What is a Cheque Bounce Notice?
A Cheque Bounce Notice is a formal legal intimation sent by the payee (receiver) to the drawer (issuer) when a cheque is dishonored by the bank. Under Section 138 of the Negotiable Instruments Act, 1881, sending this notice is a mandatory prerequisite before filing a criminal complaint in court.
Common Reasons for Cheque Bounce
- Insufficient Funds: The most common reason where the account balance is lower than the cheque amount.
- Signature Mismatch: The drawer's signature does not match the bank's records.
- Account Closed: The account on which the cheque was drawn has been closed.
- Stop Payment: The drawer has instructed the bank to stop the payment.
- Stale Cheque: The cheque is presented after its validity period (3 months).
Legal Process Steps
1. Cheque Presentation & Return
The payee deposits the cheque, and the bank returns it unpaid with a "Cheque Return Memo" stating the reason.
2. Sending Legal Notice
The payee must send a legal demand notice to the drawer within 30 days of receiving the return memo. The notice must demand payment of the cheque amount.
3. Waiting Period
The drawer is given 15 days from the receipt of the notice to make the payment.
4. Filing Complaint
If the drawer fails to pay within 15 days, the payee can file a criminal complaint in the Magistrate's court within 30 days from the expiry of the notice period.
Critical Timelines to Remember
| Action | Time Limit |
|---|---|
| Sending Legal Notice | Within 30 days of Cheque Return Memo |
| Drawer's Payment Window | 15 days from receipt of notice |
| Filing Court Complaint | Within 30 days after the 15-day window expires |
Documents Required for Legal Action
- Original Dishonored Cheque.
- Original Cheque Return Memo from the Bank.
- Copy of the Legal Notice sent.
- Proof of Delivery (Postal Receipt / Tracking Report / Acknowledgment Card).
- Proof of Debt (Invoices, Agreements, etc.).
Penalties Under Section 138
Cheque bounce is a criminal offense in India. If convicted, the drawer faces:
- Imprisonment: Up to 2 years.
- Fine: Up to twice the amount of the cheque.
- Both: Imprisonment and fine together.
