Cheque Bounce

A cheque Bounce notice is nothing but an intimation to the issuer that legal action will be taken by the cheque beneficiary in case of non-payment of cheque amount on an immediate basis.

Cheque bounce is a condition which arises due to the non-payment of the amount because of the lack of balance in the account. For the recovery of the amount, prompt action must be taken. Firstly a letter is sent to the drawer to make payment otherwise proceedings shall be initiated. Sometimes a prompt settlement is done on the letter. Cheque Bounce is a serious offense which is punishable by imprisonment and fine which is stated in the Negotiable Instrument Act. The drawer of the cheque should present the cheque within 30 days from the date of dishonoring of the cheque just to protect his rights as stated in the Negotiable Instrument Act. In India, as per Section 138 of the Negotiable Instruments Act, cheque bounce or cheque non-payment is a serious offense punishable with fine or imprisonment.

What is the Procedure of Cheque Bouncing?

  • Within the period of 30 days, demand notice is sent. On receiving demand notice, the drawer has to make payment within 15 days.
  • The cheque bounce notice is sent by the registered post as to create the proof of the notice sent.
  • In case of payment is not received within 15 days then payee can file a complaint before a magistrate within 30 days.
  • A complaint has to be filed in such a state where the bank is situated.

Punishment and Penalty

On receiving the complaint, along with an affidavit and relevant paper trail, the court will issue summons and hear the matter. If found guilty, the defaulter can be punished with monetary penalty which may be twice the amount of the cheque or imprisonment for a term which may be extended to two years or both. The bank also has the right to stop the cheque book facility and close the account for repeat offences of bounced cheques.

If the drawer makes payment of the cheque amount within 15 days from the date of receipt of the notice, then drawer does not commit any offence. Otherwise, the payee may proceed to file a complaint in the court of the jurisdictional magistrate within one month from the date of expiry of 15 days prescribed in the notice.