When a Cheque is bounced / dishonored, the drawee bank immediately issues a ‘Cheque Return Memo’ to the banker of the payee mentioning the reason for non-payment. The payee’s banker then gives the bounced cheque and the memo to the payee. Bounced cheque case comes under Section 138 in The Negotiable Instruments Act, 1881. The dishonor of cheque is a criminal offence and is punishable by imprisonment up to 2 years or with monetary penalty or with both.
138 Dishonor of Cheque for insufficiency, etc., of funds in the account. —Where any Cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the Cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the Cheque, or with both: Provided that nothing contained in this section shall apply unless—
Explanation. — For the purposes of this section, “debt or other liability” means a legally enforceable debt or other liability.
The complaint should be registered in a magistrate’s court within a month of the expiry of the notice period. The Cheque should be returned due to insufficient funds. The notice should be given within 30 days of Cheque bounce. The drawer has failed to make the payments within 15 days of Cheque bounce notice, legal action can be taken against him within 30 days.
You can escape only from a false Cheque bounce case by having a good counsel to represent your objective. Cheque bouncing is a criminal offence in India under the provisions of section 138 of Negotiable Instrument Act. There is no way out to escape from the liability if it is due.
When filing a Cheque bounce grievance, the complainant is required to pay court fees. The Court fees vary depending upon the amount of the Cheque against which the complaint is being filed. The requisite court fees for various Cheque amounts have been listed below:
Section 138 of the Negotiable Instruments Act, 1881, specifically deals with the offence of a returning of the cheque by the bank, where the cheque is drawn by the person having an account in such bank had drawn the said cheque for the discharge of his legally payable debt or liability. The one that commits the above offence is susceptible to be punished with imprisonment for a term which can be extended to 2 years, or with fine which can reach twice the quantity of the cheque, or with both.
Yes. You can sue for the bounced cheque by initiating a criminal case against the offender. For a detailed timeline and procedure, please refer answers to the above questions.
An offence under section 138 of the Negotiable Instruments Act, 1881, (i.e. cheque bounce) may be a bailable offence. Generally, after the looks of the accused on the primary date of hearing before the Magistrate, bail is granted.
Yes. Cheque bounce is a criminal offence under Section 138 of the Negotiable Instruments Act, 188. The provisions relating to a Summary Criminal Case, provided in the Code of Criminal Procedure, 1973, are applicable to the proceeding under section 138.
The payee/holder of the cheque can file criminal case under section 138 of Negotiable Instrument Act against the drawer of the cheque and simultaneously can also file a civil case for recovery.