Why a bounced cheque becomes a legal matter
Under Section 138 of the Negotiable Instruments Act, a cheque returned unpaid, for example for insufficient funds, can lead to a criminal complaint if certain conditions are met.
The timeline in four steps
The cheque must be presented within its validity period. After the bank returns it, the payee has 30 days to send a written demand notice. The person who issued the cheque then has 15 days to pay. If they do not, the payee can file a complaint within one month after those 15 days end.
What the law can lead to
A conviction can bring imprisonment of up to two years, a fine of up to twice the cheque amount, or both. In practice, a large share of these cases end in settlement.
If you issued the cheque
Do not ignore the notice. Pay within 15 days if the claim is correct, or reply in writing if you dispute it. Keep every document.
If you received the cheque
Send the demand notice on time and keep proof. Missing the 30-day window can end your ability to file a complaint on that cheque.
Settlement is common
The parties can settle at any stage, even after the case has begun. Record the terms in writing and make sure the original cheque is returned.
Looking for specific help? Read our guide to cheque bounce cases or request a confidential consultation.
This article is general information and not legal advice.