Question
Q: Can you avoid charges if cheque cleared later?
Answer
A:
No, usually you cannot avoid cheque bounce charges even if the cheque is cleared later. Once a cheque is dishonoured, the bank immediately records it as a dishonour transaction and levies a penalty fee. Even if you deposit funds later and the same cheque is presented again and cleared, the bounce charges already applied by the bank will remain payable.
Why Charges Apply Even if Cheque Clears Later
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Bank Processing System
When a cheque is first presented and dishonoured due to insufficient funds, stop payment, or mismatch, the bank treats it as a failed transaction and imposes the standard penalty. -
Separate Transaction on Re-Presentation
If the cheque is presented again and funds are available, it will clear successfully. But this is treated as a new transaction. The earlier dishonour fee is not reversed. -
Payee Bank Charges
In some cases, the payee’s bank also deducts penalty charges for dishonour, and these may be passed on to the payee, creating reputational and financial issues for the drawer.
Legal Consequences Under Section 138 NI Act
Even if the cheque is later cleared on re-presentation, the first dishonour still gives the payee the right to issue a legal notice under Section 138 of the Negotiable Instruments Act if they choose to.
To avoid legal action, the drawer must make payment within 15 days of receiving a demand notice.
How to Avoid Such Charges
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Always maintain sufficient balance before issuing cheques.
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Monitor your account activity to ensure timely fund availability.
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Prefer digital modes of payment like NEFT, RTGS, or UPI for time-sensitive transactions.
Key Takeaway
Once a cheque bounces, bank charges are unavoidable, even if the cheque is honoured later on re-presentation. The dishonour also exposes the drawer to legal risks under Section 138 NI Act. The best way to avoid charges and legal issues is to ensure sufficient funds before issuing any cheque.
.By Advocate BK Singh
(Delhi High Court)
