From Promise to Penalty: The Legal Realities of Cheque Bounce Cases under Section 138
Cheques have long been regarded as a symbol of trust and credibility in financial transactions. However, when a cheque is dishonoured due to insufficient funds or other reasons, it not only disrupts business dealings but also erodes confidence in the banking system. To address this, Section 138 of the Negotiable Instruments Act, 1881 was enacted, making cheque bounce a criminal offence in India. Under this provision, if a cheque issued by an individual or business is returned unpaid, the payee has the right to issue a legal notice within 30 days of receiving the dishonour memo. If the drawer fails to make the payment within 15 days of receiving the notice, the payee can initiate criminal proceedings. The law prescribes penalties, including imprisonment of up to two years or a…








