Cheque Bounce Laws in India: Legal Remedies and Process

Published on: Lawiz Team

Understand the legal provisions related to cheque bounce in India, including the process, penalties, and remedies available under the law.

What is Cheque Bounce?

Cheque bounce occurs when a bank returns a cheque unpaid due to insufficient funds or other reasons.

Cheque bounce is punishable under Section 138 of the Negotiable Instruments Act, 1881.

Insufficient funds, mismatched signatures, overwriting, expired cheque, or closed account are common reasons.

The payee must send a legal notice within 30 days of cheque return, and the drawer has 15 days to make payment.

If payment isn't made within 15 days, the payee can file a criminal complaint within 30 days after that.

Punishment may include imprisonment up to 2 years, a fine up to twice the cheque amount, or both.

The drawer may defend on grounds like post-dated cheque, lack of legally enforceable debt, or procedural lapses.

What is a cheque bounce case?

A cheque bounce case arises when a cheque is dishonoured by the bank due to insufficient funds or other reasons.

What is the legal interpretation of cheque bounce under Indian law?

Cheque bounce is governed by Section 138 of the Negotiable Instruments Act, 1881, which criminalizes dishonour of cheques for insufficient funds.

Who can file a cheque bounce case?

The payee or holder of the cheque can file a case if the cheque is dishonoured and legal notice requirements are fulfilled.

Can you give a practical example of a cheque bounce case?

For example, if Person A issues a cheque to Person B and it bounces due to insufficient funds, B can send a legal notice and file a case.

Are there any other laws connected with cheque bounce?

Yes, it can also involve IPC provisions such as cheating (Section 420) if there is fraudulent intent.

How do courts handle cheque bounce cases?

Courts follow summary trial procedures and emphasize timely disposal; conviction may lead to imprisonment up to 2 years or fine.

Why is cheque bounce law important?

It maintains trust in financial transactions and ensures accountability for payment failures.