Commercial Litigation • Notice, Liability & Settlement
Cheque Bounce, Clearly Explained
Negotiable Instruments Act, 1881 • Section 138
Clear guidance on statutory notices, payment periods, legally enforceable debt, security cheques, complaint documents, settlement and compensation.
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Questions 1–14
Cheque bounce: what you need to know
1My check has bounced, is it a criminal case?
Yes, this is a criminal offense under Section 138 of the Negotiable Instruments Act. The punishment can be imprisonment up to 2 years or a fine up to double the amount of the cheque, or both.
2I have received a legal notice, what should I do?
You have to make the payment within 15 days of receiving the notice. If you do not do this, only then a case can be filed against you. You should respond to the notice and present your stand.
3What can my defense be?
Your defense may be that the check was not drawn for any legal liability but was given as security, or that you had already paid the cheque, or that your signature was forged.
4Is it mandatory to go to jail in this case?
Imprisonment is not automatic. The offence is ordinarily bailable, and the accused must appear and seek bail or comply with the court process. The outcome may involve acquittal, conviction, compensation, fine or settlement depending on the evidence; bail should never be assumed without attending court.
5Can I settle in court?
Yes, it is a negotiable matter. You can end the case by making payment at any stage.
6The signature on the check is mine but the amount was paid by someone else, what is the defence?
The mere payment of the amount by someone else is not always a sufficient defence. The main question is whether the check was given for liability or not.
7The check was given as security, will a case not be filed?
A case may also be made on a security check if an actual legal liability exists at the time of notice. The defense will focus on absence of liability.
8A check given by someone has bounced, what is the first step?
Within 30 days of the check bouncing, you have to send a legal notice to the drawer of the cheque, asking him to make the payment within 15 days.
9What if he does not pay the money within 15 days?
If payment is not made within 15 days of receipt of a valid demand notice, the cause of action arises. The complaint must then be filed within the statutory limitation period under Section 142, ordinarily one month from the date the cause of action arises, before the court having territorial jurisdiction. Obtain advice on exact date calculation.
10What is required to file a case?
Original cheque, bank return memo, copy of legal notice, and postal receipt.
11Will I get my money back?
Yes, this is the purpose of this law. The court may order the accused to pay the amount of the check and compensation thereon.
12How long does it take to complete a case?
By law, these cases should be disposed of in 6 months, but in practice it takes 2-3 years in cities like Varanasi, Prayagraj.
13In how many days does notice have to be sent in check bounce?
Legal notice should be sent within 30 days of receiving the check return memo. 15 days are given for payment.
14When can check bounce be compromised?
At any stage. It is safe to put the terms of payment, interest, expenses and installments in writing before the court.
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