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Cheque Bounce Cases Online in India

Dealing with a cheque bounce issue and unsure about the next legal steps? Our firm provides professional legal assistance for Cheque Bounce Cases across India, ensuring swift and effective action under the applicable provisions of law. Whether you are filing a complaint or defending a case, we make the process clear, strategic, and result-oriented.

We review your cheque details, bank return memo, and transaction records, draft and send the mandatory legal notice, and initiate or defend proceedings before the appropriate court. With our focused approach and timely action, you can protect your financial interests, recover your dues, and ensure full compliance with legal requirements—without unnecessary delay or confusion.

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Overview

A cheque is a written order instructing a bank to pay a specific amount of money from one account to another. When a cheque is presented for payment and the bank returns it unpaid, it is said to have bounced or been dishonoured. The most common reason for a cheque bounce is insufficient funds in the account of the person who issued the cheque (the drawer). However, a cheque can also be dishonoured due to a signature mismatch, account closure, stop payment instructions, incorrect date, or overwriting on the cheque.

Under Section 138 of the Negotiable Instruments Act, 1881, dishonour of a cheque is a criminal offence punishable with imprisonment of up to two years, or a fine which may extend to twice the amount of the cheque, or both. This provision was introduced to promote the use of cheques and instil confidence in banking transactions.

Before filing a criminal complaint under Section 138, the payee (the person to whom the cheque was issued) must follow a mandatory legal process, which includes sending a demand notice to the drawer within 30 days of receiving the cheque return memo from the bank. If the drawer fails to make the payment within 15 days of receiving the notice, a criminal complaint can be filed in court.

Legaltax will help you send the demand notice through an expert lawyer and, if required, file the cheque bounce complaint in the appropriate court to ensure you recover your money as quickly as possible.

Common Reasons for Cheque Bounce

Insufficient Funds: The most common reason — the account of the drawer does not have enough balance to honour the cheque.
Account Closed: The bank account of the drawer has been closed before the cheque was presented for payment.
Stop Payment Instructions: The drawer has instructed the bank to stop payment on the cheque.
Signature Mismatch: The signature on the cheque does not match the specimen signature registered with the bank.
Post-Dated Cheque Presented Early: The cheque was presented for payment before the date mentioned on it.
Stale Cheque: The cheque was presented after the validity period of three months from the date of issue.
Overwriting or Corrections: Unauthorized alterations or corrections on the cheque without the drawer's countersignature.
Incorrect Amount in Words and Figures: A mismatch between the amount written in words and the amount written in figures on the cheque.
Drawer's Death or Insolvency: The bank may dishonour a cheque if the drawer has passed away or has been declared insolvent.

Legal Provisions Governing Cheque Bounce Cases

Cheque bounce cases in India are primarily governed by the following legal provisions:

Section 138, Negotiable Instruments Act, 1881: This is the primary provision that makes dishonour of a cheque a criminal offence. It prescribes the conditions under which a complaint can be filed, the punishment for the offence, and the mandatory pre-complaint procedure.
Section 139, Negotiable Instruments Act, 1881: This section presumes that the holder of a cheque received it for the discharge of a legally enforceable debt or liability. The burden of proof lies on the accused to rebut this presumption.
Section 140, Negotiable Instruments Act, 1881: This section states that it is not a defence in a cheque bounce case that the drawer had no reason to believe the cheque would be dishonoured.
Section 141, Negotiable Instruments Act, 1881: This section deals with offences committed by companies. It provides that if a company commits an offence under Section 138, every person who was in charge of and responsible for the conduct of the business of the company at the time of the offence shall be deemed guilty.
Section 142, Negotiable Instruments Act, 1881: This section lays down the procedure for filing a complaint and the jurisdiction of the court to try cheque bounce cases.

Mandatory Pre-Complaint Procedure under Section 138

Before filing a criminal complaint for cheque bounce, the following steps must be strictly followed in the given sequence and within the specified time limits:

Present the Cheque to the Bank: The payee must present the cheque to his/her bank for payment within the validity period of three months from the date mentioned on the cheque.
Obtain the Cheque Return Memo: If the bank dishonours the cheque, it will return the cheque along with a cheque return memo specifying the reason for dishonour. This memo is a crucial document for filing the complaint.
Send a Demand Notice: Within 30 days of receiving the cheque return memo, the payee must send a written demand notice to the drawer demanding payment of the cheque amount. This notice should be sent through a lawyer via registered post or speed post to ensure there is proof of delivery.
Wait for 15 Days: After receiving the demand notice, the drawer has 15 days to make the payment. If the drawer makes the payment within this period, the matter is resolved without going to court.
File the Complaint: If the drawer fails to make the payment within 15 days of receiving the demand notice, the payee can file a criminal complaint under Section 138 before the appropriate Magistrate's Court within 30 days of the expiry of the 15-day notice period.

Important: If any of these steps are not followed within the prescribed time limits, the complaint may be rejected by the court as non-maintainable. It is therefore essential to act promptly and engage a lawyer at the earliest.

Steps Involved in Filing a Cheque Bounce Case

CONSULTATION WITH A LAWYER: The first step is to consult an experienced cheque bounce lawyer who will review your documents, assess the facts, and guide you through the legal process.
DOCUMENT VERIFICATION: The lawyer will verify all relevant documents including the original cheque, cheque return memo, bank statement, and any agreement or correspondence between the parties that establishes the debt or liability.
DRAFTING AND SENDING THE DEMAND NOTICE: The lawyer will draft a formal demand notice on his/her letterhead, clearly stating the facts, the amount due, and a demand for payment within 15 days. The notice is sent to the drawer by registered post or speed post and a copy is retained as proof.
FILING THE COMPLAINT: If the drawer fails to pay within 15 days, the lawyer will draft and file a criminal complaint under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate of First Class (JMFC) in the appropriate court.
ISSUANCE OF SUMMONS: The court will review the complaint and, if found in order, will issue summons to the accused (drawer) directing them to appear before the court on a specified date.
APPEARANCE OF THE ACCUSED: The accused will appear before the court and enter a plea. In most cheque bounce cases, the accused pleads not guilty and the case proceeds to trial.
EVIDENCE AND ARGUMENTS: Both parties will present their evidence and arguments before the court. The complainant (payee) will submit documents such as the original cheque, return memo, demand notice, and postal receipts to prove the offence.
COURT DECISION: After examining the evidence and hearing arguments, the court will deliver its judgment. If the accused is found guilty, the court may sentence them to imprisonment, impose a fine, or both. The court may also direct the accused to pay compensation to the complainant.

Where to File a Cheque Bounce Complaint?

As per the Supreme Court's ruling and the amendment to the Negotiable Instruments Act, a cheque bounce complaint must be filed in the court having jurisdiction over the area where the bank branch of the payee (the person who received the cheque) is located. This means the complaint is filed at the place where the cheque was presented for payment and dishonoured, not where the drawer's bank is located.

Court Having Jurisdiction

Cheque bounce cases under Section 138 are tried by the Judicial Magistrate of First Class (JMFC) or the Metropolitan Magistrate in metropolitan areas. The case must be filed in the court within whose local jurisdiction the bank branch of the payee, where the cheque was presented, is situated.

Required Documents for a Cheque Bounce Case

Original dishonoured cheque
Cheque return memo issued by the bank
Copy of the demand notice sent to the drawer
Postal receipt and delivery acknowledgement of the demand notice (registered post/speed post receipt)
Bank statement of the payee showing the cheque was presented and returned
Original agreement, contract, or invoice establishing the debt or liability for which the cheque was issued
All correspondence between the parties including letters, emails, or WhatsApp messages related to the transaction
Identity proof and address proof of the complainant (payee)
Any other document supporting the claim that the cheque was issued in discharge of a legally enforceable debt

Limitation Period

The time limit for filing a cheque bounce complaint under Section 138 of the Negotiable Instruments Act is strictly prescribed and must be adhered to:

The cheque must be presented to the bank within three months of the date mentioned on it.
The demand notice must be sent within 30 days of receiving the cheque return memo.
The criminal complaint must be filed within 30 days of the expiry of the 15-day notice period, if the drawer fails to make payment.

Note: Missing any of these deadlines can make your complaint legally invalid. It is strongly advised to consult a lawyer immediately after the cheque is returned by the bank.

Punishment for Cheque Bounce under Section 138

If a person is found guilty of dishonour of cheque under Section 138 of the Negotiable Instruments Act, they may be punished with:

Imprisonment for a term which may extend to two years, or
A fine which may extend to twice the amount of the dishonoured cheque, or
Both imprisonment and fine.

In addition to the punishment, the court may also direct the accused to pay compensation to the complainant under Section 357 of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita, 2023).

Relief Available to the Complainant

In a cheque bounce case, the complainant can seek the following reliefs from the court:

Recovery of the cheque amount from the accused.
Interest on the cheque amount from the date of dishonour till the date of actual payment.
Compensation for any loss suffered due to the dishonour of the cheque.
Litigation costs incurred in filing and pursuing the complaint.
Imprisonment of the accused as a deterrent against future defaults.

How to File a Cheque Bounce Case with Legaltax?

At Legaltax, we understand how important it is for you to recover your hard-earned money quickly and efficiently. Our team of experienced cheque bounce lawyers will handle the entire process for you, from sending the demand notice to representing you in court. Just follow our 3 simple steps:

Fill our simple form and receive a call back from our team of experienced cheque bounce lawyers.
Provide us with all necessary details and documents related to your cheque bounce case.
Our team of legal experts will assess your case, send the demand notice, and file the complaint in court on your behalf.

Why Choose Legaltax?

Free Legal Advice
Expert and Verified Cheque Bounce Lawyers
Lowest Fee
Quick and Transparent Process
Dedicated Case Manager
100% Confidentiality
Pan-India Legal Network

Payment Structure

You are required to pay 50% of the case fee to start the work.
25% is payable after the complaint is admitted by the Magistrate's Court.
Remaining 25% is to be paid before the final hearing of the case.

FAQ's on Cheque Bounce Cases in India

Q1. What is a cheque bounce case?

A cheque bounce case arises when a cheque issued by a person is returned unpaid by the bank, most commonly due to insufficient funds in the drawer's account. Under Section 138 of the Negotiable Instruments Act, 1881, dishonour of a cheque is a criminal offence punishable with imprisonment of up to two years, a fine up to twice the cheque amount, or both. The payee can file a criminal complaint against the drawer in the appropriate Magistrate's Court after following the mandatory pre-complaint procedure.

Q2. What are the conditions necessary to file a cheque bounce case under Section 138?

The following conditions must be satisfied to file a valid cheque bounce case under Section 138: the cheque must have been issued for the discharge of a legally enforceable debt or liability; the cheque must have been presented to the bank within its validity period of three months; the bank must have returned the cheque unpaid; the payee must have sent a demand notice to the drawer within 30 days of receiving the cheque return memo; and the drawer must have failed to make payment within 15 days of receiving the demand notice.

Q3. Is cheque bounce a civil or criminal offence in India?

Cheque bounce is both a civil and a criminal matter in India. Under Section 138 of the Negotiable Instruments Act, 1881, it is a criminal offence for which the drawer can be prosecuted and sentenced to imprisonment. At the same time, the payee can also file a civil suit for recovery of the cheque amount along with interest and costs. In most cases, filing a criminal complaint under Section 138 is preferred as it is faster and more effective in compelling the drawer to make payment.

Q4. How long does a cheque bounce case take in India?

The duration of a cheque bounce case depends on several factors including the workload of the court, the cooperation of the parties, and whether the case is contested or settled. However, with the introduction of special fast-track courts for cheque bounce cases under the Negotiable Instruments Act, many cases are now resolved within six months to one year. If the parties reach a settlement during the proceedings, the case can be closed even faster.

Q5. Can a cheque bounce case be settled out of court?

Yes, a cheque bounce case can be settled out of court at any stage of the proceedings. If the accused (drawer) agrees to pay the cheque amount along with interest and any other agreed compensation, the complainant can file a compounding application before the court to withdraw the case. The court will record the settlement and close the case. Out-of-court settlement is often a faster and less expensive option for both parties.

Q6. What happens if the demand notice is not delivered to the drawer?

If the demand notice is returned undelivered because the drawer refused to accept it or was not available at the given address, the notice is still considered to have been duly served. The payee should retain the returned envelope along with the postal receipt as evidence. In such cases, the court generally accepts that the drawer was given an opportunity to pay and chose not to do so. However, it is advisable to also send the notice by email or WhatsApp to ensure the drawer is made fully aware of the demand.

Q7. Can a cheque bounce case be filed against a company or its directors?

Yes, a cheque bounce case can be filed against a company as well as its directors and officers who were in charge of and responsible for the conduct of the business at the time the offence was committed. Under Section 141 of the Negotiable Instruments Act, when a company commits an offence under Section 138, every person responsible for the company's affairs is deemed guilty unless they can prove the offence was committed without their knowledge or they had taken all due diligence to prevent it.

Q8. What is the difference between a cheque bounce case under Section 138 and a money recovery suit?

A cheque bounce case under Section 138 of the Negotiable Instruments Act is a criminal proceeding filed before a Magistrate's Court. Its primary purpose is to punish the drawer for the criminal act of issuing a cheque without sufficient funds. A money recovery suit, on the other hand, is a civil proceeding filed before a Civil Court to recover the outstanding amount owed by the debtor. While a criminal complaint under Section 138 can result in imprisonment and a fine, a money recovery suit results in a decree directing the debtor to pay the amount owed. Both remedies can be pursued simultaneously for best results.

Q9. Can the accused be arrested in a cheque bounce case?

In a cheque bounce case, the accused is typically issued a summons by the court to appear for the trial. Arrest is not the immediate step in most cheque bounce cases. However, if the accused repeatedly fails to appear before the court despite being served summons, the court may issue a warrant of arrest. Additionally, if the accused is convicted and sentenced to imprisonment, they will be taken into custody to serve the sentence.

Q10. What should I do if I have received a cheque bounce legal notice?

If you have received a legal notice for cheque bounce, you should act immediately. You have 15 days from the date of receipt of the notice to make the payment of the cheque amount to the payee. If you fail to make the payment within this period, the payee will be entitled to file a criminal complaint against you under Section 138. If you believe the cheque was not issued for a legally enforceable debt, or if there is a dispute about the amount, you should consult a lawyer immediately to understand your legal position and prepare your defence.

Q11. Can a post-dated cheque bounce case be filed under Section 138?

Yes, a cheque bounce case can be filed even if the dishonoured cheque was a post-dated cheque, provided all the conditions under Section 138 are satisfied. The cheque must be presented to the bank on or after the date mentioned on it and within the validity period of three months from that date. If the cheque is presented before the date mentioned on it, the bank will dishonour it as a post-dated cheque, but in that situation a Section 138 case cannot be filed as the cheque was presented prematurely.

Q12. Is it possible to file a cheque bounce case for a cheque given as security?

Whether a cheque given as security can be the basis of a Section 138 complaint is a matter of legal interpretation and depends on the facts of the case. The Supreme Court of India has held that a cheque issued as security, if dishonoured when presented, can give rise to criminal liability under Section 138, provided it was issued for the discharge of a legally enforceable debt or liability. However, if the cheque was given purely as security with no underlying enforceable liability, the accused may use this as a defence. It is advisable to consult a lawyer to assess the specific facts of your case.

Q13. What is the role of Legaltax in a cheque bounce case?

Legaltax assists you at every stage of the cheque bounce process. We provide free initial legal advice to help you understand your rights and options. Our expert cheque bounce lawyers will draft and send the demand notice within the prescribed time limit, file the criminal complaint before the appropriate Magistrate's Court, represent you at every hearing, and work towards the quickest possible recovery of your money. With a dedicated case manager assigned to your matter, you will always be kept informed about the progress of your case.