Cheque Bounce & NI Act Cases

Cheque Bounce Cases Under Section 138, NI Act

A dishonoured cheque can give rise to criminal liability under Section 138 of the Negotiable Instruments Act, 1881, where the cheque was issued in discharge of a legally enforceable debt or liability and is returned unpaid for reasons such as insufficient funds. VIVS Legal represents both payees pursuing a cheque bounce complaint and persons defending against one.

The law prescribes a specific notice period and limitation timeline that must be followed before a complaint can be filed, making prompt action important on both sides of such a matter.

How VIVS Legal assists

Demand notice drafting

Drafting and issuing the statutory demand notice required within the prescribed period after a cheque is dishonoured.

Filing a Section 138 complaint

Preparing and filing a criminal complaint before the competent magistrate court where payment is not made after notice.

Defending a cheque bounce complaint

Representation for the accused, including available defences and settlement negotiations.

Compounding and settlement

Assisting parties in reaching a settlement and compounding the offence where both sides agree.

Recovery alongside criminal proceedings

Advising on parallel civil recovery options where appropriate, in addition to the criminal complaint.

Appeals and revisions

Representation in appeals or revision proceedings arising from a trial court order.

Frequently asked questions

What is Section 138 of the Negotiable Instruments Act?

It makes cheque dishonour a criminal offence where the cheque was issued to discharge a legally enforceable debt and is returned unpaid due to insufficient funds or a similar reason, subject to the notice and payment procedure prescribed by the Act.

What is the first step after a cheque bounces?

A written demand notice must be sent to the drawer within the period prescribed by the Act, calling for payment within the statutory response window before a complaint can be filed.

What happens if the drawer pays after the notice?

If payment is made within the prescribed period after the notice, no criminal complaint arises from that dishonoured cheque.

Can a cheque bounce case be settled?

Yes, such cases can generally be compounded and settled between the parties, including at various stages of the proceedings.

What defences are available to the accused?

Defences can include disputing the existence of a legally enforceable debt, questioning the validity of the notice, or challenging procedural compliance, depending on the facts of the case.

What is the punishment for a cheque bounce offence?

The Act provides for imprisonment, a fine that may extend to twice the cheque amount, or both, as determined by the court based on the facts of the case.

Legal notice: This page provides general information, not legal advice. No lawyer-client relationship is formed by viewing the page or sending an enquiry. Engagement, scope and fees must be confirmed in writing.