Cheque bounces under Section 138 of the Negotiable Instruments Act carry severe penalties including up to two years imprisonment and fines twice the cheque amount.
Legal Conditions for Offence
A cheque bounce qualifies as criminal if issued for a legally enforceable debt, presented within three months validity, followed by a 30-day notice, with no payment within 15 days of notice receipt.
Penalties Breakdown
Offenders face imprisonment up to two years, fines up to twice the cheque value, or both, plus legal costs and potential civil suits for recovery with interest.
| Penalty Type | Maximum Punishment |
|---|---|
| Imprisonment | 2 years |
| Fine | Twice cheque amount |
| Combined | Both possible |
| Additional | Civil recovery, costs |
Process Timeline
Payee sends notice within 30 days of dishonour; drawer has 15 days to pay. Complaint must file within one month if unpaid, handled as bailable, compoundable offence in Magistrate court.
Prevention Tips
Maintain sufficient funds, verify signatures and dates, reconcile accounts regularly, and prefer digital payments to avoid risks.
