Cheque Bounce & Debt Recovery FAQs

Section 138 of the Negotiable Instruments Act, 1881, deals with the offence of cheque bounce due to insufficient funds or if the cheque amount exceeds the arrangement with the bank. It makes the dishonour of a cheque a criminal offence, punishable with imprisonment up to 2 years, a fine up to twice the cheque amount, or both. For action under this section, the cheque must be issued for a legal debt, and bounced for valid reasons like insufficient funds or stop payment.

To file a cheque bounce case under Section 138 NI Act, the following conditions must be fulfilled: 1) The cheque was issued for the discharge of a legally enforceable debt or liability. 2) The cheque was presented within its validity (usually 3 months). 3) The cheque bounced due to insufficient funds or other valid reasons. 4) A legal demand notice was sent to the drawer within 30 days of cheque return. 5) The drawer failed to pay within 15 days of receiving the notice.

The penalty for cheque bounce under Section 138 NI Act includes imprisonment up to 2 years, or a fine that may extend to twice the cheque amount, or both. In addition to this, courts may award compensation to the complainant under Section 357 CrPC. A civil suit for recovery of the cheque amount can also be filed separately.

As per Section 138 of the Negotiable Instruments Act, a legal demand notice must be sent to the drawer within 30 days from the date of receiving the cheque return memo from the bank. The notice should demand the payment of the cheque amount within 15 days. Failure to issue the notice within this time may make the complaint invalid.

Technically, no. The complainant must send a legal notice within 30 days of cheque dishonour. However, the court may condone delay if valid reasons are provided under Section 142(b) of the NI Act. Once the notice is sent, and if payment is not made within 15 days, the complaint must be filed within 30 days from the expiry of that 15-day window.

Cheque bounce is primarily a criminal offence under Section 138 of the NI Act. However, the complainant may also file a civil suit under Order XXXVII of the CPC for recovery of the amount. Thus, both civil and criminal remedies can be pursued simultaneously. Criminal proceedings ensure penal consequences, while civil suits help recover the due amount.

A cheque bounce notice should include: 1) Date of the cheque and cheque number, 2) Amount mentioned on the cheque, 3) Name of the bank and branch where cheque was presented, 4) Reason for dishonour (as per return memo), 5) A clear demand for payment within 15 days. The notice must be sent via registered post or courier with proof of delivery.

No. Section 138 applies only to cheques issued for legally enforceable debts or liabilities. If a cheque is given as a gift, donation, or charity without any obligation or debt, then its dishonour will not constitute an offence under Section 138. The complainant must prove that the cheque was issued in discharge of a legal debt or liability.

To file a cheque bounce case, the complainant must submit: 1) Original bounced cheque, 2) Cheque return memo from bank, 3) Copy of the legal demand notice, 4) Proof of delivery of the notice (postal receipt, acknowledgment, etc.), 5) Affidavit or complaint petition, and 6) Identity and address proof. Additional documents like loan agreements may strengthen the case.

Even if the drawer refuses to accept the notice, it is considered served if sent to the correct address by registered post or courier. As per legal precedents, refusal to accept a legal notice is equivalent to deemed service. The complainant can proceed to file the complaint under Section 138 after the 15-day period lapses.