A bounced cheque can cause unexpected stress and financial trouble for both individuals and businesses. In India, cheque bounce cases are quite common and can lead to legal consequences if not handled properly. At Vikash Law Firm, we help you understand your rights and the legal process to deal with such issues effectively.
What is Cheque Bounce?
A cheque is said to be “bounced” when the bank refuses to honour it. This usually happens due to insufficient funds, a mismatched signature, overwriting, or a closed account. Under Section 138 of the Negotiable Instruments Act, 1881, bouncing a cheque is a criminal offence.
Legal Consequences of a Bounced Cheque
If your cheque bounces, the payee (the person who was supposed to receive the money) can:
✅ Send a legal notice to the drawer (the person who issued the cheque) within 30 days of receiving the bank’s ‘Cheque Return Memo’.
✅ If the drawer does not make the payment within 15 days of receiving the notice, the payee can file a criminal complaint in court under Section 138.
✅ The drawer can face penalties, including fines up to twice the cheque amount, and even imprisonment up to two years.
What Should You Do If You Receive a Bounced Cheque?
✔️ Act quickly — don’t ignore it.
✔️ Collect the ‘Cheque Return Memo’ from the bank, which mentions the reason for dishonour.
✔️ Send a legal notice to the drawer demanding payment within 15 days.
✔️ Consult a lawyer to draft the notice correctly and file a complaint if needed.