Dishonoured Cheques: Legal Implications & Actions

A cheque bounce occurs when a cheque is dishonored by the bank due to reasons such as insufficient funds, mismatched signatures, or account closure. In India, this is addressed under Section 138 of the Negotiable Instruments Act, 1881, which deems it a criminal offense.​

Upon dishonor, the payee must issue a written notice to the drawer within 30 days, demanding payment. If the drawer fails to make the payment within 15 days of receiving the notice, the payee has the right to file a complaint in the appropriate court within the next 30 days. ​

Penalties for cheque bounce can include imprisonment for up to two years, a fine up to twice the amount of the cheque, or both. Additionally, the payee may pursue civil remedies to recover the due amount. ​

It's essential for individuals and businesses to understand the legal implications of cheque bounce cases and to take prompt action to protect their financial interests.​