Cheque Bounce (Section 138 NI Act) — Notice, Complaint and Trial in Mumbai

When is a cheque bounce a criminal offence?

Under Section 138 of the Negotiable Instruments Act, 1881, dishonour of a cheque for insufficiency of funds or account closed becomes a criminal offence when three conditions are met:

1. The cheque was for a legally enforceable debt
2. A statutory demand notice was served within 30 days of the bank's dishonour memo
3. The drawer failed to pay within 15 days of receiving the notice

Where to file in Mumbai

Per Section 142(2), the complaint lies where the payee's bank is situated. Most complaints are filed at the Metropolitan Magistrate's Court at Girgaon, Mazgaon, Andheri, Borivali or Vikhroli, depending on the branch.

Interim compensation

Under Section 143A, the court may direct up to 20% of the cheque amount as interim compensation, payable within 60 days.

Sentence

Up to 2 years' imprisonment or fine up to twice the cheque amount, or both.

APS Law — cheque bounce practice

We handle complaints for MSMEs, builders, financiers and individuals — filing complaints, summary trial, appeals and settlement under Section 147.