Cheque Bounce in Nepal

A bounced cheque occurs when the payee is unable to access the specified funds from the cheque. The bank rejects the check for a variety of reasons, usually because of insufficient funds in the account of the person issuing the check. A bounced cheque may occur due to the benefactor's dishonesty or an accidental error, where the issuer incorrectly believes there are enough funds in their account. The signature on the cheque of the account holder is frequently different from the signature on record at the bank, or the bank has been informed beforehand not to proceed with the cheque.

Addressing the Issue:

The rising number of bounced cheque cases in Nepal emphasizes the need for understanding the possible solutions when faced with such scenarios. If you believe the bounced cheque was unintentional, you have the option to resolve it in a private manner. However, if the issuer declines to cooperate or provide an explanation, the recipient has the option to pursue legal action.

Cheque bouncing is seen as a type of cheque dishonor.

In Nepal, the following two Acts dictate the regulations concerning bounced cheques.

Negotiable Instruments Act 2034 (1977)

Banking Offences and Penalties Act of 2064 (2008)

The steps involved in initiating a civil lawsuit are as follows:

1. Submit a statement to the District Court no later than five years after the incident.
2. There is a witness and evidence examination.
3. The District Court makes the ultimate determination.
4. The applicant or benefactor may be able to file an appeal with the High Court if they are unhappy with the outcome.

The Banking Offense and Punishment Act of 2008: This is a criminal case in which the beneficiary of the check knew that the amount indicated on the check was not available in his or her account and yet gave the check to the other party. In this case, the benefactor is criminally prosecuted and can be imprisoned up to 3 months. The affected party must also receive the claimed amount plus the fine.

The criminal case filing procedure:

1. Since this is a criminal case, the police officers must receive the First Information Report (FIR) no later than a year from the incident date.
2. The Government Attorney receives the investigation report.
3. The High Court receives the charge sheet.
4. The High Court hearing.
5. Witness and evidence examination.
6. The High Court makes the ultimate determination.
7. Should you be unhappy with the ruling, you have the option to appeal to the Supreme Court.

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

Suit Amount	Imprisonment
Up to 10 lakh	Up to 1 yr
Above 10-50 lakh	1-2 yrs
Above 50 lakh-1 crore	2-3 yrs
Above 1 crore or above	3-5 yrs

There are other situations as well offering own imprisonment and fine(2). In sum, we can see a fine range 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.

To sum up, bouncing a check is a significant financial violation that can result in legal action such as fines and jail time, in accordance with Section 138 of the Negotiable Instruments Act, 1881. The outcome of the court's ruling depends on the complainant's ability to demonstrate that the check was given to settle a valid debt and was rejected because of insufficient funds or other reasons specified by the law. If the defendant does not present a reasonable defense or resolve the issue peacefully, the court might decide in favor of the plaintiff, leading to consequences for the defendant such as paying damages and, sometimes, being imprisoned.

In order to prevent the negative outcomes of a bounced check, it is recommended for those participating to uphold financial honesty and openness, making sure there are enough funds at the time of writing the check.

FAQs

What is a bounced cheque?

A cheque is considered bounced when the payee cannot access the specified funds because the bank rejects the cheque, usually due to insufficient funds or mismatched signatures.

What are the legal consequences of a bounced cheque in Nepal?

Legal consequences include civil lawsuits or criminal prosecution, with potential fines and imprisonment based on the cheque amount and intent behind the issuance.

What are the main laws governing bounced cheques in Nepal?

The Negotiable Instruments Act 2034 (1977) and the Banking Offences and Penalties Act of 2064 (2008) govern bounced cheques in Nepal.

What penalties can I face for issuing a bounced cheque?

Depending on the cheque amount, you may face fines up to Rs. 10,00,000 and imprisonment ranging from 1 to 5 years.

Can I resolve a bounced cheque issue privately?

Yes, if both parties agree, a bounced cheque can be settled privately without pursuing legal action.

What is the time limit for filing a civil lawsuit for a bounced cheque in Nepal?

A civil lawsuit must be filed within five years of the cheque bouncing.

How soon should I file a criminal case for a bounced cheque?

A criminal case must be filed within one year from the date of the cheque bounce.

What is the minimum punishment for a bounced cheque?

The minimum punishment includes a fine of Rs. 10,000 and imprisonment for at least one year.

Can a cheque issuer be jailed for a bounced cheque in Nepal?

Yes, if found guilty of intentionally issuing a bounced cheque, the issuer may face imprisonment, depending on the cheque amount.

What is the maximum fine for a bounced cheque in Nepal?

The maximum fine for a bounced cheque is Rs. 10,00,000, along with up to five years of imprisonment based on the cheque amount.