Cheque Bounce Remedy and Procedure in Nepal

02 June 2020

This article explains about the relevant provision and available remedies in case of cheque bounce/dishonor of cheque in Nepal.

1. Introduction

A cheque is said to be bounced when a bank refuses to make payment in return of the cheque due to insufficient fund, overwriting in the cheque, mismatch of signature, expired cheque, etc. It is also considered as a dishonor of cheque in Nepal.

2. Relevant Laws

The laws that provide remedies against cheque bounce in Nepal are:

      a) Negotiable Instruments Act, 2034 (1977), (“Negotiable Instruments Act”); and

      b) Banking Offence and Punishment Act, 2064 (2008), (“Banking Offence Act”).

3. Remedy under Negotiable Instruments Act

Negotiable Instruments Act and Banking Offenses and Punishment Act respectively provide separate civil and criminal proceedings against cheque bounce in Nepal. It is at the option of the aggrieved party to choose the remedies available under these laws.

Negotiable Instruments Act provides for civil proceedings in relation to remedy against dishonor of cheque as explained below:

Case Proceeding under Negotiable Instruments Act

4. Remedy under Banking Offence and Punishment Act

Banking Offence and Punishment Act provides for the criminal proceedings, where cheque bounce is a criminal offence and the state becomes the plaintiff.

Case Proceeding under Banking Offence and Punishment Act

Disclaimer: This article is for informational purposes only and shall not be construed as legal advice, advertisement, personal communication, solicitation or inducement of any sort from the firm or any of its members. The firm shall not be liable for consequences arising out of any action undertaken by any person relying on the information provided herein.

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