Cheque Bounce Under the Negotiable Instrument Act: A Detailed Examination

Shivendra Pratap Singh


High Court Lucknow


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Cheque transactions are an integral part of the financial fabric of modern commerce and personal dealings. Yet, one of the common issues faced by parties in cheque transactions is the bouncing of cheques. The Negotiable Instrument Act, 1881, lays down stringent provisions related to the dishonour of cheques. In this article, we will dissect the topic of cheque bounce within the framework of this Act.

What is Cheque Bounce?

A cheque is said to ‘bounce’ or be ‘dishonoured’ when the bank does not honor the payment request, typically due to insufficient funds in the account, discrepancies in signature, or if it’s post-dated. Other reasons might include the account being dormant or closed.

Section 138 – This is the primary section that deals with the dishonour of cheques. Under this section:

  1. Drawing, issuing, or presenting a cheque which gets dishonoured is a punishable offence.
  2. The punishment can be imprisonment up to 2 years, or a fine which may extend to twice the amount of the cheque, or both.

Section 139 establishes the presumption that the holder of a dishonored cheque has received the cheque in the course of trade or business for the discharge of a debt or liability.

Section 142 specifies the conditions under which a complaint can be made for the offence of cheque bounce.

Key Considerations in Cheque Bounce Cases:

  1. Notice to the Drawer: Once the cheque is dishonoured, the payee must give a written notice to the drawer, demanding payment. This notice must be given within 30 days of receiving the ‘cheque return memo’ from the bank.
  2. Drawer’s Response Time: Post receiving the notice, the drawer has 15 days to make the payment.
  3. Filing of a Complaint: If the drawer fails to make the payment within the 15-day window, the payee has the right to file a complaint. This complaint must be filed within 30 days.
  4. Jurisdiction: A significant amendment in 2018 clarified the jurisdiction for filing cheque bounce cases. The case can be initiated by the payee at the place where the branch of the bank, where the payee maintains his account, is located.

Importance of Addressing Cheque Bounce:

  1. Credibility: Frequent cheque bounces can dent the credibility of an individual or a business in financial and trade circles.
  2. Legal Implications: Given the stringent provisions of the Act, legal consequences of a cheque bounce can be severe.
  3. Financial Penalties: Banks usually charge a penalty for bounced cheques, which can be burdensome if such incidents occur frequently.


The stringent provisions under the Negotiable Instrument Act, 1881, underscore the sanctity of cheques as a trusted instrument in trade and personal transactions. It emphasizes the importance of ensuring sufficient funds while issuing cheques and the legal ramifications one might face otherwise. With the economy’s ever-growing pace, it’s crucial to understand these legal provisions to ensure smooth financial transactions and maintain one’s credibility.

Tags: #ChequeBounce #NegotiableInstrumentAct #FinancialLaw #IndianLaw