Answer By law4u team
Yes, a cheque bounce is indeed a criminal offence in India under specific statutory provisions. This matter is primarily governed by Section 138 of the Negotiable Instruments Act, 1881 (NI Act), which was enacted by the Parliament of India to instill faith, reliability, and credibility in the usage of negotiable instruments like cheques in commercial and personal transactions. When a drawer issues a cheque to a payee for the discharge, in whole or in part, of any debt or other liability, and that cheque is returned by the bank unpaid either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, it constitutes an offence under the law. To successfully establish and prosecute this criminal offence under Section 138 of the NI Act, the complainant or the payee must strictly fulfill several procedural and substantive legal requirements within the stipulated limitation periods. First, the cheque must be presented to the bank within its validity period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier. Second, upon receiving the memo from the bank stating that the cheque has been dishonoured, the payee or the holder in due course of the cheque must make a demand for the payment of the said amount of money by giving a notice in writing, within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid, to the drawer of the cheque. Third, the drawer of such cheque must fail to make the payment of the said amount of money to the payee or the holder in due course within fifteen days of the receipt of the said notice. It is only upon the expiry of this fifteen-day period from the date of service of the legal notice that the cause of action arises, and the offence is legally deemed to have been committed. Once the cause of action has arisen upon the failure of the drawer to make the payment within fifteen days, the complainant must file a criminal complaint in the court of the Judicial Magistrate of the First Class or the Metropolitan Magistrate having appropriate territorial jurisdiction within thirty days from the date on which the cause of action arose under Section 142 of the NI Act. However, the courts have the discretionary power to condone the delay in filing the complaint if the complainant satisfies the court that there was sufficient cause for not making the complaint within the prescribed period. Regarding the punishment for this criminal offence, Section 138 of the NI Act provides that the person who commits this offence shall be punished with imprisonment for a term which may extend to up to two years, or with a fine which may extend to twice the amount of the cheque, or with both. The courts in India generally lean towards ordering compensation to the complainant, which can include the cheque amount along with interest and litigation costs, as the primary objective of this criminal proceeding is compensatory rather than purely punitive, aiming to recover the due money for the victim. Furthermore, under Section 143 of the NI Act, these cases are tried summarily by magistrates to ensure speedy disposal of litigation, and Section 145 allows the evidence of the complainant to be given by way of affidavit, which significantly expedites the trial process compared to ordinary criminal trials under the Code of Criminal Procedure, 1973 (CrPC). Additionally, Section 148 of the NI Act empowers the appellate court, in an appeal by the drawer against conviction, to order the appellant to deposit a minimum of twenty percent of the fine or compensation awarded by the trial court during the pendency of the appeal.
