As per the Banking Offence and Punishment Act, 2064 B.S. (2008 A.D.)

Nepal has currently seen a rise in the cases related to Cheque Bounces (also, referred to as check). While the new amendment to Banking Offence and Punishment Act has provided that no person shall issue cheques without having an adequate amount in his/her account. The punishment for the same is a fine in equivalence to the disputed amount and a jail term up to 3 (three) months.

The new amendment in the Banking Offence and Punishment Act limits cheque bounce to be defined as the drawing of check/cheque that would result in its bounce due to insufficient fund.

The case related to Banking Offence starts with the registration of a “jaaheri” or, Police Report (FIR) within a year from the cause of action.

A banking offence is a state party case meaning the state shall be filing the “Abhiyog-Patra” or the complaint with the court.

As per the Negotiable Instruments Act, 2034 B.S. (1977 A.D.)

Dishonor of Cheque occurs when the bank refuses to let the cheque be exchanged with cash. A cheque is dishonored due to the following reasons:

• If the cheque is overwritten.
• If the signature is absent or the signature in the cheque 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 written.
• If the amount written in words and figures does not match with each other.
• If the account number is not mentioned clearly or is altogether absent.
• If the drawer (one who draws and, provides the cheque) orders the bank to stop payment on the cheque.
• If the court of law has given an order to the bank to stop payment on the cheque.
• If the drawer has closed the account before presenting the cheque.
• If the fund in the bank account is insufficient to meet the payment of the cheque.
• If the bank receives the information regarding the death or lunacy or insolvency of the drawer.
• If any alteration made on the cheque is not proved by the drawer by giving his/her signature.
• If the date is not mentioned or written incorrectly or, the cheque has expired.

In case of Nepal, check bounce can also result into a dishonor of cheque.

The drawee must provide a notice of the dishonor to the drawer of the cheque. [Note: Notice of Dishonor is not necessary for certain circumstances.]

A notice can be oral or written and can also be given to the authorized agent of the drawer or, to his/her heir when in case of the death of the drawer.

The notice shall be given within a reasonable time at the drawer’s residence or, place of business.

It is a duty of the Cheque Drawer to compensate the Drawee once a notice of Dishonor has been provided to the Drawer by the Drawee. A drawer might not be held liable if he/she has not been served with a notice (liability shall occur without the need of notices under certain circumstances).

The penalty for the dishonor of Cheque as per the Act is imprisonment for up to three months and a fine up to three thousand rupees or both. The affected party may recover the amount in question along with the interest, from the drawer.

complaint is to be filed with the concerned District Court within five years from the date of cause of action.

We provide the following related services:

1. Negotiation and Legal Notices.
2. Drafting and Filing the case documents.
3. Representation in Court.

Note: This write-up should not be considered as an expert legal opinion. This has been drafted only for the purpose of general understanding of the subject matter.

• For more details please contact:
• Atit Babu Rijal
• Commercial Litigation Lawyer
• Partner
• atit@ahnlegal.com
• +977 9851243536