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Manju nath   20 May 2022

Cooperative society cheques bounce


  If a cheques get bounced by cooperative society,  which was issued to a member with a condition orally informed him  and recorded in the Monthly/GBM resolutions due to insufficient funds . Soceity suppose to get funds by signing MOU with developer and it was delayed .We had Informed member not to present till society informs sufficient funds are available in the accounts. Member has gone ahead  and presented the cheque and got bounced , now he has put criminal case on the society making president and secretory responsible. what will be legal consequences that one has to under go from society.    


 3 Replies

SHIRISH PAWAR, 7738990900 (Advocate)     21 May 2022


As per law, you are bound to pay the cheque amount as the cheque is bounced otherwise the court may give judgment and ask society to pay double the amount of cheque value to the member and may order the imprisonment as per allegation in the case.

Try to amicably settle the issue by involving other society members.

Manju nath   23 May 2022

Hello Sir,

 Thanks for the  reply.


Few members had gone to departmental court against the GBM resolution on  land swapping/selling the ligated lands (farmers has filed cases againest soceity ) post the approval of department . Later on they came to board members and informed that they are going to withdarw the cases on One condition ,if soceity is issuing the  post dated cheques . After board menbers discussion in the board , board clearly communicated to the members that soceity do not have funds in the account as shown in the audit reports  the cheques will be issued and they cannot present to the bank untill unless soceity gets NOC from department and then we sign the MOU and get the funds from the developer and also that is their responsibility to get all the cases withdraw from the members . They agreed and took responibility of withdrawing the cases from all the members .later On , all of them withdraw the cases except two members were not withdrawn because of their internal quarrel . Due to which Department has not given the NOC cand then we could not sign the agreement with the developer .The discussions were On with them , mean while election also came and the board members got changed  and now new board in place . The members  who had taken cheqees are in the new board and one of the member has sent the court notice for cheque bounce now . In this senario , please suggest how do we handle the situation now.As per the discussion  with them , all of them suppose to withdraw the cases but they couldnot . Due to with we didnot get NOC to proceed . Same resolution has been passed in the GBM and in monthly mboard meetings .Please suggest..

Shweta   23 May 2022

 Hello Sir

In the present case, Negotiable instrument Act will be applicable. The matter of insufficiency of funds is dealt under Section 138 of the Act. It is punishable with a fine which can extend to twice the amount of the cheque or imprisonment for a term not more than two years or both. 

When the payee presents a cheque to the bank for payment, and the cheque is returned unpaid by the bank with a memo of insufficient funds, the cheque is said to have bounced. The same has happened in the present case as well. 

If there is not enough balance in the drawer’s account to make the payment of the cheque, the bank will reject and return the cheque to the payee with a memo stating insufficient funds to pay the cheque amount.

The Reserve bank of India has also issued some guidelines in 2021 which are as follows – 

  1. Customers whose financial activities revolve heavily around cheques or those who even plan to use cheques will have to ensure a minimum bank balance.

  2. If this minimum balance is not maintained, the cheque will bounce. In addition to this, the customer who issued the cheque may also have to pay a penalty fee.

However, a cheque bounce notice cannot be issued if the cheque was issued as a donation, gift or any other obligation that is not legally enforceable. 

In such cases parties should try to amicably settle the dispute outside the Court thereby saving time and cost.

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