{"id":65829,"date":"2024-08-20T14:17:52","date_gmt":"2024-08-20T08:47:52","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=65829"},"modified":"2025-08-12T16:58:26","modified_gmt":"2025-08-12T11:28:26","slug":"cheque-bounce-case-stages","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/","title":{"rendered":"Cheque Bounce Case Stages: A Simple Legal Guide"},"content":{"rendered":"\n<p>A cheque is a widely used instrument in financial transactions. Though digital payments have seen a boom in recent years, cheques still remain the safest mode of payment. Digital payments can be only made up to a lakh. Although online banking can exceed this limit, cheques are safe for high-stake transactions. The cheques are scrutinized by the banks before letting a payee encash any cheque. The reason why it is more reliable.<\/p>\n\n\n\n<p>However, as a result of this process of scrutiny, cheque bounces are common. It attracts criminal liability. One can face a civil action as well. It becomes daunting to be caught in such a process, either as a drawer or a payee, especially when one has no idea about the proceedings that shall follow. This article purports to give you an insight into the stages in a cheque bounce case, that might help the viewers in contemplating their next step.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#A_cheque_under_the_Definition_of_a_Negotiable_Instrument\" >A cheque under the Definition of a Negotiable Instrument<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#Common_Reasons_for_Cheque_Bounce\" >Common Reasons for Cheque Bounce<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#A_Brief_Look_at_Section_138_of_the_Negotiable_Instruments_Act_1881\" >A Brief Look at Section 138 of the Negotiable Instruments Act, 1881<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#Notice_to_the_Drawer\" >Notice to the Drawer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#Stages_of_a_Cheque_Bounce_Case\" >Stages of a Cheque Bounce Case<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/cheque-bounce-case-stages\/#Frequently_Asked_Question_about_Cheque_Bounce_Case\" >Frequently Asked Question about Cheque Bounce Case<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_cheque_under_the_Definition_of_a_Negotiable_Instrument\"><\/span>A cheque under the Definition of a Negotiable Instrument<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A cheque is an instrument issued to the bank directing it to transfer money from the drawer\u2019s account to the payee who furnishes it. It comes under the definition of a negotiable instrument under the Negotiable Instruments Act, of 1881, which means that it is subject to this statute. Since it is a negotiable instrument, the bearer can encash the cheque as he produces the same before the bank well in the validity period of the cheque.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Reasons_for_Cheque_Bounce\"><\/span>Common Reasons for Cheque Bounce<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Cheque bounce is when a bank dishonours a cheque. While insufficient funds remain the most common reason for cheque bounce, it happens for several more reasons. They are as follows:<\/p>\n\n\n\n<p><strong>1) Mismatched signature<\/strong><\/p>\n\n\n\n<p>If the signature of the drawer in the record with the bank does not match the one on the cheque or the strokes are different, suspecting a forged cheque, in such cases, the bank dishonours the cheque.<\/p>\n\n\n\n<p><strong>2) Alterations or mismatched amount<\/strong><\/p>\n\n\n\n<p>If it appears that there is some overwriting or alteration done in the cheque suspecting fraud on the side of the payee, or the amount written in numbers does not match the amount written in words, then in such cases, because of the anticipation of fraud or lack of clarity, a bank dishonours the cheque.<\/p>\n\n\n\n<p><strong>3) Stop-payment request<\/strong><\/p>\n\n\n\n<p>If the drawer has requested his bank to stop the payment through the cheque, in such case, the bank dishonours a cheque.<\/p>\n\n\n\n<p><strong>4) Insufficient funds<\/strong><\/p>\n\n\n\n<p>When the drawer has insufficient funds in his account, or the amount on the cheque exceeds the minimum balance a person has to maintain in his account, in such cases, a bank dishonours the cheque.<\/p>\n\n\n\n<p><strong>5) Inactive account<\/strong><\/p>\n\n\n\n<p>If the account has been dormant for a long while, where there is the possibility of the death of the account holder or him not actually drawing such a cheque, in such cases as well a bank dishonours a cheque.<\/p>\n\n\n\n<p><strong>6) Not Valid<\/strong><\/p>\n\n\n\n<p>There are times when a drawer issues a future-dated cheque. Such a cheque cannot be furnished by the payee before the bank before such date. A cheque is usually valid for 3 months from the date of issuance of the cheque written on it. If the payee furnishes it after its validity period, then the cheque gets dishonoured by the bank.<\/p>\n\n\n\n<p><strong>7) Closed Account<\/strong><\/p>\n\n\n\n<p>If the drawer has closed his account from the bank to which he issued the cheque, then the payee\u2019s bank dishonours the cheque.<\/p>\n\n\n\n<p><strong>8) Attached or frozen account<\/strong><\/p>\n\n\n\n<p>If the account of the drawer has been attached by a court\u2019s order or has been frozen as a result of no nominee or any other reason, in such cases, the cheque cannot be encashed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_Brief_Look_at_Section_138_of_the_Negotiable_Instruments_Act_1881\"><\/span>A Brief Look at Section 138 of the Negotiable Instruments Act, 1881<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Cheque bounce is not considered a mere financial inconvenience but a criminal offence. The purpose is to bring value to the promise made through a cheque. Especially when big transactions depend on it. The punishment for a cheque bounce is given under Section 138 of the Negotiable Instruments Act, 1881. There are three punishments that it envisages:<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li>Imprisonment of the drawer for up to 2 years.<\/li>\n\n\n\n<li>Fine to be paid by the drawer of up to twice the amount of the cheque.<\/li>\n\n\n\n<li>If the offence is serious and involves high stakes, then both.<\/li>\n<\/ol>\n\n\n\n<p>It is to be noticed that the court may direct compensation to the payee from the fine paid or may separately ask the drawer to pay the compensation to the payee in addition to the fine that he paid.<\/p>\n\n\n\n<p>However, is it the case that all the cheque bounces under the above-mentioned circumstances can attract such criminal liability? The answer is no. The following points are to be considered while ascertaining liability under this section:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1) Only for Insufficient funds:<\/h3>\n\n\n\n<p>A person can attract criminal liability only when the cheque gets dishonoured for insufficient funds, as explained above, which also includes the amount on the cheque exceeding the minimum balance limit of the bank. On account of all the reasons that result in a cheque bounce, criminal liability cannot be imposed.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2) Only for legally enforceable debt or liability:<\/h3>\n\n\n\n<p>When the cheque that bounced was given as a donation or out of any gratuitous act, the payment of which cannot be enforced by the court, in such cases no criminal liability can be imposed against the drawer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3) Failure to fulfil the prerequisites<\/h3>\n\n\n\n<p>Before filing a criminal complaint of cheque bounce against the drawer, a drawer needs to fulfil three prerequisites, without which the criminal case will be dismissed.<\/p>\n\n\n\n<p>1) The cheque should have been presented by the payee before the bank within its validity period.<\/p>\n\n\n\n<p>2) Within 30 days of the receipt of the information from the bank of a cheque bounce, the payee should have issued a notice to the drawer demanding the amount on the bounced cheque.&nbsp;<\/p>\n\n\n\n<p>3) The drawer fails to pay the amount within 15 days from the receipt of such notice.<\/p>\n\n\n\n<p>Only after fulfilling these prerequisites can a person file a criminal complaint of cheque bounce against the drawer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notice_to_the_Drawer\"><\/span>Notice to the Drawer<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The payee shall send a notice to the drawer demanding the payment of the amount in the bounced cheque. While sending a notice, it is important to note that within 30 days of the cause of the action, a person has to file a complaint of cheque bounce before the magistrate. After the issuance of a notice, 15 days have to be given to the drawer to pay the amount. This means if you cause a delay of more than 15 days to send the notice, you will not be able to file a complaint against the drawer.<\/p>\n\n\n\n<p>After the receipt of the notice, the recipient (drawer) either would acknowledge the allegations and pay the amount or fail to reply or challenge the <a href=\"https:\/\/corpbiz.io\/cheque-bounce-notice\" title=\"Cheque Bounce Notice\"><b>cheque bounce notice<\/b><\/a> in his reply. In any case, if he does not pay the amount, the matter proceeds to the court.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stages_of_a_Cheque_Bounce_Case\"><\/span>Stages of a Cheque Bounce Case<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>On average, it takes about a year for a cheque bounce case to complete before a trial court. The following are the steps involved in the case:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">1) Registering a complaint<\/h3>\n\n\n\n<p>The payee shall register a complaint before the magistrate under the Negotiable Instruments Act, 1881. As mentioned above, this case has to be registered within 30 days from the date when the cheque bounced. The complainant should be present before the magistrate. He shall show the original documents to the magistrate and also confirm his identity before the bench. If the magistrate, after hearing the case prima facie, feels that the matter should proceed, he shall give a next date for the sworn statement.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">2) Sworn statement<\/h3>\n\n\n\n<p>In this stage, the payee enters the witness box and gives further information on the case by first swearing before the court. If the court feels that the matter should proceed, it issues a summons to the drawer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">3) Appearance before the court<\/h3>\n\n\n\n<p>After receiving the summons, the drawer has to appear before the court on the given date. If he fails to appear, a warrant will be issued against him by the magistrate, which can lead to his arrest. In such a case, the drawer will have to bring a person as surety to ensure his appearance, or in the absence of surety; he may have to deposit cash security. The cash security is refundable after the case closes.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">4) Recording of plea<\/h3>\n\n\n\n<p>In this stage, the drawer will be asked if he admits the offence alleged against him. If the drawer admits it, he will be liable for the punishment under Section 138 of the Negotiable Instruments Act, 1881. If he denies the allegation made against him, the case shall proceed to the evidence stage.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">5) Examination-In-Chief<\/h3>\n\n\n\n<p>The payee shall furnish before the court an Affidavit of Examination-In-Chief through which he shall present all his evidence and statements regarding them. The documentary evidence attached to it shall include the bounced cheque, dishonour memo, the notice sent to the drawer, and any other evidence that the payee thinks should be produced before the court. He may also produce witnesses whose statements will be recorded by the court.&nbsp; On the basis of that affidavit, the drawer(accused) shall cross-examine the payee (complainant).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">6) Interrogation<\/h3>\n\n\n\n<p>After the complainant is done presenting his evidence, the court shall question the accused. The court shall question several things to receive an explanation of the same from the accused. The accused has to present his side of explanations on the accusations made from the presented evidence against him.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">7) Affidavit-In-Reply<\/h3>\n\n\n\n<p>As a reply to the Affidavit presented by the complainant, the accused shall present his affidavit in reply to it by attaching the documentary evidence supporting his defence. He may also call for witnesses to bring their statements on record. The complainant shall cross-examine the accused based on the affidavit in reply that he produced.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">8) Hearing of Arguments<\/h3>\n\n\n\n<p>After both parties have presented their evidence and cross-examined each other, their advocates will get a chance to argue based on the evidence produced and discrepancies found. Both parties may submit their oral arguments in written format along with the judgments supporting their case before the court.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">9) Judgement:<\/h3>\n\n\n\n<p>After listening to the arguments of both parties, the court shall arrive at a conclusion. The court shall either convict or acquit the accused. If acquitted, the accused is relieved of criminal liability.<\/p>\n\n\n\n<p>&nbsp;If convicted, he shall be liable for the punishment given under Section 138 of the Negotiable Instruments Act, 1881, along with the costs incurred by the complainant in fighting this case. The convict can even challenge the judgment by going for an appeal before the sessions within 30 days from the date of judgment.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As mentioned earlier, a cheque bounce case takes, on average, a year to complete. Civil action can also be taken against the drawer under Order XXXVII of the Code of Civil Procedure, 1908. In such a case, interim reliefs like an injunction can also be prayed before the court. However, civil action may take longer to complete, and thus, moving the magistrate&#8217;s court is the most preferred way to deal with cheque bounce matters.<\/p>\n\n\n\n<p>Cheque bounce is considered an offence as cheques are the most secure payment with promises. Transactions involving high stakes are sometimes made through cheques. Such a cheque bounce may cause drastic effects on the part of the payee, which needs to be compensated. To increase the reliability of cheques, cheque bounce is not treated as a mere inconvenience but as a serious offence.<\/p>\n\n\n\n<p>To get assistance in replying to the cheque bounce notice, visit<strong> <a href=\"https:\/\/corpbiz.io\/\">Corpbiz<\/a><\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Question_about_Cheque_Bounce_Case\"><\/span>Frequently Asked Question about Cheque Bounce Case<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3>What is a cheque bounce case?<\/h3><p class=\"saswp-faq-answer-text\">A cheque bounce case arises when a cheque issued by an individual is returned unpaid by the bank due to insufficient funds. This is considered an offence in Section 138 of the Negotiable Instruments Act of 1881.<\/p><li style=\"list-style-type: none\"><h3>What are the initial steps after a cheque bounces?<\/h3><p class=\"saswp-faq-answer-text\">After a cheque bounces, the payee must issue a demand notice to the drawer of the cheque within 30 days, demanding payment of the cheque amount. The drawer has 15 days from receiving the notice to make the payment.<\/p><li style=\"list-style-type: none\"><h3>What happens if the drawer fails to pay before the stipulated time?<\/h3><p class=\"saswp-faq-answer-text\">If the drawer fails to pay within 15 days of receiving the demand notice, the payee can file a complaint under section 138 of the Negotiable Instruments Act, 1881 within 30 days from the date when the cheque bounced.<\/p><li style=\"list-style-type: none\"><h3>Where can a cheque bounce case be filed?<\/h3><p class=\"saswp-faq-answer-text\">A cheque bounce can be filed in a magistrate court, either Judicial Magistrate First Class or, in the case of metropolitan areas in Metropolitan Magistrate courts under whose jurisdiction the nearest police station of your residence comes.<\/p><li style=\"list-style-type: none\"><h3>What documents are required to file a cheque bounce case?<\/h3><p class=\"saswp-faq-answer-text\">The complainant must provide the original bounced cheque, the bank\u2019s cheque return memo, a copy of the demand notice, and proof of the notice\u2019s delivery to the drawer.<\/p><\/ul><\/div>\n\n\n<p class=\"text-left\"><b>Read Our Article<\/b>: <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/what-is-validity-period-of-cheque-bounce\/\" title=\" Cheque Bounce Validity Period\">Validity Period of Cheque Bounce<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A cheque is a widely used instrument in financial transactions. Though digital payments have seen a boom in recent years, cheques still remain the safest mode of payment. Digital payments can be only made up to a lakh. Although online banking can exceed this limit, cheques are safe for high-stake transactions. The cheques are scrutinized [&hellip;]<\/p>\n","protected":false},"author":85,"featured_media":65830,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4158],"tags":[],"acf":{"service_id":"813"},"authorName":"Shuchi Saxena","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2024\/03\/suchi.png","authorDescription":"Shuchi Saxena is an experienced business advisor with 10+ years of experience in management consulting. Maintaining a creative flow while writing content comes naturally to her. 99.2% of her writeups are problem-solving and help readers get what they intend to look out for. Her expertise lies in Startup Advisory, Regulations, Consulting, Environmental Advisory, etc.","postViews":8082,"readingTime":8,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/65829"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/85"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=65829"}],"version-history":[{"count":5,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/65829\/revisions"}],"predecessor-version":[{"id":69784,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/65829\/revisions\/69784"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/65830"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=65829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=65829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=65829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}