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What Are Cheque Bounce Cases

Writer's picture: lead indialead india
3 days ago4 min read

The cheque can bounce for a variety of reasons, including an incorrect date, a mismatch between the figures and words of the payment amount, a mismatch in signature, or a damaged cheque, payment stopped by the buyer, insufficient funds etc. However, these are some important reasons for cheque bounce, and the drawer can issue another check to correct the error and pay the money to the payee.


What are Cheque Bounce Cases

When a cheque is brought to a bank for payment and bounces, the bank will return the cheque with a return memo outlining the reason for the return. If the bank rejects the cheque because of insufficient funds, notice can be given to the drawer, and legal action may be taken against him.


When a cheque bounces owing to insufficient money and is returned by the bank, the payee should write a legal notice to the cheque's drawer requesting payment. In India, cheque bounce is a punishable violation under Section 138 of the Negotiable Instruments Act of 1881. The legal notice informs the cheque drawer that the amount specified in the cheque must be paid by him or else legal action will be taken against him under the Negotiable Instruments Act in the appropriate court.

Legal Provisions:

  • According to Section 138 of the Negotiable Instruments Act, cheque bounce for insufficient cash is a punishable offence. It states that if a person draws a cheque on an account he owns to pay money to another person and it is returned unpaid by the bank due to insufficient funds for any other reason, honor the cheque and the cheque is dishonored. The person must draw the cheque to discharge any legally enforceable debt or duty. The cheque must be returned by the bank because the amount of money standing on the credit of the drawer's account is insufficient or exceeds the amount agreed upon to be paid from the drawer's account by the bank or other valid reason. For the offense of cheque bounce, the drawer may face imprisonment for no more than two years, a fine of up to twice the value of the cheque, or both.

  • Section 141 of the Negotiable Instruments Act states that if a cheque issued by a corporation bounces, every person in charge and responsible for the firm's business at the time the offense occurred is guilty of an offense. This provision states that bouncing a cheque for insufficient amounts is a crime if the drawer is firm. When the drawer of the bounced cheque is a company, every person in control and accountable for performing the company's business, as well as the company itself, is guilty of the offense of cheque bounce and may face punishment. If a company commits a cheque bounce offense and it is proven that the offense was committed with the consent, negligence, or convenience of the company's director, secretary, manager, or other officers, such persons will be found guilty and punished accordingly.


Reasons for Cheque Bounce:

  • Cheque validity has expired - Once issued by the drawer, the cheque must be submitted for payment within three months. The cheque will expire if it is not submitted to the bank within three months. If an expired cheque is presented to the bank, it bounces.

  • Overwriting - If the drawer's signature, cheque amount, or any other statement is overwritten on the cheque, the cheque will bounce due to overwriting.

  • Damaged cheque - If a cheque is damaged or disfigured, with no visible features, marks, or stains, it will bounce.

  • Signature mismatch - If the drawer's signature is unclear, missing, or does not match the one in the bank's database, the check will bounce.

  • Mismatch of amounts or digits - If the cheque amount specified in words and figures does not match, the cheque will bounce.


Remedies for Cheque Bounce

  • Resubmission of the cheque: When a cheque fails due to overwriting, a discrepancy in signature, a mismatch in the figures and words of the cheque amount, or a damaged cheque., the payee may request that the drawer produce another cheque to correct the error. If the drawer refuses to present another cheque, the payee may take legal action against the drawer to ensure that the cheque amount due to him is paid rather than the cheque bounces.

  • Cheque Bounce Notice Under Section 138 of the Negotiable Instruments Act: A cheque bounce notice is issued under Section 138 of the Negotiable Instruments Act when a cheque fails to clear due to insufficient money in the drawers' account to cover the cheque amount. If the cheque bounces for any reason other than insufficient money, no cheque bounce notice will be given, and the payee may request that the cheque be resubmitted.

  • Issue of a Cheque Bounce Notice: When a cheque fails due to an insufficient amount, the first step is to seek payment of the amount by sending a cheque bounce notice in writing via post under the Negotiable Instruments Act. The payee may issue a cheque bounce notice within 30 days of receiving an intimation from the bank and the bounced cheque, saying that the bank is unable to complete the cheque payment due to an inadequate amount. After sending the cheque bounce notice, the payee must allow the drawer 15 days from receipt of the cheque bounce notice to pay the cheque amount. If the drawer does not return the cheque amount even after 15 days, the payee may take legal action against the drawer within 30 days of the 15 days expiring.


Lead India offers various legal services, such as free legal advice and internet information. We provide a facility in which you can talk to a lawyer and ask legal questions regarding the law here. Lead India's lawyers can assist you with any legal issues. In India, Lead India provides free legal assistance online. In addition to receiving free legal advice online, Lead India allows users to pose inquiries to experts for free.


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