A cheque bounce case arises when a bank declines to honour a cheque due to insufficient funds in the drawer’s account or other reasons such as mismatched signatures, overwriting, or closure of the account. Under Section 138 of the Negotiable Instruments Act, 1881, dishonouring a cheque is considered a criminal offence in India. The law aims to uphold the credibility of financial transactions and ensure trust in the use of cheques as a payment method.
When a cheque is returned unpaid, the payee must send a written legal notice to the drawer within 30 days of receiving the bank memo. The drawer then has 15 days to make the payment. If the payment is not made within this time, the payee can file a complaint in the appropriate magistrate’s court within 30 days of the lapse of this period.
Punishment for cheque bounce may include imprisonment for up to two years, a monetary penalty, or both. Courts may also order compensation to the payee. Cheque bounce cases can be time-consuming, so legal advice is crucial to ensure proper compliance with procedure and timely resolution. These cases highlight the importance of maintaining adequate funds and following due diligence in financial transactions.
