Tag: #niact138matters

In India, a cheque bounce is not just a financial inconvenience—it's a legal offense under the Negotiable Instruments Act, 1881. With an increase in cheque-based transactions, understanding the law governing dishonoured cheques is crucial for individuals and businesses alike. What Is a Cheque Bounce? A cheque bounce occurs when a bank refuses to honour a cheque, usually due to insufficient funds, account closure, signature mismatch, or payment stop instructions. Legal Framework: Section 138 of the Negotiable Instruments Act, 1881 Section 138 is the cornerstone provision that criminalizes cheque dishonour. It provides that: A cheque must be issued for the discharge of a legal liability or debt. It must be presented within 3 months (or its validity period). Upon dishonour, the payee must send a legal notice within 30 days from…