Cheque Bounce and Outstanding Payment: What Businesses Should Know

A cheque issued toward an outstanding liability may be dishonoured by the bank for various reasons. Where the statutory requirements are satisfied, a dishonoured cheque can have legal consequences under the applicable provisions of Indian law.

Preserve the Banking Documents

Keep the original cheque, bank return memo and documents showing the underlying transaction. Invoices, agreements, delivery records and communications can also be important when establishing the liability.

Timelines Matter

Cheque dishonour matters can involve statutory timelines and procedural requirements. Missing an applicable deadline may affect the available remedy, so the facts should be reviewed promptly after receiving the bank's return information.

A professional assessment can help determine what documents are available, what liability is being claimed and which lawful recovery route may be appropriate.