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Cheque bounce is a serious financial offence under Section 138 of the Negotiable Instruments Act, 1881. It is treated as a criminal offence, and a person found guilty can be punished with imprisonment up to two years or a fine which may extend to twice the amount of the cheque, or both.

1. Pre-requisites for Section 138 Prosecution

For a cheque bounce to be prosecutable under Section 138, specific conditions must be met:

• The cheque must have been issued for the discharge of a legally enforceable debt or liability.
• The cheque must be presented to the bank within its validity period of three months.
• The bank must return the cheque unpaid due to insufficient funds, exceeding arrangement, etc.

2. Strict Statutory Timelines

The legal procedure is highly time-sensitive. Failure to comply with the timelines will render the case invalid:

• Legal Notice: The payee must send a written notice to the drawer within 30 days of receiving the return memo from the bank.
• Payment Period: The drawer is given 15 days from the receipt of the notice to clear the payment.
• Filing Complaint: If payment is not made within 15 days, the payee must file a criminal complaint in the Magistrate court within 30 days.

How THE PHOENIX LEGAL Can Assist

Our commercial litigation team has extensive experience filing and defending Section 138 NI Act cases. We handle the drafting of legal notices, filing complaints, and conducting courtroom trials to ensure swift financial recovery.