A cheque bounce — also called dishonour of cheque — occurs when your bank returns a cheque unpaid due to insufficient funds, a closed account, or a signature mismatch. In India, this is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881.

When Does Section 138 Apply?

For a cheque bounce case to be filed, the following conditions must be met:

• The cheque must have been issued for a legally enforceable debt or liability.
• The cheque must be presented to the bank within 3 months of the date on the cheque.
• The payee must send a legal demand notice to the drawer within 30 days of receiving the bank's memo about the dishonour.
• The drawer must fail to make the payment within 15 days of receiving the notice.

Penalty Under Section 138

If convicted, the accused can face imprisonment of up to 2 years, a fine up to twice the cheque amount, or both. Courts may also order the accused to pay compensation to the complainant.

What Should You Do If a Cheque Bounces?

1. Collect the bank's return memo immediately.
2. Send a legal notice to the drawer within 30 days.
3. File a complaint in the Magistrate's Court within 30 days if no payment is received.
4. Consult an experienced advocate to build a strong case.

At Advocate Ankush Mittal & Associates, we have extensive experience handling cheque bounce cases across Karnal, Chandigarh, and Delhi. Contact us for a free consultation at +91 9996865669.