Cheque Bounce in India: Causes, Legal Action, and What to Do Next in 2025

• What to do if a cheque bounces
• Legal actions that can follow
• Common reasons for cheque bounce

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What to Do If a Cheque Bounces: A Complete Guide

A cheque bounce happens when a bank refuses to clear a cheque. This can be frustrating and even lead to legal trouble. Here’s what to do, why it may have happened, and how to deal with it the right way.

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What is a Cheque Bounce?

A cheque bounce (or dishonoured cheque) occurs when the bank refuses to process the cheque you issued or received. The bank returns the cheque along with a memo stating the reason for rejection.

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Steps to Take If Your Cheque Gets Bounced

1. Check the Reason
   Your bank will give a return memo mentioning why the cheque was bounced. Find out the exact cause (like low balance, signature mismatch, etc.).
2. Contact Your Bank
   Visit your branch or call customer care to get clarity. You can also collect the returned cheque and the memo for records.
3. Talk to the Other Party
   • If you received the cheque: Contact the person who gave it to you and ask for repayment.
   • If you issued the cheque: Apologize and settle the payment immediately to avoid legal consequences.
4. Avoid Repeat Incidents
   • Always ensure your account has enough funds
   • Avoid overwriting or mistakes while filling the cheque
   • Keep your signature updated with the bank
   • Consider using digital payments where possible

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Legal Actions for Cheque Bounce (As per Indian Law)

If a cheque bounces due to insufficient funds, legal action can be taken under Section 138 of the Negotiable Instruments Act, 1881:

1. Legal Notice

• The payee (person expecting the money) can send a legal notice within 30 days of cheque bounce.
• The drawer (issuer) must clear the dues within 15 days from receiving the notice.

2. Criminal Case

• If payment is not made within 15 days, the payee can file a case in court within 30 days.
• Punishment can include:
  • Up to 2 years of jail, or
  • A fine up to double the cheque amount, or
  • Both

3. Civil Case

• The payee can also file a civil suit to recover the amount, interest, and legal expenses.

4. Credit Impact

• If the bounced cheque is related to a loan EMI or credit payment, it may hurt the drawer’s CIBIL score or credit history.

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Most Common Reasons for Cheque Bounce

1. Not enough money in the account
2. Signature doesn’t match the bank’s record
3. Cheque is dated in the future (post-dated cheque) and presented early
4. Cheque is more than 3 months old (stale cheque)
5. Amount written in words and numbers don’t match
6. Overwriting or corrections not signed
7. Account is closed or frozen
8. Cheque is not signed at all
9. Drawer has passed away or declared insolvent
10. Bank was told to stop payment

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How to Prevent Cheque Bounce Issues

• Maintain a sufficient balance
• Double-check details before handing over a cheque
• Keep your signature consistent
• Avoid making corrections on a cheque
• Use online payments for more secure transactions

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20 Short FAQs About Cheque Bounce

1. What is cheque bounce?
   It’s when a bank returns a cheque unpaid due to some issue.
2. Why does a cheque bounce?
   Common reasons include low balance, signature issues, or technical errors.
3. Can I go to jail for a bounced cheque?
   Yes, if you fail to pay after receiving a legal notice, you may face up to 2 years in jail.
4. How long do I have to respond to a cheque bounce notice?
   You get 15 days from the date of receiving the notice.
5. Can I re-deposit a bounced cheque?
   Yes, but it depends on the reason for bounce and agreement between both parties.
6. Is cheque bounce a criminal or civil offence?
   It can be both. Criminal under Section 138, and civil if a recovery suit is filed.
7. What happens if the drawer dies before cheque clearance?
   The cheque becomes invalid.
8. What if the signature is slightly different?
   Even small differences may lead to a bounce.
9. Can I issue a cheque without balance if I plan to deposit funds later?
   That’s risky. The cheque may bounce if presented early.
10. Will my bank inform me if a cheque bounces?
    Yes, banks usually notify the drawer and provide a return memo.
11. Can a bounced cheque affect my credit score?
    Yes, especially if it’s related to loan or EMI payments.
12. What is a return memo?
    A document from the bank stating the reason for cheque rejection.
13. Can I stop a cheque from clearing?
    Yes, by giving a stop payment instruction to your bank.
14. How many times can a cheque be bounced?
    There’s no legal limit, but repeated bouncing may lead to legal trouble.
15. Can I file a complaint if I receive a bounced cheque?
    Yes, you can send a legal notice and even file a court case.
16. What documents do I need to file a case for cheque bounce?
    Original cheque, return memo, copy of notice, and proof of delivery.
17. How long is a cheque valid?
    3 months from the date written on it.
18. Is digital payment better than cheques?
    Yes, it’s faster and safer, with fewer chances of failure.
19. Can I issue a blank cheque to someone?
    It’s not advisable. Blank cheques are risky and may be misused.
20. Who bears the penalty for cheque bounce?
    Both parties may be charged by their banks, but the drawer bears legal risk.

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