Cheque Bounce: Your Remedies 2026

Reviewed on 2026-06-20 by Dr. Shrawan Kumar Pathak.

A bounced cheque is not a dead end. The law treats it as both a crime and a debt, which means you hold two separate keys. This brief sets out the right you have, the remedy attached to each step, and the time window that protects it. Miss the window and the right lapses, so read the clock dates carefully.

When a cheque you deposited is returned unpaid for insufficient funds (or because the amount exceeds the drawer's arrangement with the bank), Section 138 of the Negotiable Instruments Act, 1881 makes that dishonour a criminal offence by the person who signed the cheque. The maximum punishment is imprisonment up to two years, or a fine up to twice the cheque amount, or both. That penalty exists to pressure the drawer to pay you. Your task is simply to follow the procedure that switches the right on.

Your remedy starts the day the cheque comes back. Ask your bank for the cheque return memo, the slip that states the reason for dishonour, for example funds insufficient, signature mismatch, or account closed. Note the date on it. That date starts your 30-day clock and is your core evidence later. Banks also levy a cheque return charge, which differs from bank to bank, so check your own bank tariff for the exact figure.

Within 30 days of receiving that memo, send a written demand notice to the drawer through a lawyer or by registered post or speed post. The notice must demand the exact cheque amount and give the drawer 15 days to pay. This notice is not optional paperwork. Without a valid notice issued inside the 30-day window, you lose the right to file a criminal complaint. Keep the postal receipt and tracking proof.

The drawer now has 15 days from receiving your notice to pay. If the money lands, your remedy has worked and the matter closes. If 15 days pass with no payment, your cause of action is born on the 16th day, and the criminal door opens.

From the day the cause of action arises, you have one month to file a criminal complaint before a Magistrate. File it where the branch of your bank, the one that sent the cheque for collection, is located. The Supreme Court reaffirmed in 2025 that jurisdiction follows the payee's bank branch under Section 142(2)(a), so you usually litigate close to home, not in the drawer's city. If you genuinely miss the month, the court may still condone the delay for sufficient cause, but never rely on that.

Once the case begins, you can ask the trial court for interim compensation under Section 143A, up to 20 per cent of the cheque amount, payable by the drawer within 60 days. The Supreme Court has held this is discretionary, not automatic, so the judge weighs the strength of your case before granting it. If the drawer is later acquitted, you repay the amount with interest at the bank rate. On appeal against a conviction, Section 148 lets the appeal court make the convicted drawer deposit at least 20 per cent more before the appeal is heard.

This is the step most people forget. The Section 138 case punishes the drawer, but a fine paid to the court is not the same as your money in hand. To recover the debt itself, file a summary suit under Order XXXVII of the Code of Civil Procedure, a faster track for money owed on a cheque or written instrument. Many lawyers run the criminal complaint and the civil suit in parallel: the criminal threat creates pressure, and the civil decree gives you a recovery order.

Figure: step-by-step flow. If a step stalls, use the grievance or RTI route shown.

Sometimes the dishonour is the bank's fault. If a bank wrongly returned a properly funded cheque, or charged you a return fee it should not have, raise a written grievance with the branch first. If it is not resolved in 30 days, or the reply is unsatisfactory, escalate free of cost to the RBI Ombudsman under the Reserve Bank Integrated Ombudsman Scheme at cms.rbi.org.in. For a public-sector bank, you can also file an RTI to obtain its cheque-return policy and the records of your own memo. A failed electronic payment follows a different track, covered in our guide on getting a refund for a failed NEFT or UPI transfer, and a wrongly levied charge can be reversed using the steps in reverse unfair bank charges.

If you are the one issuing cheques, two safeguards matter. First, register for the Positive Pay System for high-value cheques. Under the RBI circular effective 1 January 2021, this confirmation applies to cheques of Rs 50,000 and above, and banks may make it mandatory at Rs 5 lakh and above; you re-confirm the cheque details by SMS, app, net banking or ATM so a tampered cheque is caught. Second, never write a cheque you cannot honour, because repeated dishonour of large cheques can cost you your cheque book and a criminal record. If money is locked away rather than spent, our pages on an account that is frozen and on tracing unclaimed deposits on UDGAM may help you free it before the next cheque clears.

Yes. Under Section 138 of the Negotiable Instruments Act, dishonour of a cheque for insufficient funds is a criminal offence by the person who signed it, punishable with imprisonment up to two years, a fine up to twice the cheque amount, or both. You must follow the notice and complaint procedure to enforce it.

You have 30 days from the date you receive the bank's cheque return memo. Send a written notice demanding the cheque amount within 15 days. If you miss this 30-day window, you lose the right to file a Section 138 criminal complaint, though a civil recovery suit may still be open.

File it before the Magistrate in whose area the branch of your own bank, the bank that presented the cheque for collection, is located. The Supreme Court confirmed in 2025 that the payee's bank branch decides jurisdiction under Section 142(2)(a), so you generally litigate near where you banked the cheque.

Not automatically. The criminal case punishes the drawer and can yield a fine, but the surest way to recover the actual sum is a parallel civil summary suit under Order XXXVII of the Code of Civil Procedure. You can also seek interim compensation up to 20 per cent of the cheque value under Section 143A while the case runs.

It lets the trial court order the drawer to pay you up to 20 per cent of the cheque amount during the case, within 60 days. The Supreme Court has held it is discretionary, not mandatory, so the judge decides based on your case. If the drawer is acquitted, you repay it with interest at the bank rate.

Yes, if it wrongly returned a properly funded cheque or charged you incorrectly. Raise a written grievance with the branch, and if it is not resolved within 30 days, escalate free to the RBI Ombudsman at cms.rbi.org.in. For a public-sector bank you can also use RTI to get its cheque-return policy and your own records.

Positive Pay is an RBI confirmation system, effective 1 January 2021, for high-value cheques of Rs 50,000 and above, often made mandatory at Rs 5 lakh and above. You re-confirm the cheque date, payee and amount through SMS, app, net banking or ATM. It does not stop a funds-shortage bounce, but it blocks fraud from a tampered cheque.

• https://www.indiacode.nic.in/ (Negotiable Instruments Act 1881, sections 138, 142, 143A, 148)
• https://www.scconline.com/blog/post/2023/03/11/ni-act-cheque-bounce-notice-explainer-legal-research-knowledge/
• https://www.livelaw.in/supreme-court/s143a-ni-act-interim-compensation-in-cheque-dishonour-cases-isnt-mandatory-supreme-court-252443
• https://www.rbi.org.in/ (Positive Pay System, DPSS.CO.RPPD.No.309, 25 September 2020)
• https://cms.rbi.org.in/ (RBI Integrated Ombudsman Scheme)

For the wider banking rights cluster, see our guide to bank locker rules in 2026.