Cheque Bounce Cases Under Section 138 NI Act: A Complete Guide
Cheque bounce or dishonour of cheque is one of the most commonly litigated offences in Indian courts. Under Section 138 of the Negotiable Instruments Act 1881, issuing a cheque knowing that the account has insufficient funds is a criminal offence punishable with imprisonment up to two years, a fine up to twice the cheque amount, or both.
When is a Cheque Considered Bounced?
A cheque is legally considered dishonoured when it is returned by the bank with any of the following reasons:
- Insufficient funds in the account
- Account closed or frozen
- Payment stopped by the account holder
- Signature mismatch
- Cheque presented after validity (3 months from date)
Note: Only the first three reasons give rise to criminal liability under Section 138.
Steps to File a Cheque Bounce Case in Kerala
- Present the cheque — deposit the cheque within its 3-month validity period
- Receive the bank memo — preserve the original dishonoured cheque and bank return memo
- Send a legal notice within 30 days — the payee must send a written demand notice to the drawer within 30 days of receiving the bank memo
- Wait 15 days — the drawer has 15 days to make the payment after receiving the notice
- File complaint within 30 days — if payment is not made, file a criminal complaint before the Judicial Magistrate Court within 30 days of the expiry of the 15-day notice period
Punishment and Penalties
If convicted under Section 138, the accused can face:
- Imprisonment for up to 2 years
- Fine up to twice the amount of the cheque
- Both imprisonment and fine
Recent Supreme Court Guidelines on Cheque Bounce Cases
The Supreme Court of India has issued several guidelines to fast-track cheque bounce cases, including monthly hearings, evidence by affidavit, and strict timelines. Courts are directed to try cheque bounce cases within 6 months of filing where possible.
Cheque Bounce Lawyers in Kochi
D&P Legal Panacea has a dedicated team handling Section 138 NI Act cases in Ernakulam Magistrate Courts and across Kerala. Whether you are the complainant seeking recovery or the accused defending the case, our criminal law advocates provide strong and effective representation.