Cheque bounce cases, commonly referred to as cases of dishonour of cheque, arise when a cheque issued by a drawer is returned unpaid by the bank due to reasons such as insufficiency of funds, closure of account, or exceeding the arrangement made with the bank. In India, the substantive law governing cheque dishonour is contained in Section 138 of the Negotiable Instruments Act, 1881, which criminalizes the failure to honour a cheque issued towards the discharge of a legally enforceable debt or liability.
The procedural aspects relating to filing of complaints, issuance of process, trial, appearance of parties, and compounding of offences are governed by the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which has replaced the Code of Criminal Procedure, 1973.
To constitute an offence under Section 138 of the Negotiable Instruments Act, the following essential ingredients must be satisfied:
• The cheque must have been issued for the discharge, in whole or in part, of a legally enforceable debt or liability;
• The cheque must have been presented within its period of validity;
• The cheque must be returned unpaid by the bank;
• The payee or holder in due course must issue a legal demand notice within 30 days from the receipt of the bank’s return memo;
• The drawer must fail to make payment of the cheque amount within 15 days from the receipt of such notice.
Upon fulfilment of the above conditions, the cause of action arises, and a complaint may be filed before the competent Magistrate within the prescribed limitation period. Under BNSS, such cases are ordinarily tried as summons cases, ensuring a relatively expeditious and summary procedure. The court may issue summons to the accused, record evidence, and proceed with the trial in accordance with the provisions of BNSS.
The offence is compoundable in nature, thereby permitting the parties to settle the dispute amicably at any stage of the proceedings, subject to the discretion of the court. The punishment prescribed under Section 138 may extend to imprisonment for a term of up to two years, or with fine which may extend to twice the amount of the cheque, or with both.
Thus, cheque bounce cases serve as an important legal mechanism to maintain financial discipline and uphold the credibility of commercial transactions, while BNSS provides the procedural framework for fair, efficient, and time-bound adjudication of such disputes.
