Cheque Bounce Case: Step-by-Step Legal Action & Remedies

A cheque bounce, also known as dishonor of cheque, is a serious offense under Section 138 of the Negotiable Instruments Act, 1881. If a cheque issued by a drawer is dishonored, the payee has the legal right to take action against the defaulter. Here’s a step-by-step guide on how to file a cheque bounce case in India.

1. Dishonor of Cheque (Section 138 NI Act)

• The payee deposits the cheque in their bank for clearance.
• If the cheque bounces due to insufficient funds or other reasons (e.g., account closed, signature mismatch), the bank issues a cheque return memo specifying the reason for dishonor.

2. Sending a Legal Demand Notice (Section 138, Proviso (b))

• The payee must send a legal notice to the drawer within 30 days of receiving the cheque return memo.
• The notice should demand payment of the cheque amount within 15 days.

If the drawer pays within 15 days, no legal action can be taken. If no payment is received, the payee can proceed to file a case.

3. Filing a Criminal Complaint (Section 142 NI Act)

• If the payment is not received, the payee can file a criminal complaint within 30 days before the Judicial Magistrate First Class (JMFC) or Metropolitan Magistrate Court.

Documents Required:

• Original bounced cheque
• Bank’s cheque return memo
• Copy of legal notice & postal receipt
• Acknowledgment receipt of legal notice
• Affidavit & supporting documents

4. Issuance of Summons (Section 204 CrPC)

• The court will examine the complaint and issue summons to the drawer if satisfied.
• The summons must be properly served, and the accused must appear before the court.

5. Appearance & Filing of Plea

• The accused must appear in court and submit their defense.
• If the accused fails to appear, the court may issue a bailable warrant.

6. Evidence & Trial (Section 143 NI Act & Summary Trial under CrPC)

• The complainant submits affidavit evidence and supporting documents.
• The accused has the right to cross-examine the complainant.
• If a valid defense is raised, the case may proceed to a regular trial.

7. Judgment (Section 138 NI Act)

If the court finds the accused guilty, the following penalties may apply:

• Imprisonment up to 2 years OR
• Fine up to twice the cheque amount OR
• Both imprisonment and fine

If the accused is acquitted, the case is dismissed.

8. Execution of Judgment (Section 431 CrPC & Order XXI CPC)

• If the court orders a fine or compensation, the accused must pay immediately.
• If payment is not made, recovery can be done through:
  • Property attachment
  • Salary garnishment
  • Imprisonment (in case of default)

Legal Remedies for Payee & Drawer

1. Criminal Complaint (Section 138 NI Act)

• Ensures punishment for the drawer.
• Can result in imprisonment or a fine.

2. Civil Suit for Recovery (Order 37 CPC)

• The payee can file a summary suit under Order 37 CPC to recover the cheque amount.
• This is a separate civil remedy alongside the criminal complaint.

3. Alternative Remedies

• Arbitration (if an agreement exists between parties)
• Filing for insolvency (if the drawer is unable to pay)

Conclusion

A cheque bounce case requires swift legal action. Sending a legal notice, filing a complaint, and proving the case in court can ensure justice for the payee. Understanding the legal remedies and following the prescribed procedure is crucial to successfully handling a cheque dishonor case.

Written By – Ajit Kumar