Offence of cheque bouncing

Section 138 of the Negotiable Instruments Act 1881, was introduced in the year 1989 which made the dishonor of cheques, for various reasons, enumerated therein, a punishable offence. The present punishment is imprisonment for a term, which may extend to two years or with fine, which may extend to twice the amount of cheque, or with both.

A cheque needs to be presented within 6 months of the date of drawing, to the bank. After the cheque gets dishonored, the payee has to make a demand by giving a notice in writing to the drawer of the cheque, within 30 days of the receipt of information from the bank regarding the dishonor of the cheque. The payee need to wait for another 15 days after the said notice is served on the drawer to see whether the drawer is making the payment of the cheque amount. If, within 15 days, the drawer does not make the payment, the payee can file a complaint before the jurisdictional magistrate, within 30 days. It is interesting to note that such a complaint cannot be filed before the police authorities.

There are special courts in Bangalore to try cheque-bouncing cases. In addition to the criminal prosecution, a person can approach the civil court for the recovery of the money under the same cheque. Hence a person has double remedy under the law. In a prosecution for an offence of cheque dishonor, the defenses available to an accused are very limited. Most of the recent decisions of various High Courts and the Supreme Court are in favour of conviction in matters of Cheque bouncing.