By Advocate Anurag Bhati – Expert in Cheque Bounce Cases in Noida & Greater Noida
Cheque bounce cases are one of the most common financial disputes in India, often arising from insufficient funds, signature mismatches, or payment stoppages. Governed by Section 138 of the Negotiable Instruments Act, 1881, cheque bounce is considered a criminal offense, attracting penalties, fines, and even imprisonment. If you are dealing with a cheque bounce matter in Noida or Greater Noida, LawyerHelp offers expert legal assistance to protect your rights.
What Constitutes a Cheque Bounce Case?
A cheque is said to have bounced when the bank refuses to honor it due to:
Insufficient funds in the drawer’s account.
Signature mismatch or any other technical error.
Account closure or freezing of the drawer’s account.
Payment stopped by the drawer.
Mismatch in cheque details, such as the amount in words and figures.
When a cheque is dishonored, the payee (recipient of the cheque) has the right to take legal action under Section 138 of the Negotiable Instruments Act (NI Act), 1881.
Section 138 of the Negotiable Instruments Act, 1881
Section 138 NI Act criminalizes the dishonor of cheques for insufficient funds or if the cheque amount exceeds the drawer’s balance. The key elements required to constitute an offense under Section 138 are:
- Cheque was issued for discharge of a legally enforceable debt or liability.
- Cheque was presented within its validity period (3 months from issuance).
- Cheque was dishonored due to insufficient funds or other valid reasons.
- A written demand notice was sent to the drawer within 30 days of receiving the bank’s dishonor memo.
- Drawer failed to make the payment within 15 days of receiving the notice.
If these conditions are met, the payee can initiate a criminal complaint against the drawer.
Legal Procedure for a Cheque Bounce Case
Step 1: Demand Notice to the Drawer
After the cheque bounces, the payee must send a legal demand notice to the drawer within 30 days, demanding payment.
If the drawer makes the payment within 15 days, no further action is required.
Step 2: Filing of Complaint
If payment is not received, the payee can file a complaint under Section 138 NI Act before a Magistrate Court within 30 days after the 15-day period expires.
Step 3: Summoning the Drawer
The court, after reviewing the complaint, issues summons to the drawer to appear and respond.
Step 4: Trial & Evidence Presentation
Both parties present their evidence, including the dishonored cheque, bank memo, demand notice, and proof of liability.
Step 5: Judgment & Penalty
If found guilty, the drawer may face penalties, fines, and even imprisonment.
Time Limit to Conclude a Cheque Bounce Trial
The law mandates speedy trial of cheque bounce cases, and courts are encouraged to conclude trials within 6-12 months. However, due to backlog, cases may take 1-3 years in practice.
Interim Relief Available to the Drawer
In cheque bounce cases, the accused (drawer) can seek:
Bail: Since cheque bounce is a bailable offense, the accused can apply for bail immediately.
Discharge of Complaint: If the cheque was not issued for a legal liability, the accused can challenge the case.
Compounding the Offense: At any stage, both parties can mutually settle the matter and close the case.
Stay on Proceedings: The accused can challenge proceedings in higher courts in exceptional circumstances.
Presumptions in Cheque Bounce Cases
Under Section 139 of the NI Act, the law assumes:
The cheque was issued for the discharge of a legally enforceable debt.
The drawer is liable unless proven otherwise.
This presumption shifts the burden of proof to the accused, meaning the drawer must provide strong evidence to dispute the liability.
Penalties for Cheque Bounce Under Section 138 NI Act
If found guilty, the accused may face:
Imprisonment up to 2 years, or
Fine up to twice the cheque amount, or
Both imprisonment and fine.
Additionally, the court may direct the accused to compensate the complainant under Section 357 of the CrPC.
Legal Remedies for the Payee in Cheque Bounce Cases
- Criminal Complaint: File a case under Section 138 NI Act.
- Civil Suit for Recovery: If the amount is large, a civil suit under the Order 37 of CPC (Summary Suit) can be filed.
- Insolvency Proceedings: If the drawer is unable to pay multiple cheques, insolvency proceedings can be initiated.
If you need legal help for a cheque bounce case in Noida & Greater Noida, contact Advocate Anurag Bhati at LawyerHelp for expert guidance.
Conclusion
Cheque bounce cases can have serious legal consequences, including hefty fines and imprisonment. If you are facing a cheque bounce issue—whether as a drawer or payee—it’s crucial to act swiftly and seek legal help.
For professional assistance, reach out to Advocate Anurag Bhati, a top cheque bounce lawyer in Noida & Greater Noida, at LawyerHelp. With years of experience handling cheque dishonor cases, our legal team ensures the best possible outcome for you.