What is the punishment for cheque bounce under Section 138 NI Act?

Answer

A:

 Punishment for Cheque Bounce under Section 138 NI Act

If a cheque is dishonoured and the drawer fails to pay even after receiving the statutory notice, the court may impose the following punishment under Section 138 of the Negotiable Instruments Act, 1881:

1. Imprisonment – Up to 2 years.

2. Fine – Up to twice the cheque amount.

3. Both – The court can award both imprisonment and fine together.

 Key Points

• The offence is bailable, compoundable, and non-cognizable.

• This means the matter can always be settled (compounded) between parties at any stage.

• Courts often prefer compensation/fine over imprisonment, especially if the drawer agrees to pay the cheque amount with interest/penalty.

• In many cases, courts order the drawer to pay double the cheque amount as fine/compensation rather than sending him to jail.

 Example

If a cheque of ₹5,00,000 bounces:

• The drawer may face imprisonment up to 2 years, OR

• A fine up to ₹10,00,000 (twice the cheque amount), OR

• Both, depending on court’s decision.

The punishment for cheque bounce under Section 138 is up to 2 years in jail, or fine up to double the cheque amount, or both, but in practice, courts usually focus on ensuring repayment with penalty through fine or settlement.