As per the Indian judicial system, cheque bounce is a serious crime; it counts as a criminal offence in India. When any person presents any cheque in the bank, and that cheque is not encashed due to any reason that is mentioned under the NI Act, then it's counted as a cheque bounce. Common reasons for the cheque bounce are insufficient funds, signature mismatch, incorrect date, expired cheque and payment stoppage request. Understanding rules and regulations about the cheque bounce is important for the cheque receiver and giver. 

List of Top Cheque Bounce Lawyers

What is the reasons for cheque bounce 

  • One of the common reasons in cheque bounce cases is the insufficient funds in the bank account of the issuer of the cheque. Insufficient funds are counted as a serious reason in the cheque dishonoured and can face major legal action under the NI Act. 
  • Sometimes issuers instruct the bank to stop the payment of certain cheques; that mostly happens when a cheque was stolen or lost. This situation can lead to the cheque being dishonoured or bouncing. 
  • Signature mismatch is another common reason in the cheque bounce case; when the issuer bank signature and the cheque signature did not match, then the bank stops the payment of the cheque. 
  • In certain cases the issuer overwrites the cheque or makes any correction on the cheque; this creates overwrites on the cheque or unclear information. In this case also, the bank rejects the cheque payment, causing the cheque to bounce. 
  • In some cases, the issuer issues the cheque; that account is closed, which also causes the cheque to bounce.
  • Sometimes the receiver deposited the cheque after the legally authorised period of the cheque. This will cause the cheque to bounce and be dishonoured because the bank does not give the payment on an outdated cheque. 
  • If the issuer gives a post-dated cheque and the receiver presents it before the due date, the cheque may bounce.

What is the process of filling cheque bounce cases

Bank memo

Once the cheque bounces in the bank, then the bank provides one detailed Memo to the payee. In that the bank mentions the reasons why the cheque has bounced. 

Sending notice 

Once the payee receives the memo from the bank, the payee must send the legal notice to the drawer of the cheque within 30 days of receiving the memo from the bank. In the notice, the payee must mention the date and amount of the cheque and the reason for the cheque according to what is mentioned in the memo or clearly demand the cheque amount within 15 days from the issuer. 

Filling a case 

If the drawer paid the cheque amount in 15 days to the payee, then the matter was resolved over there. But if the amount was not paid by the drawer, then the next step is to file a complaint for cheque bounce under Section 138 of the NI Act 1881. The payee must file a complaint within 30 days once the period of the 15 days was completed. 

Required documents 

Some documents are mandatorily required for filling a case, such as an original cheque that has bounced and the original copy of a memo that was received from the bank. And a copy of the legal notice sent to the drawer, proof of the legal delivery of the legal notice. 

Court hearing 

Final step in the cheque bounce case is the court summons the drawer to present in the court. In the court hearing, giving opportunities to both the parties to present their side and evidence. Court first hears all the arguments and checks the evidence and gives decision if the mistakes are from drawer then the court orders the penalties to the drawer. 

Why its important to take legal assistance in cheque bounce cases 

Filing a cheque bounce case and defending the cheque bounce case are both legally complicated processes. Due to this reason, taking legal assistance in a cheque bounce case is always beneficial for both the payee and drawer. 

Now let’s see which legal services are provided by lawyers for filing a cheque bounce case. 

Legal notice

Lawyers professionally drafted a notice for sending to the drawer,  with mention of the demand of the cheque amount and how the non-payment can cause the drawer to face serious legal consequences. 

Collecting evidence Lawyers assist the payee in case preparation by developing effective court strategies and helping to gather evidence. They also explain every applicable legal ground and remedy, enabling the payee to choose the most appropriate legal course of action.

Court representation 

Lawyers present the payee case in the court and do the cross-examination of the drawer arguments in the court. Also, ensure all the procedural and legal aspects are complete in the court representation. 

Now let’s see which legal  services are provided by lawyers for defending cheque bounce cases. 

Legal advise 

Once the notice is received by the drawer, they need to take legal advice on that. lawyers check that notice and explain which legal option is available for the drawee. Such as a negotiation and settlement and preparing strategies for defending the drawee in the court. 

Sending response 

Sending a reply to the notice within 15 days is advisable. Lawyers usually draft a response within this period, request additional time for payment of the cheque amount, and attempt to negotiate a settlement between the parties.

Defending drawer in court 

In the court proceedings, lawyers apply defence strategies, provide evidence to mitigate the charge on the drawer and argue in the court for the drawer. 

Negotiable Instruments Act, 1881

The main aim of the NI Act, 1881, is to regularise the financial transactions between the payee and the drawee. It assures the payee they receive the cheque amount, encouraging the use of cheques in the business world.

Main aspects of the NI Act:

  • Due to a lack of certainties from the drawers in cheque payments, cheques lost credibility in the business world as well as for individuals.
  • To increase the credibility of cheques, Section 138 of the NI Act provides rules and regulations for the reliability of cheques.
  • It upholds commercial transactions and prevents the issuance of cheques with insufficient payment or with fraudulent intent.
  • Under the NI Act, 1881, Sections 138 to 142 govern the provisions that provide a process for the cheque giver and receiver to follow once a cheque bounces.

In the case of M/s. Dalmia Cement (Bharat) Ltd vs. M/s. Galaxy Traders & Agencies Ltd & Ors, a complaint was filed under Section 138 of the NI Act against the drawer whose cheque bounced due to insufficient funds. The complainant sent a legal notice, but the drawee claimed he did not receive it. The complainant presented the cheque again, which bounced, and sent a second notice that was properly received. After receiving the notice, the drawee failed to pay the cheque amount. The High Court dismissed the case, stating the time limit for filing the complaint had expired. The Supreme Court revived the case, upholding the complainant’s legal right and directing action under the Act.

Why you choose the Right to law firm as your legal assistance in cheque bounce case 

Handling cheque bounce matters is difficult and crucial because you have to deal with various legal terminology. So handling this process by yourself is a difficult task, but don't worry; if you live in Noida or nearby places, then you can choose Right To Law firm as your legal assistance. Our firm offers you professional legal assistance in handling the cheque bounce case. 

  • We have expert lawyers who have years of experience with specialised experience in handling cheque bounce matters.
  • Right To Law Firm’s legal team drafts and sends legal notices on behalf of clients within the applicable timeline. Our lawyers guarantee that each notice is well-structured and fully complies with all legal requirements.
  • Our firm’s lawyers help with collecting evidence and doing all the paperwork and documentation for the client, either your payee or defendant. 
  • We provide experienced assistance in the court representation, either your payee who files a complaint or the drawee who defends the complaint; our lawyers fervently represent client cases in court. 
  • We provide legal assistance and other dispute-solving methods to clients, like mediation or out-of-court settlement among the parties.
RightToLaw Team
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RightToLaw Team

Legal Research Team

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Frequently Asked Questions

Yes, the drawer can pay the cheque amount to the payee within 15 days after receiving the cheque bounce notice from the payee. Drawers can avoid legal action by creating strong defence strategies against the cheque bounce case. 

Alternate remedies available for cheque bounce matters are the  mediation, arbitration, pre-litigation settlement, lok adalat, out-of-court settlement, conciliation and negotiation. These are available legal remedies. 

The NI Act provides various things, like legal assurance in financial transactions and protection to the payee in cheque bounce cases; this act provides uniform rules and regulations for handling economic transactions all over the nation. All these benefits positively affect increasing growth in business sectors. 

Drawers can face imprisonment of up to two years, a fine up to twice the amount of the cheque, or both, for the crime of cheque bounce as per the mention in Section 138 of the NI Act. 

The complainant can withdraw at any time the complaint of the cheque bounce under Section 138 of the NI Act with the permission of the court. When the court is satisfied that the interest of the complaint is safeguarded, then the court gives permission to withdraw a complaint. 

Charges for cheque bounce depend on each bank; they vary for each bank, so it depends on which bank you present the cheque that gets bounced or dishonoured to. 

Yes, cheque bouncing comes under the criminal offences, and in the punishment for the cheque bounce, they give a term of imprisonment, which means the drawer can be arrested for cheque bounce cases, but it's a bailable offence, so the drawer gets bail in these offences. 

Bank provide memo to the payee when cheque get bounces. That memo mentions the reason for the cheque bounce, the date and the number of the issued cheque; that memo is generally called the cheque return memo.