What is the procedure of cheque bounce case u/s 138 of the Negotiable Instruments Act, 1881) step by step?

The procedure for filing and pursuing a cheque bounce case (under Section 138 of the Negotiable Instruments Act, 1881) in India involves several clear legal steps. Here’s a step-by-step guide:

Step-by-Step Procedure of a Cheque Bounce Case in India

Step 1: Presentation of the Cheque

• The payee presents the cheque to the bank within its validity (usually 3 months from the date on the cheque).
• If the cheque bounces due to insufficient funds, account closure, or any other reason, the bank issues a “Cheque Return Memo.”

Step 2: Issuance of Legal Demand Notice

• The payee must send a legal notice to the drawer of the cheque within 30 days of receiving the “Cheque Return Memo.”
• The notice must:
  • Inform about the dishonour.
  • Demand payment of the cheque amount.
  • Give the drawer 15 days to make the payment.

Step 3: Waiting Period

• After sending the notice, the drawer is given 15 days to make the payment.
• If the drawer pays within 15 days – case ends.
• If the drawer fails to pay – proceed to file a complaint.

Step 4: Filing of Complaint in Court

• A complaint must be filed under Section 138 of the Negotiable Instruments Act within 30 days of the expiry of the 15-day notice period.
• The complaint is filed in a Magistrate’s Court having jurisdiction (usually where the bank of the payee is located).
• Documents needed:
  • Copy of the bounced cheque.
  • Cheque return memo.
  • Copy of the legal notice sent.
  • Postal or courier receipt showing notice was delivered/sent.
  • Affidavit and complaint form.

Step 5: Cognizance and Summons by the Court

• The Magistrate examines the complaint and supporting documents.
• If prima facie case is made out, the court issues summons to the drawer (accused).

Step 6: Appearance of Accused

• The accused appears in court and may:
  • Seek bail.
  • Contest the case or try to settle.
• The court may refer the matter for mediation.

Step 7: Evidence Stage

• The complainant presents evidence (oral or documentary).
• The accused is given the opportunity to cross-examine.
• The accused may present their defence evidence.

Step 8: Final Arguments & Judgment

• Both parties present final arguments.
• The court delivers judgment:
  • If guilty: the drawer may be punished with imprisonment up to 2 years and/or fine up to double the cheque amount.
  • If not guilty: the case is dismissed.

Step 9: Appeal (if required)

• Either party can file an appeal in the Sessions Court within 30 days of the judgment.