismatches in Signatures, frozen accounts, and post-dated cheques.

There are two primary Cheque Bounce Laws in Nepal:

1. Negotiable Instrument Act 2034
2. Banking Offence and Punishment Act 2064

Negotiable Instruments Act

The Negotiable Instruments Act has provisioned that if one person issues a cheque to the other without sufficient funds or knowledge of the sufficient funds as specified in the Bill of Exchange, then, it constitutes a Cheque Bounce.

Further, if a Bounced Cheque has been issued, the bank has no responsibility or obligation to honor the cheque and ensure the payment. The Individual holding the bank account is liable if the cheque bounces when cashed in.

Moreover, if the Cheque has been dishonored, the Notice of Dishonor must give notice to all the related parties to the Instrument, else, the party isn’t to be liable to such dishonor.

If any offence of Cheque Bounce has been committed, then, it can be filed to the nearest Police Station within five years from the date of Knowledge.

The holder who is entitled to the amount prescribed in the Cheque and the endorser of the Cheque are the Individuals held responsible according to Cheque Bounce Laws in Nepal.

Banking Offence and Punishment Act

The Banking Offence and Punishment Act is another Cheque Bounce Law in Nepal that has criminalized Acts related to Cheque Bounce in Nepal.

Section 3 of the Act has incorporated that it is a Banking Crime to draw a cheque to obtain or to knowingly make payment from the account without sufficient balance. However, the Holder must have an apparent knowledge that the account doesn’t have sufficient balance to cover the amount of cheque drawn.

Such actions of providing an invalid cheque with knowledge or intention have been criminalized by this Act. As stated in the Act, the limitation for providing FIR for Cheque Bounce is one year from the date of knowledge of commission. The Lawsuit must be decided upon within Six Months of the registration of the Case in a competent court.

Cheque Bounce Case in Nepal: Process and Remedy

Following is the complete Procedural Guide for Cheque Bounce Law and its Procedure in Nepal:

Step 1: Filing of FIR

If you are a victim of Cheque Bounce, you must consult a competent lawyer before taking any decision. Moreover, you must collect the bounced letter along with the Bounced Cheque(thrice) and file the First Information Report to the nearest Police Station.

Step 2: Police Investigation and Legal Proceedings

After you have submitted the FIR, the police conduct the required Preliminary Investigation along with the analysis of the Evidence. Thereafter, the Attorney must file the case to the court after which the Court demands a defense from the defendant along with a Counter-Claim if any. If the Defense has been submitted, a hearing is conducted in the Court.

Step 3: Hearing and Decision per the Negotiable Instruments

After the submission of the Claim, the claimant (the one who files the case) requires a law firm in your defense. Thereafter, the Hearing is conducted where the claimant must be presented or opt for representation in Court.

Thereafter, the Lawyer provides the relevant arguments along with Evidence. The Judge provides a final decision based on the Witness, Evidence, and other documents per the Negotiable Instruments.

Step 4: Cheque Bounce Punishment Time Limitation and Compensation

If the Case filed for Cheque Bounce was valid, the claimant is provided with the compensation according to the amount of money in the Cheque Bounce. Thereafter, you shall get the relevant compensation, and the defendant, when found guilty, is provided with the penalties prescribed in Cheque Bounce Law in Nepal.

Penalty and Remedy for Cheque Bounce

The Negotiable Instrument Act has provided that intentional issuance of a Cheque without sufficient funds or an unspecified amount of funds, then, the Cheque Bounce Law is applicable. SC rules against Invoking BOPA for Cheque Bounce has also been duly noted.

If the above action is committed, the Act has stated that the amount mentioned in the Cheque must be recovered from the cheque-holder along with Interest. Moreover, the Holder or the Endorser can be imprisoned for up to 3 Months or fined up to NPR 3,000 or both.

According to the Banking Offence and Punishment Act, it is a crime if an individual draws a cheque from an account where the account doesn’t have sufficient balance.

Moreover, the Drawer must have apparent knowledge of the lack of funds or that the Balance doesn’t cover the amount prescribed in the Cheque.

The Act provisions that the claimed amount must be recovered in due time. It further provides that the individual committing the crime of intentional cheque bounce must be fined up to NPR 10,000.

What is the punishment for a bounced cheque?

According to the Nepalese Laws, the Punishment for a Bounced Cheque is imprisonment for up to 3 Months or fines up to NPR 30,000 or both.

What will happen in cheque bounce case?

In Cheque Bounce Cases, Negotiable Instruments Act and Banking Offence and Punishment Act is applicable through which a Case is filed in the District Court or the High Court.

What is the case for bounced cheque?

The Case For Bounced Cheque has a specific Procedure which starts from Filing of FIR to Police Investigation, Hearing, Decision and finally Compensation to the victim.

What is the time limit for cheque in Nepal?

The Statute of Limitation for filing Cheque Bounce Cases in Nepal is six months from the Date of Knowledge.