Cheque bounce cases are among the most common financial disputes in India. They are governed by Section 138 of the Negotiable Instruments Act, 1881, which makes cheque dishonor a criminal offence under specific conditions. Understanding the legal procedure helps individuals and businesses recover money lawfully.
What Is a Cheque Bounce?
A cheque is said to bounce when it is returned unpaid by the bank due to reasons such as insufficient funds, account closure, or mismatch of signatures. Not every dishonor results in criminal liability, but certain legal requirements must be fulfilled.
When Does Cheque Bounce Become a Criminal Offence?
A cheque bounce becomes an offence when:
• The cheque was issued to discharge a legally enforceable debt
• The cheque was presented within its validity period
• The cheque was dishonored due to insufficient funds or similar reasons
• A legal notice was sent within 30 days of dishonor
• Payment was not made within 15 days of receiving the notice
If all conditions are met, a criminal complaint can be filed.
Legal Procedure for Cheque Bounce Case
The process begins with the bank issuing a cheque return memo. The payee must then send a legal notice demanding payment within 30 days. If payment is not made within 15 days, a criminal complaint can be filed before the Magistrate.
Punishment Under Section 138
The punishment may include:
• Imprisonment up to two years
• Fine up to twice the cheque amount
• Or both
Courts often encourage settlement and compensation instead of imprisonment.
Is Cheque Bounce a Civil or Criminal Case?
Cheque bounce cases are criminal in nature but involve financial recovery. Civil remedies can also be pursued simultaneously.
Conclusion
Cheque bounce law provides strong protection to creditors. Following proper legal steps ensures faster recovery and legal compliance.