Cheque Bounce


With the advent of growing technologies, the payment system is mainly made through the online banking system or online transaction, which made our life simpler and also helped in fast transactions of money. Online transactions are way more simple and faster than the issuing of cheques. Yet cheques have been preferred for financial transactions for longer time as it is considered as a safe mode for transferring funds and making purchases. However, the risk which comes with using of cheques is ‘cheque bounce’/ ‘cheque dishonor’ which leads to fine, penalties and even imprisonment.

What is Dishonor of Cheque?

A cheque is usually a written commitment written by the payer to the payee against a sum of money. The payee, also known as drawer then goes to the bank to deposit it. In an ideal situation the bank of the payer transfers the fund in the account of the payee’s bank. However, there are some times when the when the payer’s bank refuses to make the transaction into the payee’s bank account. The reason may vary but usually the main reason is insufficiency of funds in the payer’s bank account. Because of this the cheque bounces and it is called the dishonor of cheque. A cheque bounce is an offence under Section 138 of the Negotiable Instruments Act, 1881. According to Section 138 of the Negotiable Instruments Act, 1881;

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honor the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both.”

An efficient way to avoid dishonor of cheques is to go paperless transactions by the way of using net banking or mobile banking to transfer the funds to the third-party’s bank account. Instead of issuing a cheque, always choose to transfer funds through online mode life NEFT or direct transfer to bank account by net banking.

Remedies available to a person

There are two remedies available to a person in case of cheque bounce. The remedy can be civil or criminal. A civil suit is usually filed in case of dishonor of cheque to recover the money, while a criminal complaint is made to punish the defaulter, it doesn’t result in the recovery of the money. Therefore, it can be said that these two pleas can be maintained simultaneously. One for the recovery of the money and the other to punish the offender.

  • Section 138 of The Negotiable Instrument Act

Section 138 provides that if a cheque is dishonored due to insufficiency of funds or exceeds the cash credit/overdraft limit, the defaulter can be punished with imprisonment which may extend to two years, or with fine which may extend to twice the amount of the cheque, or both.

  • Legal Action for Cheque Bounce under Section 138 of The Negotiable Instrument Act

When the cheque bounces the first and primary step is to send a notice to the payer and request him to pay the amount. If he does not respond to the notice or do not pay the amount then legal action can be taken against him. For imitating legal action, the payee should present the cheque within three months from its issue and the bank should reject the cheque because of insufficiency of funds. Cheque bounce notice is sent within 30 days of the receipt or return of cheque by bank to the payer. If the payee fails to pay the mentioned amount in the cheque within 15 days of the cheque bounce notice, then legal proceedings can be imitated within 30 days after the expiry of 15 days’ time period.


Order 37 of the Civil Procedure Code provide with the summary procedure. It is a legal procedure which is used to enforce rights that takes faster effect than the ordinary suits, as in ordinary suits the courts usually do not hear the defense.

  • Legal Action for Cheque Bounce under XXXVII of CPC

A summary suit is initiated by presenting in an appropriate civil court. The burden of proof lies on the defendant. After the institution of summary suit a summon is prescribed to the defendant and within 10 days the defendant has to enter an appearance. On the appearance, the plaintiff shall serve a summons for judgement on the defendant and within 10 days of such summon the defendant has to apply for the leave to defend the suit. Leave to defend may be granted by the court upon such terms as appear to the judge.


Cheques have become a part of daily transactions such as repayment of loans, paying salaries, transactions related to business deals etc. it is considered as one of the most reliable payments but it has some disadvantages too. Dishonor of cheque or cheque bounce makes the defaulter liable to pay the mentioned amount in the cheque to the person in whose name the cheque was issued. Hence, it can be concluded that in case of a cheque bounce a person has both the remedies available i.e., the criminal remedy and the civil remedy and both remedies can be availed simultaneously. There is speedy disposal of cases and the defaulter is held liable to pay an interim compensation of 20% of the amount mentioned in the cheque as partial recovery.


  1. Indian Kanoon –
  2. Clear tax –,-Resubmission%20of%20cheque&text=When%20the%20cheque%20bounces%20due,another%20cheque%20rectifying%20the%20mistake.
  3. iPleaders
  4. The Economic Times

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

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