Quick answer: A cheque bounce is when a bank refuses to pay a cheque and returns it unpaid, most often because the drawer’s account does not have enough balance. The drawer pays a return charge (₹500 + GST at SBI for insufficient funds), and if the cheque was issued against a legally enforceable debt, the payee can file a cheque bounce case under Section 138 of the Negotiable Instruments Act, 1881.
| Point | What applies |
|---|---|
| Who returns the cheque | The drawee bank (the bank of the person who wrote it) |
| Proof of bounce | Cheque return memo with a reason code |
| Bank alert | SMS on the registered mobile number of the account holder |
| Bank charge to drawer | ₹500 + GST at SBI for insufficient funds; varies by bank |
| Criminal law | Section 138, NI Act: up to 2 years’ imprisonment, fine up to twice the cheque amount, or both |
| Deadline for legal notice | 30 days from receiving the return memo |
Cheque Bounce Meaning: What Happens When a Cheque Bounces
Cheque bounce meaning, in plain terms: the bank on which a cheque is drawn declines to pay it and sends it back through clearing marked “returned unpaid.” The money never leaves the drawer’s account, and the payee gets the physical cheque (or its image) back with a return memo stating why. For example, a ₹75,000 cheque drawn on an account holding ₹60,000 bounces with the reason “Funds insufficient.”
In banking documents and court records, the formal term is a “dishonoured cheque.” For a deeper look at the dishonour terminology and bank-by-bank charge schedules, see FinPulse India’s guide on dishonoured cheque meaning, charges and consequences.
Check Bounce Meaning: Is It Different From Cheque Bounce?
Check bounce meaning is identical to cheque bounce meaning. “Check” is the American spelling, while Indian banks, the RBI and the Negotiable Instruments Act use “cheque.” A “check bounce case” searched online refers to the same Section 138 proceeding filed in Indian courts. The spelling difference is explained in detail in cheque vs check.
Who Is Who in a Cheque Bounce
Every cheque bounce involves three parties, and the law treats each one differently.
- Drawer: the person who wrote and signed the cheque. The drawer faces the bank charge and possible criminal liability.
- Payee: the person in whose favour the cheque was written. The payee gets the right to send a legal notice and file a complaint.
- Drawee bank: the drawer’s bank, which decides to pay or return the cheque and issues the return memo.
Whether a cheque is payable to bearer or to order also decides who can present it and collect the money. Our guide on bearer cheque vs order cheque explains the difference.
How a Cheque Bounces Under the Current Clearing System
A cheque now bounces within the same working day it is presented, in most cases. The RBI moved the Cheque Truncation System (CTS) from batch processing to continuous clearing with settlement on realisation, with Phase 1 going live on October 4, 2025 (RBI circular RBI/2025-26/73). Under this system, the drawee bank must send either a positive confirmation (honoured) or a negative confirmation (dishonoured) for every cheque image it receives.
The RBI’s December 24, 2025 circular (RBI/2025-26/156) postponed Phase 2, which would have cut the confirmation window to three hours, “until further notice,” and revised CTS timings as follows:
| CTS session | Timing (working days) |
|---|---|
| Presentation session (cheques sent to clearing house) | 9:00 AM to 3:00 PM |
| Confirmation session (drawee bank honours or returns) | 9:00 AM to 7:00 PM |
| Cheques not confirmed by session close | Treated as approved and settled |
The practical effect for the drawer: there is no longer a two-day cushion to move money in after a cheque is deposited. If the balance is short when the image reaches your bank, the cheque bounces that day.
Common Reasons for Cheque Bounce, With Return Codes
Every bounced cheque carries a numeric reason code on the return memo. These codes come from the Uniform Regulations and Rules for Bankers’ Clearing Houses, and SBI publishes the full list in its board-approved Policy on Dishonour of Cheques. Whether a reason can lead to a Section 138 case depends on the reason and on court rulings.
| Code | Reason printed on return memo | Category | Can it lead to a Section 138 case? |
|---|---|---|---|
| 01 | Funds insufficient | Financial | Yes, the core Section 138 ground |
| 02 | Exceeds arrangement | Financial | Yes, expressly covered by Section 138 |
| 20 | Payment stopped by drawer | Drawer action | Yes, if the drawer had no valid reason or the account lacked funds (Supreme Court, Modi Cements v. Kuchil Kumar Nandi, 1998) |
| 50 | Account closed | Drawer action | Yes (Supreme Court, NEPC Micon v. Magma Leasing, 1999) |
| 12 | Drawer’s signature differs | Technical | Can, where the mismatch was deliberate (Supreme Court, Laxmi Dyechem v. State of Gujarat, 2012) |
| 34 | Amount in words and figures differs | Technical | Generally no; the cheque is irregular |
| 30 | Instrument post-dated | Technical | No; present it again on or after its date |
| 31 | Instrument out dated / stale | Technical | No; a cheque is stale after three months |
| 17 | Alteration requires drawer’s authentication | Technical | Generally no |
Technical returns are usually avoidable. Mismatched figures are the most common, so check how to write the amount in words on a cheque before issuing one.
Cheque Bounce Message From Bank: What the SMS Means
A cheque bounce message from bank is an SMS alert sent to the registered mobile number when a cheque is returned unpaid. SBI’s Policy on Dishonour of Cheques requires the collecting branch to dispatch the returned cheque within 24 hours of receipt and to inform the customer by SMS, with a dispatch reference number to track delivery. Most banks follow the same 24-hour standard, drawn from RBI customer service guidelines.
What a Cheque Bounce SMS From Bank Usually Contains
The exact wording differs by bank, but a cheque bounce SMS from bank normally carries these details:
- Cheque number and amount
- Date of return
- Reason for return (for example, “Funds insufficient” or “Signature differs”)
- Return charge debited, if any, plus GST
- Available balance after the debit
The drawer and the payee receive different alerts. Both are illustrated below. These are illustrative formats only, not the actual text of any specific bank.
| Who receives it | Illustrative check bounce message |
|---|---|
| Drawer (cheque you issued bounced) | “Chq No. 000123 for Rs 75,000 presented on 05-10-2026 returned unpaid. Reason: Funds Insufficient. Return charges Rs 590 debited. Avl Bal Rs 59,410.” |
| Payee (cheque you deposited bounced) | “Chq No. 000123 deposited in A/c XX4521 returned unpaid. Reason: Funds Insufficient. Instrument dispatched, Ref No. 7788.” |
If you receive a check bounce message for a cheque you never issued, contact your bank immediately. It can signal a forged or stolen cheque leaf.
What to Do After a Cheque Bounce SMS
The right next step depends on which side of the cheque you are on.
| If you are the… | Do this |
|---|---|
| Drawer | Check your balance through net banking or the bank’s mobile app, fund the account, and contact the payee the same day. Paying before a legal notice arrives avoids a Section 138 case entirely. |
| Payee | Collect the original cheque and return memo from your branch. Note the date you received the memo, because the 30-day notice clock starts from it. Download a bank statement showing the return entry. |
Third Bounce Warning: The Cautionary Advice
A third bounce in one financial year triggers a formal warning. Under SBI’s policy, which follows RBI guidelines for frequent dishonour, the bank sends a system-generated cautionary advice by SMS or email when a cheque, NACH or ECS debit on the same account is dishonoured for insufficient funds for the third time in a financial year. On the fourth occasion, no fresh cheque book is issued, and the branch may close the account after giving 30 days’ notice.
Cheque Bounce Charges in India
Cheque bounce charges are fees the bank debits automatically when a cheque is returned. The drawer’s bank charges an “inward return” fee, and the payee’s bank may charge a separate “outward return” fee on the same cheque. GST at 18% applies on top of the base charge.
| Bank | Cheque bounce charges (insufficient funds) | Technical reasons |
|---|---|---|
| SBI | ₹500 + GST, irrespective of cheque amount | ₹150 + GST |
| Other major banks | Commonly ₹450 to ₹550 + GST per return | Commonly ₹50 to ₹150 + GST |
The full bank-wise check bounce charges table for HDFC Bank, ICICI Bank and SBI, including tiered and senior citizen rates, is in the dishonoured cheque charges guide. Always confirm the current figure on your bank’s official schedule of charges before quoting it to a client.
When a Bank Cannot Charge You
Under RBI circular RBI/2012-13/493, cheque return charges can be levied only where the customer is at fault and responsible for the return. If a cheque is returned because of a bank-side issue, such as an unclear image or a clearing error, the customer should not be charged. The same circular requires banks to re-present technical-return cheques in the next clearing, within 24 hours (excluding holidays), and to notify the customer by SMS or email.
Consequences of a Cheque Bounce
A cheque bounce affects the drawer far more than the payee. The consequences range from a small bank fee to a criminal conviction, depending on the reason and on whether the drawer pays after notice.
| Consequence | Drawer | Payee |
|---|---|---|
| Bank return charge | Yes, inward return fee + GST | Possibly, outward return fee + GST |
| Cautionary advice after 3rd bounce in a financial year | Yes | No |
| Cheque book stopped after 4th bounce | Yes (SBI policy) | No |
| Account closure | Possible, after 30 days’ notice (SBI policy) | No |
| CIBIL score impact | Only if the cheque was a loan EMI or credit repayment | No |
| Legal notice and Section 138 case | Yes, if the cheque was for a legally enforceable debt | Has the right to file |
| Civil recovery suit | Yes, can be sued for the amount | Has the right to file |
A one-off savings account bounce does not reach credit bureaus. A bounced EMI cheque does, because the lender reports the missed instalment.
Cheque Bounce Case Under Section 138: Legal Implications
A cheque bounce case is a criminal complaint filed by the payee under Section 138 of the Negotiable Instruments Act, 1881. The offence is complete only when the drawer fails to pay within 15 days of receiving a written demand notice. On conviction, the court can impose imprisonment of up to two years, a fine of up to twice the cheque amount, or both.
The Negotiable Instruments Act was not replaced by the new criminal laws of 2023. The Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) now governs the general criminal procedure around a Section 138 trial, but Sections 138 to 148 of the NI Act continue to apply in full.
When Section 138 Applies: The Five Conditions
A cheque bounce case is maintainable only when all five conditions are met.
- Debt or liability: The cheque was issued to discharge a legally enforceable debt or liability, in whole or part. A gift cheque does not qualify.
- Presentation within validity: The cheque was presented within three months of its date. Section 138 says six months, but the RBI cut cheque validity to three months from April 1, 2012, and the shorter period applies.
- Return for insufficient funds or exceeding arrangement: Courts have extended this to account closed, stop payment and deliberate signature mismatch.
- Notice within 30 days: The payee sent a written demand notice within 30 days of receiving information of the bounce from the bank.
- No payment within 15 days: The drawer did not pay the cheque amount within 15 days of receiving the notice.
Security cheques are a grey area. In Sripati Singh v. State of Jharkhand (2021), the Supreme Court held that a security cheque can attract Section 138 if the debt had become due when the cheque was presented.
Cheque Bounce Case Timeline
| Step | Statutory deadline | Provision |
|---|---|---|
| Present cheque to bank | Within 3 months of cheque date | Section 138(a) read with RBI validity rule |
| Send legal demand notice | Within 30 days of receiving return memo | Section 138(b) |
| Drawer’s window to pay | 15 days from receiving notice | Section 138(c) |
| File complaint in court | Within 1 month after the 15-day window ends | Section 142(1)(b) |
| Late complaint | Court may condone delay if sufficient cause is shown | Proviso to Section 142(1)(b) |
Missing the 30-day notice deadline is the most common reason a payee loses the criminal remedy. Filing the complaint before the 15-day window ends is also fatal, because the cause of action has not yet arisen.
What the Legal Notice Must Contain
A Section 138 legal notice must demand payment of the cheque amount, which is the specific sum written on the cheque. Practitioners typically include these details:
- Name and address of the drawer and the payee
- Cheque number, date, amount and drawee bank
- The debt or transaction for which the cheque was issued
- Date of return and the reason on the return memo
- A clear demand to pay the cheque amount within 15 days of receipt
Send it by registered post with acknowledgement due, or speed post with tracking, and keep the postal receipts. The receipts prove the date of service, which starts the drawer’s 15-day clock.
Where to File a Cheque Bounce Case
Under Section 142(2), inserted by the Negotiable Instruments (Amendment) Act, 2015, a cheque bounce case is filed in the court within whose local jurisdiction the payee’s bank branch (where the payee maintains the account and deposited the cheque) is situated. For a cheque presented directly at the drawer’s branch, it is the court where that branch is located. This rule lets a payee in Pune file in Pune even if the drawer lives in Delhi.
Documents Needed for a Cheque Bounce Case
- Original bounced cheque
- Cheque return memo from the bank
- Copy of the legal demand notice
- Postal receipts and delivery proof or tracking report
- Reply from the drawer, if any
- Proof of the underlying debt: invoice, loan agreement, ledger extract or messages
- Bank statement showing the cheque deposit and return entry
- Affidavit of evidence (Section 145 allows the complainant’s evidence on affidavit)
Under the Supreme Court’s September 2025 judgment in Sanjabij Tari v. Kishore S. Borcar, complaints should also carry a short synopsis in a prescribed format summarising the key facts.
Punishment, Interim Compensation and Appeal Deposit
| Provision | What it says |
|---|---|
| Section 138 | Imprisonment up to 2 years, fine up to twice the cheque amount, or both |
| Section 139 | Court presumes the cheque was issued for a debt; the drawer must rebut it |
| Section 143A | Court can order interim compensation of up to 20% of the cheque amount during trial, payable within 60 days (extendable by 30 days); refundable with interest on acquittal |
| Section 148 | On appeal against conviction, the appellate court can order a deposit of at least 20% of the fine or compensation awarded |
| Section 143 | Cases are tried summarily, with an aim to conclude within six months |
Sections 143A and 148 were added by the Negotiable Instruments (Amendment) Act, 2018 to stop drawers from dragging cases out.
Cheque Bounce by a Company: Directors Can Be Liable
Under Section 141, when a company’s cheque bounces, every person who was in charge of and responsible for the company’s business at the time can be prosecuted along with the company. Independent and non-executive directors are generally not liable unless the complaint shows their specific role. For Indian businesses, this makes authorised signatory controls on current account cheques a compliance issue, not just an accounting one.
Settling a Cheque Bounce Case: Compounding Under Section 147
Section 147 makes the offence compoundable, so the drawer and payee can settle at any stage, even after conviction. The Supreme Court’s Sanjabij Tari judgment (September 25, 2025) revised the older Damodar S. Prabhu cost scale to push settlement earlier. Courts were directed to apply the guidelines from November 1, 2025.
| Stage at which drawer pays and compounds | Additional cost (as reported from Sanjabij Tari) |
|---|---|
| Before the accused’s evidence is recorded | No cost |
| Later, before the trial court | 5% of cheque amount |
| Before the Sessions Court or High Court | 7.5% of cheque amount |
| Before the Supreme Court | 10% of cheque amount |
The same judgment directed courts to allow service of summons by electronic means and dasti (hand delivery by the complainant), and to give the accused an online option to pay the cheque amount at the first stage. In a separate November 2025 ruling, the Supreme Court held that these cost guidelines are not rigidly binding, and courts can waive costs where the complainant consents.
Civil Remedy: Summary Suit for Recovery
A payee can also file a civil summary suit under Order XXXVII of the Code of Civil Procedure, 1908, to recover the cheque amount with interest. The limitation period is three years. A criminal case and a civil suit can run side by side, and many businesses file both: the criminal case for pressure, the civil suit for a decree they can execute against assets.
Common Defences in a Cheque Bounce Case
Because Section 139 presumes the cheque was issued for a debt, the drawer must rebut that presumption on a balance of probabilities. Defences courts regularly examine include:
- No legally enforceable debt existed when the cheque was presented
- The legal notice was never served, or was served at a wrong address
- The notice or complaint was filed outside the statutory deadlines
- The cheque was a blank signed security cheque misused for a different amount
- The cheque amount had already been paid in part, and the notice demanded the full amount
On cash loans, Sanjabij Tari held that a cash loan of ₹20,000 or more does not stop being a legally enforceable debt merely because it breaches the income tax cash-loan restriction. That restriction was Section 269SS of the Income-tax Act, 1961, which the Income Tax Act, 2025 replaced from April 1, 2026.
How to Avoid a Cheque Bounce
- Keep a buffer: Same-day clearing under continuous CTS leaves no time to top up after a cheque is deposited.
- Use Positive Pay: For cheques of ₹50,000 and above, register the cheque details with your bank through Positive Pay (RBI framework, effective January 1, 2021). Many banks make it mandatory for ₹5 lakh and above.
- Match words and figures: Amount mismatches cause code 34 returns.
- Sign exactly as per the bank’s specimen signature.
- Track post-dated cheques: Note every PDC issued for rent, EMIs or vendor payments, and fund the account a day before each date.
- Account for other debits: NACH mandates and auto-debits can clear on the same day. Account-level deposit and withdrawal limits and minimum balance charges can also eat into the buffer.
If you would rather avoid bounce risk entirely for a large payment, a demand draft is prepaid and cannot bounce for want of funds.
What Experts Say
Practitioners who handle Section 138 matters say most cases are lost on procedure, not merits. A notice sent on day 32, a complaint filed on day 14 of the 15-day window, or no proof of postal delivery can end a strong case before it reaches evidence. The recurring advice to payees is to diary every deadline the day the return memo arrives.
For drawers, the common view is that settling early is almost always cheaper. Paying within the 15-day notice window avoids the case completely, and compounding before evidence carries no extra cost under the 2025 guidelines. Lawyers also point out that legal fees often exceed the cheque amount in smaller disputes, which makes negotiation the practical first step on both sides.
Frequently Asked Questions
What is cheque bounce in simple words? A cheque bounce is when a bank refuses to pay a cheque and returns it unpaid, usually because the drawer’s account does not have enough money. The bank issues a return memo stating the reason and debits a return charge from the drawer’s account.
What is a cheque bounce message from bank? A cheque bounce message from bank is an SMS sent to the registered mobile number when a cheque is returned unpaid. It usually shows the cheque number, amount, reason for return and any return charge debited, and the returned cheque is dispatched within 24 hours.
What are cheque bounce charges in SBI? SBI charges ₹500 + GST for a cheque returned for insufficient funds, irrespective of the cheque amount, and ₹150 + GST for a return due to technical reasons. Other banks charge different amounts, so check your bank’s current schedule of charges.
Is cheque bounce a criminal offence in India? Yes. Under Section 138 of the Negotiable Instruments Act, 1881, a bounced cheque issued for a legally enforceable debt is a criminal offence if the drawer does not pay within 15 days of receiving a legal notice. The punishment is up to two years’ imprisonment, a fine up to twice the cheque amount, or both.
What is the time limit to file a cheque bounce case? The payee must send a legal notice within 30 days of receiving the return memo. The drawer then gets 15 days to pay. If the drawer does not pay, the complaint must be filed within one month after the 15-day period ends, though the court can condone delay for sufficient cause.
Where is a cheque bounce case filed? Under Section 142(2) of the Negotiable Instruments Act, a cheque bounce case is filed in the court within whose jurisdiction the payee’s bank branch, where the cheque was deposited for collection, is located.
Can a cheque bounce case be settled? Yes. Section 147 of the Negotiable Instruments Act makes the offence compoundable at any stage. Under the Supreme Court’s 2025 guidelines in Sanjabij Tari v. Kishore S. Borcar, no additional cost applies if the drawer pays before the accused’s evidence is recorded.
Does a cheque bounce affect my CIBIL score? A single cheque bounce on a savings account does not directly affect your CIBIL score. It does affect the score if the bounced cheque was a loan EMI or credit repayment, because the lender reports the missed payment to credit bureaus.
This article is for general information only and is not legal advice. Cheque bounce cases turn on specific facts and strict deadlines. Consult a practising advocate before sending a legal notice or responding to one.