Section 138 of the Negotiable Instruments Act addresses the offense of dishonor of a cheque due to insufficient funds or if it exceeds the amount arranged to be paid by the drawer’s account.

Conditions for Filing a Complaint: To initiate legal action for a cheque bounce under Section 138, the following conditions must be fulfilled:

  1. Presentation of the Cheque:
    • The cheque must be presented for payment within six months from the date mentioned on it or within its validity period.
  2. Notice of Demand:
    • The payee or holder of the cheque must send a notice of demand to the drawer within 30 days from the date the cheque is dishonored.
  3. Failure to Pay:
    • The drawer must fail to make the payment within 15 days after receiving the notice of demand.

Penalties: If found guilty, the drawer may face:

  • Imprisonment for a term that may extend up to two years, and/or
  • A fine that may extend to twice the amount of the cheque, or
  • Both imprisonment and fine.

Compounding:

  • Parties involved can often resolve the matter through a compromise or settlement, known as compounding the offense, subject to the court’s approval.

Jurisdiction:

  • Complaints are typically filed in magistrate courts. The case should be filed in the location where the bank is situated or where the cheque was presented.

Multiple Cheques:

  • If multiple cheques are dishonored, the complainant may file separate complaints for each dishonored cheque.

Legal Recourse:

  • As a payee or holder of a dishonored cheque, you can file a complaint under Section 138 of the Negotiable Instruments Act. It is advisable to engage a qualified lawyer for appropriate legal representation and guidance throughout the process.

Cheque bounce cases can be intricate, requiring strict adherence to legal procedures and requirements. For the most accurate and current legal advice, consulting with a legal professional is recommended.