Bounced cheques

Cheques where the payee is unable to collect payment due to the issuer's bank stating "refer to drawer" are known as "rubber cheques" or "bounced cheques". The issue to be considered here is whether issuing of such cheques should be considered a criminal matter, eg the offence of cheating under the Penal Code.

From what I understand, the police normally take the view that this is only a civil case and not a criminal one. The police would only take action if the case is reasonably strong. In the normal bounced cheque situation, it is possible that the cheque issuer intended to pay but for some reasons, the funds were not available on the due date for payment. There is therefore no intention to cheat. On the other hand, if it can be shown that the cheque was issued from a closed account, then there is clearly no way for the payee to receive payment. This would then be a clear case of cheating.

Even if the police rejects the complaint of criminal conduct, it might still be possible to obtain a private summons for cheating against the cheque issuer. It would be better to consult your lawyer on this although the procedure is not complicated.

As a final comment, it might be possible to show cheating even where the bank account was not closed if it can be shown that the issuer issued cheque(s) for ridiculously large sums of money. For example, if he issued cheques totalling $500,000 when his bank account never had more than $10,000, the court may well agree that he had no intention of paying the cheques.