Cheque Bounce in India: What a Common Person Should Do and the Legal Procedure
Cheque bounce cases are one of the most frequent financial disputes in India. Whether the cheque is issued for a loan, rent, business payment, or personal dues, its dishonour can cause serious stress for the recipient. Fortunately, Indian law provides a clear and effective remedy—provided the correct procedure is followed strictly.
A cheque is said to have “bounced” when the bank refuses payment due to reasons such as insufficient funds, account closure, signature mismatch, or payment being stopped by the issuer. Such dishonour, if linked to a legally enforceable debt or liability, can attract criminal proceedings.
The most critical aspect of a cheque bounce case is time. Once the cheque is returned unpaid, the payee must issue a legal demand notice within 30 days from the date of receiving the bank’s return memo. This notice demands payment of the cheque amount and must be sent in writing.
After receiving the notice, the cheque issuer is given 15 days to make the payment. If the amount is paid within this period, the matter ends. However, if no payment is made, the payee gets the right to initiate legal action.
The complaint must be filed before the Judicial Magistrate within 30 days after the expiry of the 15-day notice period. Along with the complaint, the original cheque, bank return memo, legal notice, and proof of service must be submitted.
While a layperson can technically file the case without a lawyer, cheque bounce matters are highly procedural. Missing a deadline or making drafting errors can lead to dismissal. Courts also encourage settlement, and many cases are resolved through compromise at an early stage.
In short, cheque bounce law strongly favours the payee—but only when timelines and procedure are followed with precision.
FAQs
1. Is cheque bounce a criminal offence?
Yes. It is a criminal offence arising out of a financial transaction and may lead to imprisonment or fine.
2. Can I file a cheque bounce case without sending a legal notice?
No. Sending a legal notice within 30 days is mandatory.
3. Where should the cheque bounce case be filed?
It is filed before the Magistrate Court having jurisdiction over the payee’s bank branch.
4. What is the punishment for cheque bounce?
Punishment can include imprisonment up to two years, fine up to twice the cheque amount, or both.
5. Can the case be settled later?
Yes. Courts encourage settlement at any stage, even after filing the case.
