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I will not pay a single penny, do whatever you want to do………I will sue you……I will see you in court……I will make sure to get you behind bars: harsh words, but very common in the case of money-related disputes. Giving and taking payments through cheques is too common in Indian businesses. But since it is not a direct currency but another negotiable instrument, a document which in a way promises a later payment, things often lack a sense of confirmation. To give a sense of security to persons receiving monetary transactions through a cheque, Section 138 of the Negotiable Instruments Act was brought in. It provides a pathway to follow if payment through cheque sticks is midway. What happens if the cheque bounces in India? More importantly, can I file a police complaint for a cheque? Find out here on this page.
How to File Police Complaint for Cheque Bounce?
If a person receives a cheque which has been returned by the bank due to insufficient funds, a legal notice has to be served to the drawer of the cheque within cheque bounce case time limit. If payment is not made within the deadline given through that notice, the cause of action starts. Such an aggrieved person in whose favour the said cheque was drawn may proceed legally, provided that the cheque bounce facts comply with the requirements provided under Section 138 of Negotiable Instruments Act, 1881.
It should be noted that although new rules for cheque bounce in India are criminal in nature, however, a person does not file a cheque bounce police complaint. Complaint under 138 NI Act, 1881 has to be registered with the magistrate of appropriate jurisdiction. Even if a person approaches with a sample police complaint letter for cheque bounce, the officials may enter into their diary entry and refer the same to the concerned magistrate. Thus, if people think that a bounced cheque may bring them behind the bars overnight, it is not correct. Even if the payee (person in whose favour the cheque was drawn) or the authorities are harassing the drawer of arrest, nobody can arrest in a cheque bounce police complaint unless there is some other serious allegation. If matter is proved before the court regarding default in payment through cheque and person is not paying the sum, imprisonment can not be avoided in such case.
Can I Lodge a Police Complaint for a Disputed Cheque?
In India, a cheque bounce is recognised as essentially a civil and quasi-criminal infraction only under Section 138 of the Negotiable Instruments Act, 1881, and police cases are not opened. There is a possibility of filing a police complaint under Section 316 or Section 318 of the Bharatiya Nyaya Sanhita, 2023 (i.e. IPC 417 and IPC 420), if you can prove that the cheque was booked without any legal intent or in a malicious intent to mislead you. In most cases, a legal notice would have to be sent to the cheque writer, and you would have to furnish proof that the cheque bounced with a real demand.
Section 420 in the Cheque Bounce
The provision of cheque bounce under Section 138 of the NI Act specifically deals with dishonour of a cheque due to insufficiency of funds, and even courts support repayment over imprisonment. But if the complainant is a victim of cheating due to the drawer's deceiving action, in such cases, the process may take a turn. Provisions like cheating (u/s 420 of Indian Penal Code, 1860), criminal breach of trust (u/s 406 of IPC) may be invoked with confirmation from cheque bounce lawyers. This can be understood with an example. If a person issues a post-dated cheque, nobody knows what may come in the future, and some financial stress may hit. However, there is another scenario whereby a person is drawing a cheque that is supposed to go for encashment immediately, some valuable goods are taken by convincing on the same lines, and the same is dishonoured. Ill intention of the drawer can be deduced initially to deceive the other person. Here, the payee has been cheated upon by establishing a trustworthy business relation. In such cases, a cheque bounce police complaint is lodged under Sections 420 and 406 along with Section 138 NI Act.
Cheque Bounce Action Under Section 138 – Procedure
According to Section 138 of the Negotiable Instruments Act, the payee must raise the demand notice within 30 days of the dishonour of the cheque. If the drawer fails to pay the amount within 15 days, a criminal complaint can be filed before a Judicial Magistrate. The particular case provides both punitive and compensatory relief, and the defaulter is liable under a quasi-criminal mechanism.
Cheque Bounce - Cheating and Double Jeopardy
The concept of double jeopardy is that a person should not undergo legal trial/ prosecution twice for one particular act/ offence. Article 20 (2) of the Constitution of India prohibits the practice, and the person has a fundamental right against the same. The question here arises whether section 420 in the cheque bounce of 138 of the NI Act causes double jeopardy?
The answer is provided recently by the Karnataka High Court in the case of Rashmi Tandon[1] and even the Gujarat High Court in the Sangeeta Ben Patel case[2]. The Hon'ble High Courts have clarified that registration of criminal cases under Section 406, 420 of the Indian Penal Code, 1860 is not barred in the name of double jeopardy. The essence is that under Section 138 of the Negotiable Instruments Act, 1881, a guilty mind is not essential. Even if a person mistakenly drew a cheque that got dishonoured and is unable to pay off the amount for the time being, legal proceedings may be invoked. However, if all of this happens through deceiving the other person into believing that there is a sufficient amount in the account and benefits were fetched on that note, it becomes a rather punishable offence. Thus, a cheque bounce police complaint will by no means become a case of double jeopardy in such cases.
Punishment, Bail and Defence in Cheque Bounce Action
The punishment for a cheque bounce can amount to an imprisonment term of up to 2 years, a fine up to twice the amount of the cheque, or both. In light of the criminal intent involved in cheque bounce, it is treated as a bailable and compoundable offence. In this respect, the bail is typically granted. The accused can, however, defend their case by showing the cheque was delivered as a security, or that there was no debt that was enforceable. There is a right of appeal to be filed before the Sessions Court within the limitation period.
Legal Support, Case Law, and Appeals
Courts have resolved many grey areas in case law - for example, looking at liability in joint accounts, or whether cheques were post-dated or issued under some duress. You should consult an expert cheque bounce lawyer in Delhi or your city if you are dealing with grey area cases. If you are dissatisfied with the decision of the lower court, you have an opportunity to appeal to a higher court on a lack of due process or a finding of fact was unreasonable.
FAQs around Cheque Bounce Police Complaint
Q- Can an FIR be lodged for a cheque bounce?
A- An FIR or first information report can be filed under Section 154 of the Code of Criminal Procedure, 1973, for offences which are serious in nature, allowing the police to arrest without a warrant. Registration of FIR is not usually done in the usual event of facts in cheque bounce cases. However, facts of cases vary, and it might become a serious offence with cheating, robbery, etc., whereby the police might be required to register the same under Section 154 of CrPC 1973.
Q- Can police take action ona cheque bounce?
A- If it is only a case of dishonour of cheque section 138, police may not even register a complaint or refer the matter to the magistrate for criminal complaint. In cases of cheque bounce, police normally come into picture if the defendant (drawer of cheque who owes the payment to complainant) is avoiding the court and non-bailable warrants have been issued. To ensure the defendant's presence during proceedings in such a case, police officials are required.
Q- What is the time limit to file a cheque bounce case?
A- Ordinary people are often confused over how to complain for cheque bounce. If I have received a bounced cheque in a particular jurisdiction, I need to contact banking lawyers near me to serve the drawer of that cheque with a legal notice in this regard within 30 days of dishonour. Through the notice, another 15 days are given to reply to the notice and pay the requisite amount. Within 30 days of the expiry of the 15 day notice period, police complaint may be lodged to initiate court proceedings.
Q- How do you take legal action on a bounced cheque?
A- The cheque bounce case procedure in India begins with bounced cheque due to insufficient funds in the drawer’s account which was drawn in furtherance of a legal liability. The person is supposed to serve a legal notice to the drawer in this regard giving him a deadline to repay the amount. At the end of such a period, a cheque bounce police complaint may be lodged. Additional provisions like cheating section 420 in cheque bounce may be invoked if facts of the case allow so.
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