Cheque Bounce Rule, Punishment & Penalty Rules

Cheque Bounce Rule: Cheque Bounce Rule , Punishment & Penalty Rules

If you also pay with a cheque, there are a number of factors that must be made. If the cheque bounces, however, you can also be sentenced to jail in addition to the fine. The wording of the court describes check bounce as a legal offence. A punishment under the Negotiable Instruments Act of 1881 has been provided for in this.

When does a check bounce?

When a bank rejects a check for some reason and the payment is not made, it is called check bounce. The reason for this happening is mostly due to lack of balance in the account. Apart from this, even if there is a difference in the person’s signature, the bank rejects the cheque.

Due to check bounce

  • insufficient funds in the payee’s bank account
  • signature mismatch
  • account number mismatch
  • issue with date of check
  • non-uniformity of amount in words and figures
  • mutilated check
  • overdraft limit

What happens after a cheque bounces?

When the check bounces, the person giving the check has to inform about it. After which he has to pay you within 1 month. In case of not doing so, a legal notice is sent to the person. Even after that, if no reply is given for 15 days, then a case is registered against him under section 138 of Negotiable Instrument Act 1881. Under the Negotiable Instruments Act, 1881, the person can be prosecuted and the check drawer can be punished for up to two years.

How long is the check period?

Cheques, bank drafts are currently valid for 3 months from their issue.

Why are they valid only for 3 months?

It is common banking practice to dishonor a check older than 3 months. This practice is for the protection of the person who has written the cheque, as there is a possibility that the payment may have been made through some other means or the check may have been lost or stolen.

Keep these things in mind before issuing a check

  • Whenever you give a check to someone, make sure that you have money in your account.
  • Apart from this, the person taking the check should get it cashed within three months.
  • Whenever paying someone with a cheque, avoid giving more space between words and figures regarding name and amount.
  • Whenever you sign a bank cheque, remember that you have to sign in the same way as it is already recorded in the records of the concerned bank branch.
  • Whenever you pay someone through a bank cheque, make sure to note down the details of the check like check number, account name, amount and date.
  • Always issue account payee cheques.
  • The signature on the check should be registered with the bank.
  • Fill in the information on the check carefully and correctly.


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