Someone Gave You a Cheque and It Bounced. What Should You Do?

ByBase Legal

The problem

You lent money or sold goods. The other person gave you a cheque. Your bank returned it with a memo saying “funds insufficient” or “account closed”. The person is not answering your calls.

Example: A supplier in Bengaluru receives a cheque for ₹4 lakh from a customer. It bounces. The customer keeps promising to pay “next week”.

What the law says

Dishonour of a cheque given for a legal debt is an offence under Section 138 of the Negotiable Instruments Act, 1881. The court can impose a jail term of up to 2 years, or a fine of up to twice the cheque amount, or both. The law has strict time limits. If you miss one, you may lose the criminal remedy.

What you can do – step by step

  1. Present the cheque in time. A cheque is valid for 3 months from its date. You can present it again within this period.
  2. Collect the bank’s return memo. Keep the original cheque and the memo safely.
  3. Send a legal notice within 30 days of receiving the bank memo. It must demand payment of the cheque amount. Send it by registered post and keep the receipt.
  4. Wait 15 days. The drawer has 15 days from receiving the notice to pay.
  5. File a complaint within 1 month after those 15 days end. In Bengaluru, it is filed before the Magistrate where your own bank branch is located.
  6. Ask for interim compensation. Under Section 143A, the court may order the accused to pay up to 20% of the cheque amount during the case.

Documents to keep

  • Original cheque and bank return memo
  • Copy of the legal notice, postal receipt and delivery proof
  • Proof of the debt: invoice, agreement, bank transfer or messages

Mistakes to avoid

  • Waiting for promises and missing the 30-day notice deadline.
  • Sending a notice that demands more than the cheque amount without care.
  • Losing the original cheque.

You can also file a civil suit for recovery at the same time. A civil suit can include interest, which a cheque case may not.

Contact

To speak to an advocate, call +91 63660 42792 or email contact@baselegal.in. You can also send us a message. Read more about our Criminal Law practice.

This article is for general information only. It is not legal advice. Please speak to an advocate about your own case.

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