Is a bounced cheque a civil or criminal proceeding?

Answer

A:

A bounced cheque under Section 138 of the Negotiable Instruments Act, 1881 is treated as a criminal proceeding. The law makes cheque dishonour due to insufficient funds, account closure, or stop payment a criminal offence, punishable with:

• Imprisonment of up to 2 years, or

• Fine up to twice the cheque amount, or

• Both imprisonment and fine.

Although cheque bounce is a criminal offence, the payee (person who received the cheque) can also file a civil suit for recovery of the cheque amount along with interest and damages.

So, cheque bounce cases can involve both:

1. Criminal proceedings under Section 138 NI Act, and

2. Civil proceedings for recovery of money.

• Cheque bounce under Section 138 NI Act = Criminal case.

• Payee may also file a civil case to recover the cheque amount.

• This dual approach ensures both punishment for the offender and compensation for the payee.