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Overview of Cheque Bounce Notice

A Cheque Bounce notice serves as an intimation to the issuer that legal action will be taken by the cheque beneficiary in case of non-payment of the cheque amount on an immediate basis. It is a serious offence under the Negotiable Instruments Act and can result in penalties, fines, or even imprisonment. This notice is a crucial step in the process of recovering the unpaid amount.

What is a Cheque?

A "bill of exchange" that is payable immediately on demand is a check. The issuer of the cheque is known as the 'drawer,' while the person or entity in whose favour the cheque is issued is known as the 'drawee.' Cheques are commonly used for various transactions, including loan repayments, salary payments, bill settlements, and more.

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Sending a Cheque Bounce Notice

To send a Cheque Bounce notice, follow these steps:

  • Draft the notice using a proper format, including the name of the beneficiary, name and address of the drawer, return date of the cheque, reasons for cheque return, and the request for immediate payment.
  • Print the notice on plain paper or on the business letterhead.
  • Send the notice through a registered post to formally record the date of issuance.
  • Retain one copy of the notice, and deliver the other copy to the cheque issuer via registered post.

When Can a Cheque Bounce Notice Be Issued?

A Cheque Bounce notice can be issued under the following circumstances:

  • The cheque must be presented within 6 months from the date of its issue.
  • The cheque must have been dishonored due to insufficient funds.
  • The beneficiary has informed the drawer of the cheque within 30 days from the date of bouncing.
  • Legal action is initiated within one month from the date of the cause of action.

Initiating Legal Action


If the drawer fails to make payment within 15 days from the receipt of the notice, legal action can be initiated. Here's the procedure:

  • The payee can file a criminal case in a court within 30 days from the expiry of the notice period.
  • The complaint should be filed in the state where the bank is situated.
  • Once the case is admitted in court, hearings will be conducted, and summons will be issued under Section 138 of the Negotiable Instruments Act.
  • The drawer (cheque issuer) will be required to appear before the court for resolution.

Circumstances of Cheque Bounce

Insufficient Account Balance:

This is one of the most common reasons for a cheque to bounce. When the drawer writes a cheque, they are essentially directing their bank to pay a certain amount to the payee from their account. If the account does not have sufficient funds to cover the cheque amount when it is presented to the bank, the cheque will bounce. The bank will return the cheque to the payee with a memo stating "insufficient funds."

Expired Validity of the Cheque:

A cheque has a limited validity period, usually three months from the date of issuance. If the payee presents the cheque to the bank after this validity period has expired, the cheque becomes invalid, and the bank will not honour it. The payee should ensure they present the cheque for payment within the specified validity period.

Overwriting on the Cheque:

Any alterations or overwriting on the cheque can lead to suspicion and rejection. If there are corrections, changes, or overwriting on crucial details like the payee's name, the cheque amount (in figures or words), or the date, the bank may consider the cheque as potentially fraudulent. Banks prefer clean and unaltered cheques.

Damaged Cheque:

If a cheque is physically damaged or disfigured in a way that essential details are not clearly visible, the bank may refuse to honour it. Stains, marks, or tears that obscure important information on the cheque can result in rejection. It's essential to keep cheques in good condition.

Signature Mismatch:

The signature on the cheque is compared with the specimen signature available with the bank. If the signature on the cheque does not match the authorized signature held by the bank, it raises suspicions of fraud or forgery. In such cases, the bank may reject the cheque.

Mismatch of Amounts or Digits:

Cheques require the amount to be written both in words and figures. If there is a discrepancy between the amount written in words and the amount in figures, it can lead to confusion and rejection. The two amounts should match precisely.

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