Check Dishonor and Legal Remedies in Bangladesh
Check dishonor, also known as bounced cheque, is a common problem faced by businesses and individuals in Bangladesh. When a check is presented for payment but is not honored by the bank due to insufficient funds or other reasons, it can lead to financial loss and legal complications. In this article, we will explore the concept of check dishonor and the legal remedies available to victims in Bangladesh.
Understanding check dishonor
Check dishonor occurs when a check presented for payment is returned unpaid by the bank. This can happen for a variety of reasons, including insufficient funds in the issuer’s account, mismatched signatures, or the check being post-dated or stale. Whatever the reason, check dishonor can have serious consequences for both the payer and the issuer.
Legal framework in Bangladesh
In Bangladesh, checks are dishonored by the Negotiable Instruments Act, 1881. According to this Act, subsequent issuance of dishonored checks is a criminal offense punishable by imprisonment and/or fine. The payee of a dishonored check has the right to take legal action against the issuer to recover the amount owed.
Legal Remedies for Dishonor of Checks
1. Legal Notice
The first step in seeking remedy for check dishonor is to send a legal notice to the issuer demanding payment of the dishonored amount. The notice should specify the amount due, the reason for the dishonor and the payment deadline. If the issuer fails to respond or make payment within the stipulated time, the receiver may proceed with legal action.
2. Filing a complaint
If the issuer fails to respond to the legal notice or contests the demand, the receiver can file a complaint under Section 138 of the Negotiable Instruments Act in the concerned Magistrate Court. Complaint should be filed within 30 days from the date of receipt of dishonored cheque.
3. Court Proceedings
Once the complaint is filed, the court will issue a summons to the issuer, requiring them to appear in court. If the issuer fails to appear, the court can issue a warrant for their arrest. During the proceedings, both parties will have an opportunity to present evidence and arguments in court.
4. Trial and execution
If the court finds the issuer guilty of dishonoring the check, they may be ordered to pay imprisonment and/or fines. Additionally, the court may order the issuer to compensate the recipient for the dishonored amount and any legal costs incurred. The receiver can enforce the court judgment through judicial proceedings to recover the due amount.
Check dishonor is a serious offense under Bangladesh law, and legal remedies are available to victims. By understanding the legal framework and taking quick action, individuals and businesses can protect their interests and recover amounts owed to them through dishonored checks.
Can bounced check cases be settled out of court in Bangladesh?
Yes, the parties involved can settle the matter out of court by mutual agreement, but it is advisable to document the settlement to avoid future disputes.
What is the penalty for dishonoring checks in Bangladesh?
Punishment for check dishonor in Bangladesh includes imprisonment up to one year or fine, or both, as determined by the court.
Is there a time limit for filing complaint for check dishonor in Bangladesh?
Yes, as per Section 138 of the Negotiable Instruments Act, complaint has to be filed within 30 days from the date of receipt of dishonored cheque.
Can legal action be taken for bounced checks issued by authorized representatives of a company?
Yes, legal action can be taken against both individual issuers and the companies they represent for check dishonor under Bangladesh law.
Is there any defense available to the issuer in case of check dishonor?
Yes, the issuer may have defenses such as lack of knowledge of insufficient funds or an actual dispute regarding the loan. However, the burden of proof is on the issuer to establish such a defense in court.