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Cheque Bounce

Draft for Outbound Cheque in India

If there is a cheque bounce, what should one do? If you have no idea, then read this blog to understand how to file a legal notice in case of dishonour of a cheque.

Cheques are used in almost all monetary exchanges. An endless number of cheques are cleared by banks each day. Cheques are issued with the intent of securing approval of the instalment. Many prefer to mention “Account payee only” on cheques to eliminate misuse. You send the Legal Notice Draft to the owner.  

Cheques are negotiable instruments but account payee cheques are different; they are non-negotiable by anyone except the payee. Cheques are meant to be placed into the payee’s account. The drawer is someone who issues a cheque; on the other hand, we refer to the person on whose behalf the cheque has been issued as the payee. The bank entitled with the responsibility of paying the amount is referred to as drawee. 

Instances of cheque bounces are quite regular these days. At times cheques bearing large sums remain unpaid as we see them being returned by our banking organisations from which they were drawn.

Cheque Bounce Notice

When the bank refrains from crediting the amount to the payee, we refer to the cheque to be dishonoured. Numerous reasons lead to this situation, which we will discuss in the latter part of this article. 

When a check gets dishonoured, a bill tagged as “Cheque Return Memo” is issued by the drawee bank and sent to the payee’s banker. The reason for turning down the service is mentioned. The payee may resubmit this cheque within 90 days of the date mentioned on that dishonoured cheque if he is sure the transaction will be approved. The issuer has the correct summon of the drawer. 

The payee is eligible to sue the drawer as he dishonoured the cheque. The exception cases are when a cheque is issued for loaning an advance or gifting someone. The defaulter cannot be prosecuted for those things.

Preparation of Cheque Bounce Notice

No procedure has been set in preparing a notice for a cheque bounce. Drafting a legal notice. Draft for the dishonour of a cheque is compulsory, and lawyers must sign it. The payee should scrutinize it. 

In the next step, the notice is sent to the cheque drawer. If no action follows from the drawer’s end or no repayment is issued within the mentioned period, the payee can file a criminal case and sue the drawer. This is a fundamental right delegated under the Act of Negotiable Instruments. The complaint is duly registered within one month of the notice period’s expiry in the magistrate’s court.

You can also go through – cancel cheque sample

What Must Be Covered in a Legal Notice Issued for Cheque Dishonour?

The cheque bounce notice needs to include a few necessary details. Here we have discussed each one of them:

  • Name and current residential addresses of the concerned entities.
  • The exact cheque number along with the sum written by the drawer.
  • Summary of the incidents generating the claim.
  • The reason stated for the cheque bounce. It has to be attached to the receipt of the return memo; the bank sends this receipt.
  • The date on which the drawer issued the cheque.
  • The date on which the cheque was produced for payment.
  • The law designated to this offence.
  • Instruction was passed to the drawer asking for repayment within 15 days after the legal notice draft reached them.
  • Provision of the complaint has to be stated if the defaulter fails to pay within 15 days.
  • Advocate’s signature on behalf of the payee.

Documents to Present in Addition to Cheque Bounce Notice

No particular documents have been mentioned as a compulsory inclusion under the Negotiable Instruments Act for drafting and further executing the legal notice draft for the dishonour of the cheque.

Although the readers must note that the return memo and the particular cheque received by their banks are the necessary documents that need to be tallied when the Legal Notice Writing is being drafted, any additional papers supporting the cheque dishonour notice must also be scrutinised to contain the adequate details in your legal notice.

Click here to know more about legal notice format for recovery of money

Consequences of Receiving a Cheque Bounce Notice

The law passed in 1881 as the Negotiable Instruments Act applies to cheque dishonour cases. The law has been modified multiple times since its enactment. 

Based on Section 138 of this law, dishonouring a cheque is considered a criminal offence. The defaulter who’s found guilty of this crime will be subjected to imprisonment that can last two years. He has to pay a monetary penalty; both legislative bodies decide the punishments in severe cases.

If any payee decides to take a stance legally, then the concerned drawer must be awarded the last chance of reissuing the cheque amount within a given time. This needs to be mentioned in writing, more specifically through legal notice.

The payee must send the notice addressing the drawer within one month of receiving the “cheque return memo” issued by the bank. The exact payable sum is vividly stated, and the drawer is asked to complete the transaction within 15 days starting from the date he gets this receipt. When the cheque issuer does not respond with a new payment even after 30 days of getting the legal notice, the payee is entitled to the right to issue a criminal complaint against the offender under Section 138.

The complaint must be made in the magistrate’s court within 30 days of the expiry notice period. Advocate consultancy is recommended at this critical stage. The lawyer must be experienced and well-versed in this practice so that the payee can seamlessly proceed in this legal affair.


On receiving the complaint, in addition to an affidavit and necessary paper trail, the concerned court will issue a summons so that it can hear the matter. If the drawer is found guilty, he is announced as a defaulter, and now he can be sued with a monetary penalty.

This can be twice the amount of the cheque that was dishonoured earlier, or he can be sent behind bars for as long as two years; at times, both punishments apply simultaneously. 

Banks are eligible to close the defaulter’s account permanently and nullify his chequebook if similar offences are repeated. 

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