Team SoOLEGAL 1 Aug 2023


In many countries around the world, a cheque is an important part of the financial system. A cheque is regarded as a crucial document that can be used by an individual, company, or government for various monetary transactions. A cheque is a negotiable document used to transport money in physical form or to perform inter-account transfers.

Cheque Bounce:

When a cheque bounces, it means that the process of depositing the cheque in the bank was unsuccessful.

It could be due to a number of factors, including:

·       When the issuer's account has insufficient funds.

·       The bank can bounce a cheque if the date on the cheque is unreadable the numbers are scribbled, or the date on the cheque is more than three months old.

·       When the signature does not match what is on file with the bank.

·       When the amounts stated in numbers and words differ.

·       When there are too many stains or marks on the cheque.

·       When a cheque is overwritten, scribbled, or corrected.

False Cheque Bounce:

Numerous individuals still prefer to make payments by cheque for a variety of reasons, such as the ability to pay people who do not have a bank account or for those who are not yet comfortable with net banking. However, cheque bounce cases are on the rise, and Indian courts are overflowing with these cases filed under Section 138 of the Negotiable Instruments Act of 1881.

These cases are typically used to extract money from someone or to harm and tarnish his or her reputation. Yet, some of these cheque bounce cases are false and are not genuine cases that target innocent people who then end up facing legal issues because they do not know what to do.

How would you handle a Cheque Bounce Case?

In such instances, the victim need not be concerned because it is a false accusation that is generally easily proven with valid documents that there was sufficient balance or fund in the issuer's bank account to ensure that the cheque did not bounce.

·       Gather relevant documents: Collect all the necessary documents that can prove your innocence and expose the false accusation. These documents could include transaction records, bank statements, and any other evidence that supports your case.

·       Contact the bank: Get in touch with the bank to verify the dishonoring of the cheque and understand the reasons behind it. Request detailed information about the incident and ask for any relevant documentation or records they may have.

·       Seek legal representation: Hire a lawyer who specializes in cheque bounce cases. They can provide guidance and help you draft a suitable reply to the legal notice received from the bank or the accuser. It's crucial to consult with an experienced professional to ensure your response is appropriate and legally sound.

·       Respond to the legal notice: Reply to the legal notice within the stipulated timeframe, typically within 30 days. Your lawyer can assist in preparing a comprehensive response that addresses the false accusations and presents your defense effectively.

·       Consider filing a counter case: If the false accusation has caused significant harm or financial loss, you may choose to file a counter civil case against the individual who accused you. In this case, you can seek compensation for damages, expenses incurred due to the fraud case, and potentially file a defamation case against the false accuser.

Documents needed to file a counter-claim:

·       Payment bills

·       When the payment was made, a bill was generated.

·       The account statement from the bank

·       A copy of the issued cheque

·       Cheque drawn on a bank

Section 138 of the Negotiable Instruments Act of 1881:

Section 138 of the Negotiable Instruments Act of 1881 provides legal recourse in the event of a cheque bounce or dishonour.

This section was recently decriminalized. On June 8, 2020, the Ministry of Finance proposed decriminalizing several minor offences in order to improve business sentiment and unclog court processes, including Section 138 of the Negotiable Instruments Act, 1881. The primary goal of decriminalizing this section is to encourage foreign investment in our country.

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