Why Does a Cheque Bounce? Punishment under Law

 

1. Why Does a Cheque Bounce?

A cheque may bounce due to several reasons:

• Insufficient balance in the account.

• Account closed or stopped by bank.

• Signature mismatch.

• Cheque expired (validity is 3 months only).

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2. Collecting the Proof

When the cheque is dishonoured, the bank issues a Cheque Return Memo stating the reason.
👉 Always collect and keep this memo safely — it is your primary proof.

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3. Sending Legal Notice

• The payee (you) must send a legal notice within 30 days of receiving the return memo.

• The notice should demand the cheque amount within 15 days.

• If the drawer (person who gave cheque) pays within this time → no case is filed.

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4. Filing the Case

If payment is not made:

• You can file a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881.

• The case is filed in the court of Judicial Magistrate First Class where:

  • The cheque was presented, OR

  • Where the bank is located, OR

  • Where the accused resides.

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5. Punishment under Law

If proved guilty, the accused may face:

• Imprisonment up to 2 years, or

• Fine up to double the cheque amount, or both.

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6. Practical Tips

• Always keep photocopy of cheque before depositing.

• Preserve bank slip and return memo.

• Consult an advocate for drafting a strong legal notice.

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Conclusion

Cheque bounce is a serious offence, but the law gives you effective remedies to recover your money. By following the steps above — collecting memo, sending legal notice, and filing case if needed — you can protect your rights.