Cheque Bounce Return Memo - Understanding the Bank Cheque Return Memo

What is a Cheque Return Memo

A cheque return memo, also known as a cheque dishonour memo or cheque return advice, is a document issued by a bank when a cheque presented for payment is dishonoured. The return memo contains all the relevant details of the cheque and the reason for its dishonour. It is a crucial document in a cheque bounce case, as it serves as proof that the cheque was presented and dishonoured. The return memo is issued by the paying bank (the drawer's bank) and is transmitted to the presenting bank (the payee's bank) through the Cheque Truncation System (CTS).

The return memo is typically issued in a standardised format prescribed by the Reserve Bank of India. It contains the cheque number, date, amount, the name of the drawer, the account number, and the reason for dishonour. The return memo also contains the return code, which is a standardised code that specifies the reason for dishonour. The return memo is signed or authenticated by the bank official and bears the stamp of the bank. The payee should obtain the original return memo from the bank and preserve it as evidence. Vidhi Legal Services advises clients on the importance of the cheque return memo and how to obtain it from the bank.

Information Contained in a Return Memo

A cheque return memo contains several pieces of information that are essential for a cheque bounce case. The memo typically includes the name and branch of the paying bank, the date of presentation, the date of return, the cheque number, the cheque date, the cheque amount in figures and words, the drawer's name and account number, and the payee's name. The return memo also contains the reason for dishonour, which is specified using a standard return code. The return code is a numeric or alphanumeric code that corresponds to a specific reason for dishonour.

The return memo also contains the signature or authentication of the bank official who processed the return. The memo may also contain additional remarks or comments from the bank official. The return memo is typically printed on the bank's letterhead and bears the bank's stamp. The payee should carefully examine the return memo to verify that all the details are correct. The payee should also ensure that the return memo is obtained from the bank promptly after the dishonour. The return memo is a crucial piece of evidence, and the payee should preserve the original memo and make copies for legal proceedings. Vidhi Legal Services helps clients obtain and examine the cheque return memo and use it effectively in legal proceedings.

Standard Return Codes Explained

Banks in India use standard return codes to specify the reason for dishonour of a cheque. These codes are prescribed by the Reserve Bank of India and are used uniformly by all banks. The most common return codes include: Code 01 - Funds Insufficient, which means the account balance is lower than the cheque amount. Code 02 - Exceeds Arrangement, which means the cheque amount exceeds the overdraft or credit limit. Code 03 - Refer to Drawer, which is a general code used when the bank advises the payee to contact the drawer. Code 05 - Signature Mismatch, which means the signature on the cheque does not match the specimen signature.

Other common return codes include: Code 06 - Alteration Required, which means the cheque has alterations that need to be authenticated. Code 07 - Amount in Words and Figures Differ. Code 08 - Post Dated, which means the cheque is dated in the future. Code 09 - Stale Dated, which means the cheque was presented after three months. Code 10 - Account Closed. Code 11 - Account Frozen. Code 12 - Account Dormant. Code 13 - Payment Stopped by Drawer. Code 14 - Death of Drawer. The return code is crucial because it determines the legal remedy available. For instance, Code 01 attracts criminal liability under Section 138, while Code 05 does not. Vidhi Legal Services helps clients understand the return codes and advises on the appropriate legal action.

Legal Significance of the Return Memo

The cheque return memo is a document of significant legal value in a cheque bounce case. The return memo serves as prima facie evidence of the dishonour of the cheque. The court relies on the return memo to determine the fact of dishonour and the reason for dishonour. The return memo also helps in establishing the limitation period, as the date of the return memo is used to calculate the period for issuing the legal notice. The return memo is also used to determine the jurisdiction of the court, as the jurisdiction is based on the place where the cheque was presented for payment.

The return memo is also used to rebut the defence of the drawer. If the drawer argues that the cheque was not dishonoured or that it was dishonoured for a different reason, the return memo can be used to establish the truth. The return memo is a public document issued by the bank, and it carries a presumption of authenticity. The court will accept the return memo as evidence unless its authenticity is challenged by the accused. The payee should ensure that the return memo is obtained and preserved properly. Vidhi Legal Services advises clients on the legal significance of the return memo and uses it effectively in legal proceedings.

How to Obtain and Preserve the Return Memo

The process of obtaining the cheque return memo is straightforward. When a cheque is dishonoured, the paying bank transmits the return memo electronically through the CTS system to the presenting bank. The payee can obtain the return memo from the presenting bank (the bank where the cheque was deposited). The payee should visit the bank branch and request a copy of the return memo. The bank may provide the return memo in physical or electronic form. The payee should ensure that the return memo contains all the necessary details and that it is properly authenticated.

The payee should preserve the original return memo carefully, as it is a crucial piece of evidence. The payee should make multiple copies of the return memo and store them in a safe place. The payee should also obtain a certified copy of the return memo from the bank, which may be required for legal proceedings. The payee should also preserve the envelope or covering letter in which the return memo was received, as this may be used to prove the date of receipt. The payee should not make any alterations or markings on the original return memo. If the original return memo is lost, the payee should obtain a duplicate from the bank. Vidhi Legal Services assists clients in obtaining and preserving the cheque return memo and uses it as evidence in legal proceedings.

Frequently Asked Questions