Cheque bounce cases are among the most common financial disputes in India and are governed by Section 138 of the Negotiable Instruments Act, 1881. The objective of this law is to maintain trust and credibility in commercial and financial transactions. When a cheque is dishonoured due to reasons such as insufficient funds, account closure, or stop payment instructions, the law provides a structured remedy to the payee.
Understanding Cheque Bounce Under Section 138
A cheque bounce becomes a criminal offence only when all statutory requirements are strictly followed. The cheque must be issued towards a legally enforceable debt or liability and presented within its validity period. Upon dishonour, the bank issues a return memo specifying the reason for non-payment.
The legal process begins when the payee sends a statutory legal notice within 30 days from the date of receiving the bank’s return memo. This notice demands payment of the cheque amount from the drawer.
After receiving the legal notice, the drawer is granted 15 days’ time to make the payment.
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If payment is made within these 15 days, the matter stands resolved and no criminal case arises.
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If payment is not made within 15 days, the cause of action arises under Section 138 of the NI Act.
Thereafter, the payee must file a criminal complaint within 30 days from the date on which the cause of action arises, before the competent Magistrate Court.
Legal Remedies Available
Once a complaint is properly filed, the court may summon the accused. Upon conviction, punishment may include imprisonment, fine (which may extend up to twice the cheque amount), or both. Alongside criminal prosecution, the complainant may also pursue civil recovery proceedings to recover the outstanding amount.
Courts increasingly encourage settlement and compounding of offences to ensure speedy resolution and reduce unnecessary litigation.
Importance of Legal Expertise
Cheque bounce matters are highly procedural, and even a minor error—such as delay in issuing notice or filing the complaint—can result in dismissal of the case. Experienced legal professionals ensure strict compliance with statutory timelines, accurate drafting of notices, and effective representation before the Magistrate Court.
Conclusion
Cheque bounce cases in India require timely action, procedural accuracy, and professional legal guidance. By following the correct legal process under the NI Act, individuals and businesses can effectively recover dues and uphold financial accountability.