Consequences of Cheque Bounce Notice

By Mayashree Acharya

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Updated on: Sep 24th, 2025

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4 min read

A cheque bounce notice is a legal intimation issued under Section 138 of the Negotiable Instruments Act when a cheque is dishonoured due to insufficient funds. It demands repayment of the exact cheque amount within 15 days. A cheque bounce notice is valid only if it states the exact cheque amount. Any error, however small, invalidates it.

Key Highlights

  • The payee must issue the notice within 30 days of receiving the bank’s cheque return memo.
  • The drawer gets 15 days from receipt of notice to clear the payment.
  • Failure to pay allows the payee to file a criminal complaint under Section 138 NI Act.
  • The offence is criminal in nature but the payee may also pursue a civil suit for recovery.
  • Both the drawer and company directors (if a company issued the cheque) can be held liable.

What is a Cheque Bounce?

When the payee presents a cheque to the bank for payment, and the cheque is returned unpaid by the bank with a memo of insufficient funds, the cheque is said to have bounced

A cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881. The punishment can be:

  • A fine of up to twice the cheque amount,
  • Imprisonment of up to two years, or
  • Both.

Cheques may bounce for many reasons, but insufficient account balance is the most common and legally punishable cause. In such cases, the bank issues a return memo to the payee. The payee can then send a cheque bounce notice to the drawer, demanding payment of the cheque amount.

Reasons For Cheque Bounce

The various situations that result in cheque bounce are as follows:

  • Insufficient account balance: If there is not enough balance in the drawer’s account to make the payment of the cheque, the bank will reject and return the cheque to the payee with a memo stating insufficient funds to pay the cheque amount.
  • Expired validity of cheque: Once the drawer issues the cheque, it must be presented for payment within three months. The cheque expires if it is not presented to the bank within three months. If the expired cheque is given to the bank, it bounces. 
  • Overwriting: If the signature of the drawer or cheque amount or any other statement has been overwritten on the cheque, the cheque bounces for overwriting.
  • Damaged cheque: If a cheque is damaged or disfigured and the details are not visible or have marks or stains, the cheque will bounce.
  • Signature mismatch: If the drawer’s signature is unclear or absent or does not match the one in the bank’s data, the cheque will bounce.
  • Mismatch of amounts or digits: Beyond the cheque itself, the legal demand notice must also match the cheque amount exactly. If the notice mentions even a slightly different figure, the claim under Section 138 cannot be maintained.

Remedies Against Cheque Bounce

Resubmission of Cheque 

When the cheque bounces due to overwriting, mismatch of signature, mismatch of the figures and words of the cheque amount or damaged cheque, the payee can ask the drawer to submit another cheque to rectify the mistake. 

If the drawer does not agree to submit another cheque, the payee can initiate civil action against the drawer to pay the cheque amount due to him and not the cheque bounce.

Cheque Bounce Notice

A cheque bounce notice is issued under Section 138 of the Negotiable Instruments Act only when a cheque bounces due to insufficient funds in the drawers’ account to make the cheque amount payment. 

If the cheque bounces for any other reason other than insufficient funds, the cheque bounce notice cannot be issued, and the payee can demand resubmission of the cheque. 

Issuance of Cheque Bounce Notice

When the cheque bounces due to an insufficient amount, the first step is to demand the payment of the amount by issuing a cheque bounce notice in writing by post as per the Act. 

  • The payee can issue a cheque bounce notice within 30 days of an intimation sent by the bank and the bounced cheque stating that the bank cannot make the cheque payment due to an insufficient amount. 
  • After issuing the cheque bounce notice, the payee must give the drawer 15 days time period from the receipt of the cheque bounce notice to pay the cheque amount. 
  • If the drawer does not reimburse the cheque amount even after the expiry of 15 days, then legal action can be initiated by the payee against the drawer within 30 days of the expiry of 15 days.
  • The notice must demand only the cheque amount as written on the cheque. Even a small difference between the cheque and the notice amount invalidates the notice.

However, a cheque bounce notice cannot be issued if the cheque was issued as a donation, gift or any other obligation that is not legally enforceable. The cheque must be issued to discharge a legally enforceable liability or debt to constitute an offence under the Act.

Reply For Cheque Bounce Notice

The drawer may reply to a cheque bounce notice to avoid further legal proceedings. The reply should be drafted carefully, ideally with the help of a legal practitioner, and may include details of the transaction, objections to the claims, or proof of payment.

The drawer cannot argue that typographical mistakes in the notice should be ignored. Any mismatch between the cheque and the notice amount makes the notice itself invalid, leaving no room for such a defence. 

The failure to reply to the legal notice or pay the cheque amount within 15 days can motivate the drawee to legally file a complaint at the court, which would initiate the legal proceedings against the drawer.

Format

A reply to a cheque bounce notice has no prescribed format, but it should include the following details:

  • Address the reply of the legal notice to the lawyer of the drawee.
  • Drawer's description, name, and address.
  • Facts of the issue: date of issue, cheque-return memo, etc.
  • Rebuttal of the allegations made against drawer.
  • Refrain from admitting to any allegation against the drawer mentioned in the notice.
  • Any complaints against the drawee of the cheque.
  • A summary of the defence against the allegations mentioned in the legal notice for cheque bounce.
  • The reply to any legal notice must be sent on a lawyer’s letterhead.

How to Handle a Cheque Bounce Case?

After the expiry of 15 days of issuing the cheque bounce notice, the payee can initiate legal action against the drawer if he/she does not receive the cheque payment. The payee should register a complaint under Section 138 of the Act. 

Under Section 138 of the Act, the offence of cheque bounce is a criminal offence for which the payee can initiate a criminal suit. The payee must file the complaint against the cheque bounce before the Magistrate within 30 days of the expiry of 15 days of issuing the cheque bounce notice.

Jurisdiction of Magistrate for Filing Cheque Bounce Suit

The payee can file the complaint before the Magistrate in any of the following places: 

  • Where the cheque was drawn.
  • Where the cheque was presented for payment.
  • Where the payment had to be made.
  • Where the cheque is dishonoured.
  • Where the demand notice was served. 

The cheque bounce complaint has to be filed before the Metropolitan Magistrate if the cheque bounce suit falls in any metropolitan city. If the suit for cheque bounce falls in any other city, the complaint must be filed before the Judicial Magistrate.

Process of Cheque Bounce Case

The process of a cheque bounce suit is as follows:

  • Filing a complaint before the Magistrate after the expiry of 15 days of receipt of cheque bounce notice by the drawer.
  • The payee/complainant has to appear before the court and provide the case details. If the Magistrate is satisfied with the complainant’s statement, he will issue a summons to the drawer for appearing before the court.
  • The drawer will appear and accept or deny the facts stated by the complainant. If the drawer refuses the complaint, then the court will proceed with the criminal trial of the case.
  • The drawer/accused will file his statement, and evidence and arguments of both sides will be presented to the court.
  • If the court finds the drawer guilty of the offence of cheque bounce, the court will pass a judgement of conviction against the drawer for the offence of cheque bounce.

Punishment For Cheque Bounce Case

Under Section 138 of the Negotiable Instruments Act, 1881, cheque bounce due to insufficient funds is a criminal offence. The punishment may include:

  • Imprisonment for up to two years,
  • A fine of up to twice the cheque amount, or
  • Both.

Civil Proceedings for Cheque Bounce

Apart from criminal proceedings, the payee may also file a civil suit to recover the cheque amount. However, in a civil suit, no cheque bounce notice is required. Only a legal notice for recovery is required. Civil action does not impose punishment; it ensures repayment only.

Company Liability in Cheque Bounce Cases

The cheque bounce notice can be issued against the company. A criminal suit can be initiated against a company when it issues the cheque and bounces due to an insufficient amount under Section 148 of the Act. When a criminal suit is initiated under Section 148 of the Act, the company and its directors will be punished for the offence of cheque bounce

Relief for the Drawer

If the drawer pays the cheque amount within 15 days of receiving the cheque bounce notice, no offence is deemed to have been committed under Section 138, and legal proceedings cannot continue.

Cheque Bounce Charges

Banks levy penalties when a cheque is dishonoured due to insufficient funds or other reasons. These cheque bounce charges usually range from Rs. 100 to Rs. 750, depending on the bank and the cheque amount. Charges may apply to both the drawer (issuer) and the payee (recipient). In addition, legal fees may arise if the matter proceeds to court.

When a cheque is returned unpaid, the payee should immediately inform the drawer. The drawer must then take corrective action, such as:

  • Resubmitting the cheque if the issue was a mistake (e.g., signature mismatch or overwriting).
  • Ensuring sufficient funds and re-issuing payment if the dishonour was due to insufficient balance.
  • If the drawer fails to resolve the issue, the payee may send a cheque bounce notice and initiate a criminal case under Section 138 of the NI Act to recover the amount.

Cheque bounce is both a financial burden and a legal risk. Maintaining sufficient funds and ensuring accurate cheque details is the simplest way to avoid penalties, notices, and criminal proceedings.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice. It should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

Related Articles:
1. Dishonoured Cheque
2. Cheque Bounce Notice Format

Frequently Asked Questions

How much is the cheque bounce charges?

Cheque bounce penalty charges vary from bank to bank ranging from Rs. 50 to Rs. 750.

Can I file an FIR for a cheque bounce?

You can file an FIR against the person who has issued a cheque. The usual remedy for cheque bounce is filing a complaint under Section 138 of the Negotiable Instruments Act after issuing a notice. An FIR may be filed under IPC Sections 406 or 420 only in cases involving fraud or criminal breach of trust.

Can I be arrested in a cheque bounce case?

Yes. Cheque bounce is a bailable criminal offence under Section 138 of the Negotiable Instruments Act. If found guilty, the court may award imprisonment of up to two years, though in most cases, courts first impose a fine or order repayment before considering arrest. 

What is a cheque return memo?

A cheque return memo is a document issued by the bank when a cheque is dishonoured. It states the reason for non-payment, such as insufficient funds, signature mismatch, or expired validity, and is given to the payee along with the returned cheque.

 

What are the documents required to file a cheque bounce case in India?

The documents required to file a cheque bounce case in India are:

  • Copy of the notice served on the drawer.
  • Proof of service of notice, either courier receipt or registered post receipt.
  • Original cheque on record.
  • Cheque return memo issued by the banker to the drawer.
  • Proof of the existence of a legally enforceable debt or liability.
What is the cheque bounce notice period?

The cheque bounce notice period is 30 days from the date the bank informs the payee about the dishonoured cheque. After receiving the notice, the drawer gets 15 days to make the payment, failing which the payee can file a complaint under Section 138 of the NI Act. 

What are the cheque bounce charges in SBI?

The cheque bounce charges in SBI due to insufficient funds is Rs. 500. The cheque bounce charges for technical reasons in SBI is Rs. 150.

About the Author
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Mayashree Acharya

Senior Content Writer
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I am an advocate by profession and have a keen interest in writing. I write articles in various categories, from legal, business, personal finance, and investments to government schemes. I put words in a simplified manner and write easy-to-understand articles. Read more

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