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Legal implications of Cheque Bounce in India

A cheque bounces due to several reasons like insufficient balance, expired validity of cheque, torn cheque, overwriting, etc. Section 138 of the Negotiable Instruments Act, 1881 deals with cheque bounce cases and lays down punishment for anyone found guilty of cheque bounce. Let us find out what is cheque bounce & the legal consequences of cheque bounce in India.
Written by:
Shivi Gupta
Published on

Having a cheque bounce or be dishonoured due to insufficient funds is quite common in our country. But, what are the implications and legal consequences of cheque bounce?  Let's Find out.

Cheques are considered to be the most common, authentic and safe method of making a financial transaction in business as well as the personal world. However, cheques are one of the primary causes of legal disputes in India. There are over 2.5 lakh cases related to cheque bounce pending in India.


This blog will focus on what does bounce cheque means, what are the consequences of cheque bounce, punishment for cheque bounce in India, law for cheque bounce in India and bouncing of cheques and their implications.

For more adept legal expertise on the implications of cheque bounce in India, connect to us for an expert legal consultation.


What is Cheque Bounce?

A cheque bounce in India is one which was submitted to a bank for payment but was rejected by the bank for some reason. The bank returns such cheque to the account holder, along with a Return Memo that mentions why the cheque bounced in the bank.

Why do Cheques Bounce in India?

There are numerous reasons for which cheques bounce in India. The reasons for cheque bounce include: 

  • There are insufficient funds in the issuer’s bank account

  • The signature of issuer recorded in the bank and the signature on the cheque does not match

  • The date mentioned on the cheque is disfigured or unreadable

  • The cheque has expired. The validity of cheques in India is 3 months from the date mentioned on it

  • The amount written on the cheque in words and numbers do not match

  • The cheque is damaged or torn

  • There is some cheque overwriting or scrawling on the cheque

  • The bank has a suspicion of fraud or forgery regarding the cheque

  • The account number to which the cheque is drawn does not match

Cheque Bounce under Section 138

As a consequence of cheque bounce in India a Cheque bounce case under Section 138(1) of the Negotiable Instrument Act, 1881, makes a person liable for cheque bounce case, if the cheque issued by him/her is dishonoured due to the following reasons:

  • Insufficiency of funds in the bank account

  • The amount mentioned in the issued cheque is more than the amount to be paid in agreement with the bank

The careful study of Section 138 cheque bounce provides an answer to the question - 'Is cheque bouncing a criminal offence in India?' Cheque bounce is considered to be a criminal offence and any person found guilty in a cheque bounce case would be liable for punishment mentioned in Section 138 for cheque bounce of the Negotiable Instruments Act.

What is the Punishment for Cheque Bounce in India?

The punishment for cheque bounce in India is 

  • Imprisonment for up to 1 year

  • Fine which may be equal to double the amount of cheque, or

  • Both

However, if the payment has been made by the drawer of the cheque to the person in whose name the cheque was issued within the 15 days of receiving of the cheque bounce notice under section 138 then it will be deemed that no offence has been committed by the drawer and he does not have to face any legal consequences of cheque bounce in India. If the payment is not received by the drawee within the 15 days i.e., cheque bounce notice period then the drawee will proceed to file the cheque forgery case on the basis of cheque bounce memo given by the bank within one month from the end of cheque bounce notice period.

Legal Action against Bounced Cheque in India

Cheque bounce cases in the recent times have seen a rise in their numbers When a cheque is bounced in a bank, the bank sends a Cheque Return Memo or the cheque bounce memo to the account holder which mentions the reason for which the cheque bounced. If the cheque bounced due to some minute error or for reasons beyond the control of cheque issuer, a simple notification conveying the cheque bounce can be sent.

However, if the cheque bounced due to some deliberate action by the issuer, or on any grounds mentioned under 138 section for cheque bounce, you can take the following legal actions against cheque bounce in India:

  • The cheque can be submitted again within 3 months if you have informed the issued and he/she has assured you that the cheque will be honoured this time

  • Upon receiving the cheque return memo from your bank, you can send a legal notice to the issuer within 30 days from the date of receiving the cheque return memo. The legal notice for cheque bounce must contain all the relevant details regarding the amount payable, the date on which the cheque was issued, the date on which the cheque was deposited in the bank and the date on which the cheque was returned

  • If the issuer does not make the payment within 15 days of receiving the legal notice for cheque bounce, you can file a cheque bounce case under Section 138. The cheque bounce case can be filed in Magistrate’s Court within 30 days after the 15 days notice period expires

  • If a cheque bounce case is not filed within the said period, the court may consider it as a false cheque bounce case and refuse to admit the case unless a justifiable and valid reason is provided

  • The cheque bounce complaint is filed with an affidavit and relevant documents associated with cheque bounce, like any sale-purchase contract, cheque receipt, cheque return memo, the conversation between you and issuer, etc.

  • Once the complaint is filed in court, the Magistrate issues summons for the issuer to appear before the court.

  • If the issuer is found guilty in a cheque bounce case, he/she would be liable for punishment under Section 138.

  • A civil suit or summary suit for recovery of the pending amount can also be filed. A civil or summary suit can also be filed to recover the cost incurred to recover the amount, interest on the amount.

The case for cheque bounce can be filed against a person as well as a company for making default i.e. if the cheque issued by them is dishonoured for the want of insufficient funds in the drawer account or any other reason as given under Section 138 of Negotiable Instruments Act.

Even if a person or a company has taken a loan from the bank and has always made payment on time but cheque has been bounced for one EMI payment, the banker can file a case of cheque bounce against such person or such company.

Other things to keep in mind about Cheque Bounce Case

  • The cheque must be issued to pay off some debt or liability, and not for any donation or gift

  • The cheque must be presented to the bank within its validity period of cheque i.e. 3 months from the date mentioned in it

  • The reason for cheque bounce must be insufficient funds in the bank account of the issuer

  • Legal notice for cheque bounce must be sent to the issuer to allow him/her to make the payment before filing a cheque bounce case against him/her

A cheque bounce lawyer must be consulted to send a legal notice against a bounced cheque or to file a cheque bounce case in court. MyAdvo connects you with the best cheque bounce lawyers in India. Email us at or call us at +919811782573.

MyAdvo acts as Client's legal concierge providing technology solutions for Lawyer Discovery, Price Discovery and Case updates. With the use of technological solutions, we match the client’s requirements with the lawyer based on expertise, location etc. Our dedicated team of 60+ in Delhi, Mumbai and Bangalore strive to do everything to help the client in taking the better-informed decision by understanding his legal situation and requirement. Further, for any query regarding the operational or financial debtor you can consult the lawyer online and also ask legal advice online. MyAdvo lets you find the lawyer anywhere in India online.


External Links:

1. Section 138: The Negotiable Instruments Act, 1881