Cheque Dishonour Cases - Section 138 Negotiable Instruments Act, 1881

In India, cheque bounce is a criminal offence punishable with imprisonment for a term up to two years or with a fine twice the amount of the cheque or both. Recently, the provisions relating to cheque bounce have been further strengthened to reduce the number of trivial cases and speed up the process of payment collection. Therefore, it is important for individuals and small & medium-sized businesses to understand their rights & responsibilities of a cheque bounce and maintain the financial discipline to avoid cheque bounces.

The Negotiable Instruments Act, 1881 ("Act") deals with negotiable instruments, such as promissory notes, bills of exchange, cheques etc. Chapter XVII containing Sections 138 to 142 was introduced with the aim of inculcating confidence in the efficacy of banking operations and giving credibility to negotiable instruments employed in business transactions. If a party issues a cheque as a mode of deferred payment and the payee of the cheque accepts the same on the faith that he will get his payment on due date, then he should not suffer on account of non-payment.

Some of the instances that results in the dishonor of a cheque includes:-

• Insufficient Funds. Salaries sometimes reach late in accounts leaving insufficient funds in your account which may lead to bouncing of cheque.
• Signature Variance
• Alterations in Cheque
• Post-dated Cheque
• Stale Cheque
• When Payment Is Stopped
• Frozen Account

Cheque Dishonour Proceedings at Nitesh Mehra & Associates

The Cheque Dishonour Dispute team at our office has formulated comprehensive strategies to help clients and further have a dedicated team of lawyers for handling matters related to the Negotiable Instruments Act, 1881 for claiming the amount under cheque dishonor disputes and defending any bogus claims. The Team is highly experienced in claiming and defending the cheque bouncing cases and is well versed with the judicial precedents in the subject matter.