A cheque given to repay a loan or pay a bill comes back from the bank marked "insufficient funds" or "payment stopped". The next question is nearly always the same: what can the person who received it actually do? This article explains, for readers anywhere in India, how a cheque bounce complaint works under the Negotiable Instruments Act, 1881. It is a central law, so the basic steps are the same in every state. It is not one of the laws replaced in 2024, so the Bharatiya Nyaya Sanhita does not change these steps. Why a bounced cheque can become a criminal case Section 138 of the Act treats the return of a cheque unpaid, for lack of funds or because it exceeds the arrangement with the bank, as an offence by the person who drew it. The cheque must have been given to repay a legally enforceable debt or liability. The punishment can be imprisonment of up to two years, a fine of up to twice the cheque amount, or both. In practice, most cases end in settlement a...
Plain-language legal awareness from Advocate Prabal Bhandari, Advocate R.K. Bhandari & Associates, Ludhiana (since 1986). Guides on labour law, EPF and ESI compliance, the new Labour Codes, POSH, gratuity, cheque bounce and money recovery, for employers, HR teams and individuals across India.