What to Do in a Cheque Bounce Case (Section 138 NI Act)
A bounced cheque can cause stress, especially when it involves business transactions or personal loans. But Indian law provides strong remedies under Section 138 of the Negotiable Instruments Act.
Step 1: Verify the Bounce Reason
- Banks issue a “Cheque Return Memo.
- Common reasons: insufficient funds, signature mismatch, account closed.
Step 2: Send a Legal Notice
- Must be sent within 30 days of receiving the memo.
- Notice demands payment within 15 days.
Step 3: Filing a Complaint
- If payment isn’t made, file a criminal complaint under Section 138.
- File in the court where the bank branch is located.
Step 4: Court Proceedings
- The accused is summoned.
- Trial begins (similar to a criminal case).
- Court may order fine up to twice the cheque amount + imprisonment.
Tip : Always keep cheque copies, bank memos, and notice receipts as evidence.
Benefit : Law ensures quick remedies and acts as a strong deterrent.