The cases of cheque bouncing are rampant in Nepal nowadays. Cheque bouncing is regarded as a condition in which the receiver will not be able to exchange the issued cheque due to various reasons such as insufficient fund, overwriting in the cheque, mismatch of signature, among others. As per the law, cheque bouncing is regarded as one of the causes for dishonouring of the cheque.
Here is everything you need to know about laws related to cheque bouncing and/or dishonouring in Nepal.
In Nepal, the following two acts regulate this issue:
Provisions in the Negotiable Instruments Act
Conditions of cheque dishonouring
The Negotiable Instruments Act, 1977, regards the following acts as a dishonouring of a cheque:
- Overwritten cheque
- If no signature is affixed or does not match with the specimen signature kept by the bank
- If the name of the drawee (one who accepts and, cashes the cheque) is absent or not clearly mentioned
- If the amounts written in words and figures do not match with each other
- If the account number is not mentioned or not mentioned clearly
- If the drawer (one who draws and, provides the cheque) asks the bank to stop the payment on the cheque
- If a court has given an order to the bank to stop the payment
- If the drawer has closed the account before presenting the cheque
- If the fund in the account is insufficient to meet the payment mentioned in the cheque
- If the bank receives information regarding the death or lunacy or insolvency of the drawer
- If the alteration made on the cheque is not proved by the drawer by giving his/her signature
- If the date is not mentioned or the cheque has expired
Filing a case against cheque dishonouring
Section 108 of the Negotiable Instrument Act, 1977, mentions that a complaint shall be filed within five years from the date of the cause of action to file such a complaint. The process for filing the case at the concerned district court is listed below:
Step 1: Filing of a statement of claim (phiradpatra) by the party
Step 2: Reply by other party on the statement of claim, which is regarded as pratyuttarpatra.
Step 3: Collection of evidence and examination of witnesses
Step 4: Hearing and final decision by the district court
Step 5: Filing an appeal at a high court, if the any of the party is not satisfied with the decision rendered by the district court
Remedies
Section 107A of Negotiable Instrument Act, 1977, provides the following remedy to the affected party.
- Recovery of the amount mentioned in the cheque with interest
- Imprisonment not exceeding three months or fine up to Rs 3,000 or both
Provisions in the Banking Offence and Punishment Act
Definition
Section 3(c) of Banking Offence and Punishment Act, 2008, has it that if drawer draws a cheque knowingly to make a payment from an account where he/she has an apparent knowledge that the account does not have sufficient balance to cover the amount of the cheque drawn, it is regarded as an act of dishonouring the cheque.
Procedure to file a case
Section 7(1) of the Banking Offence and Punishment Act, 2064, mentions a complaint shall be filed within one year from the date of cause of action to file such a complaint. The process for filing the case in the concerned high court is listed below:
Step 1: Submission of the first information report (FIR) at the concerned police station
Step 2: Police will carry out investigation, which they will submit to government attorney.
Step 3: Filing of a charge sheet at the high court by the government attorney
Step 4: Hearing for bail at the high court: It is the first hearing in that particular case
Step 5: Examination of witness
Step 6: Hearing when the high court will render it decision
Step 7: Filing an appeal at the Supreme Court, if any of the parties is not satisfied with the decision rendered by the high court
Remedies
The Banking Offence and Punishment Act, 2008, provides the following remedy to the affected party:
- Recovery of the amount mentioned in the cheque with interest
- Imprisonment not exceeding three months
- Fine of the amount mentioned in the cheque
