Do's & Don'ts in case of a Cheque Bounce

हिंदी में पढ़ें
November 22, 2018
By Advocate Chikirsha Mohanty

Introduction: What is a cheque?

A Cheque is a bill of exchange drawn upon a specified banker and is payable only on demand. Legally, the person who has issued the cheque is called as 'drawer' and the person in whose favour the cheque is issued is called as 'drawee'. The following are the essential characteristics of a cheque:

  1. It has to be in writing

  2. It has to be an unconditional order

  3. Banker has to be specified

  4. Payment should be directed to a specified person

  5. It should be payable on demand

  6. It should be for a specific sum of money

  7. Should have the signature of the drawer

What is cheque bounce/ dishonour of cheque?

A cheque is said to be dishonoured or bounced when it is presented for payment to a bank but it is not paid because of some reason or the other. The following are some of the reasons why a cheque is generally bounced :

  1. Signature is not matching

  2. There is overwriting in the cheque

  3. Cheque was presented after lapse of three months, i.e. after the cheque has expired

  4. Account was closed

  5. Insufficient funds in the account

  6. Payment stopped by the account holder

  7. Opening balance insufficient

  8. Disparity in the words and figures mentioned on the cheque

  9. In case the cheque is issued by a company, the same does not bear the seal of the company

  10. Mismatch in account number

  11. In case of joint account where both signatures are required, only one sign is there

  12. Death of the customer

  13. Insolvency of the customer

  14. Insanity of the customer

  15. Crossed cheque

  16. When a cheque is issued against the rules of trust

  17. Alteration in cheque

  18. Doubt in genuineness of the cheque

  19. Presented at the wrong branch

  20. Crossing limit of overdraft (OD)

Legal Remedies available in case your cheque is bounced

Cheque bounce is a criminal offence in India, covered under section 138 of the Negotiable Instruments Act. The following information will act a useful guide in what steps can be undertaken in case your cheque is bounced:

Step 1: Demand Notice:

Once the cheque has been returned by the bank, then before filing a legal complaint against the drawer, you must first send a demand letter/ legal notice to such drawer within a period of 30 days from the date the cheque has been returned to you by the bank. The letter must demand the amount from the drawer and also the legal action that can be initiated against him under the Negotiable Instruments Act in case the amount is not paid within a stipulated time period (usually 15 days).

Even though there is no prescribed format for this notice, its purpose of demanding payment and informing the issuer that s/he will be prosecuted in case payment is not made should be highlighted very clearly. Further, proof of delivery of such letter should be preserved carefully.

Demand letter can be sent by the complainant her/himself. However, it is advisable to get the draft vetted by a cheque bounce lawyer before sending it to the person concerned.

The following information should be stated clearly in the demand notice:

  1. A statement that the cheque was presented within its period of validity

  2. Statement of debt or legally enforceable liability

  3. Information regarding dishonour of cheque as given by the bank

  4. Demanding the issuer to pay the amount due within 15 days of receiving such notice


Step 2: Drafting of Complaint:

If the drawer has not replied to your demand notice within a period of 15 days from the date of the delivery of the demand letter or has refused to pay your amount, then the next option available in such a case is to file a complaint in court within a stipulated time period of 30 days. Before filing a legal complaint, it is important to understand that which court should you approach in such cases. You can file the complaint in a court within whose local limits of jurisdiction any of the following incidents have taken place:

  1. Where the cheque was drawn

  2. Where the cheque was presented

  3. Where the cheque was returned by the bank

  4. Where the demand notice was served by you

  5. You must have all the following documents:

  6. Complaint

  7. Oath letter

  8. Photocopy of all the documents such as cheque, memo, notice copy, and acknowledgement receipts


Step 3: Court Process for filing the case:

Amount on cheque                  Court fee

Rs. 0 to Rs. 50,000/-                            Rs. 200

Rs. 50,000/- to Rs. 2,00,000/-              Rs. 500

Above Rs. 2,00,000/-                           Rs. 1000


Memo of Advocate is essential at the time of filing of the suit along with signatures of the complainant

  • After the case is filed in the court, all documents are cross-checked by Judicial Magistrate First Class, so original documents such as original cheque (bounced), original memo, a copy of the notice, receipt of the post office, receipt of U.P.C., acknowledgement receipt, are required at the time of cross-checking

  • The period of limitation is also verified at this stage

  • The Process Form, also known as the Bhatta, is filed by the complainant or lawyer, along with the address of accused

  • The court then issues summons to accused to appear in the court on the specific date

  • If the accused does not appear in court on the date of hearing, the court can also issue a bailable warrant on the request of the complainant

  • It the accused still does not appear before the court, the court may issue a non-bailable warrant of arrest

Important things to be kept in mind

  1. A delay in filing the complaint after the lapse of 30 days may be excused by the magistrate only in exceptional circumstances

  2. Dishonour of a cheque due to stop payment is also covered under Section 138 of the NI Act

  3. Presentation of the cheque at the request of the drawer after the demand notice has been sent and the consequent dishonour of the cheque will not mean that the drawer’s time limit under the notice has increased

  4. A cheque issued as a gift/donation/any other obligation, will not be covered under Section 138 of the Act. For this section to apply, the cheque has to carry a legal obligation

  5. A cheque expires after three months from the date on which it is issued

Learn what should be & what shouldn't be done in case of a cheque bounce with this complete guide for Indian Laws on cheque bounce.


These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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User Reviews

4.5 - 20 reviews

November 22, 2018 Do's & Don'ts in case of a Cheque Bounce

thank you for the information

Bhushan on Apr 03, 2019

I have a case. Who can I contact?

Surya on Apr 12, 2019

nicely explained. Thanks fro the information

Veena on Mar 22, 2019

Nice piece on the subject.

Govind on Apr 04, 2019

Good work with the article. Solved all my legal queries. Regards.

Venkat on Mar 14, 2019

solved my queries.

Abhi on Mar 26, 2019

very helpful

Kailash on Apr 10, 2019

I want to know more about this law. Good work

Ashwin on Mar 15, 2019

needed a lawyer….what is the procedure?

Divya on Mar 11, 2019

very helpful and detailed

Mahesh on Mar 12, 2019

Very good article

Narender on Mar 22, 2019

nice work. Learned a lot. Thanks

Tushar on Mar 28, 2019

Very informative and a good read as well.

Avinash on Mar 23, 2019

Had a good time reading the article.

Chandan on Apr 01, 2019

excellent article. Very informative

Mayur on Apr 19, 2019

who can I contact for my legal case?

Ashok on Apr 19, 2019

It’s a very nice article.

Nikita on Mar 05, 2019

Gave a clear understanding about my legal issue.

Nagesh on Mar 31, 2019

Detailed and informative.

Nagaraj on Mar 14, 2019

good article and easy to understand

Vishnu on Apr 04, 2019