Cheque Bounce Case Law in Bangladesh | Legal Remedies & Procedures

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Cheque Bounce Case Law in Bangladesh

Cheque dishonour or cheque bounce is a common and serious legal issue in Bangladesh. Despite massive development in digital banking including BEFTN (Bangladesh Electronic Funds Transfer Network) and RTGS (Real Time Gross Settlement), cheques remain a preferred payment method for large-scale transactions due to security considerations.

When a cheque cannot be honoured and is returned by the bank due to insufficient funds or other reasons, it amounts to cheque bounce or dishonour. This is a criminal offense in Bangladesh under the Negotiable Instruments Act, 1881.

Advocacy Legal, recognized among Bangladesh’s top law firms, provides expert legal services for cheque bounce cases, recovery suits, and criminal defense.

Legal Framework for Cheque Bounce

Primary Legislation

Negotiable Instruments Act, 1881 (Act No. XXVI of 1881)

This is the principal law governing cheque bounce offenses in Bangladesh. The Act extends to the whole of Bangladesh and is considered a special law whose provisions take precedence over ordinary laws.

Key Provisions:

Section 6 – Definition of Cheque: “A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”

In simpler terms: A cheque is a written order issued to a bank by an account holder, requesting payment of a specific sum to a named person, bearer, or order.

Section 138 – Dishonour of Cheque for Insufficiency of Funds: This section creates the criminal offense of cheque bounce and provides remedies.

Section 139 – Presumption in Favor of Holder: Creates rebuttable presumption that cheque was issued for consideration (debt/liability).

Section 140 – Offense by Companies: Makes company directors and officers liable for cheque bounce by company.

Section 141C – Jurisdiction: Specifies which court has power to try cheque bounce cases.

Official Legal Resource: Negotiable Instruments Act 1881

What is a Cheque?

Legal Definition: A bill of exchange drawn on a specified banker, payable only on demand.

Practical Definition: A written order by account holder (drawer) directing their bank (drawee) to pay specified amount to a person (payee) or bearer.

Key Features of Cheques:

More convenient than carrying cash
Payments can be stopped if necessary
Safer means of payment (especially crossed cheques)
Eliminates risk of counting mistakes
Can be posted cheaply
Can be traced if lost
Can be post-dated

Limitations:

Not legal tender (creditors may refuse)
Validity period (6 months from issue date)
Risk of dishonour/bounce
Requires bank account

When is Cheque Bounce a Criminal Offense?

Section 138 Requirements

For cheque bounce to be a criminal offense under Section 138 of NI Act, ALL of the following conditions must be satisfied:

1. Cheque Must Be Issued for Discharge of Debt/Liability

Issued for payment of money
In discharge of whole or part of debt
Or for legally enforceable liability

Important: Cheque given as security, advance payment without obligation, or gift is NOT covered.

2. Cheque Presented Within Validity Period

Must be presented within 6 months of issue date
Or within validity period of cheque
Can be presented multiple times as drawer directs

3. Cheque Returned Unpaid

Returned by bank with “dishonour slip”
Due to insufficient funds in account, OR
Amount exceeds arrangement with bank

4. Legal Notice Sent Within 30 Days

Payee must send written notice within 30 days
From date of receiving information of dishonour
Sent by registered post
Demanding payment of cheque amount

5. Drawer Fails to Pay Within 30 Days

After receiving notice
Drawer does not pay the amount
Within 30 days of notice receipt

Only after ALL five conditions met can criminal case be filed under Section 138.

Consideration Requirement

Recent Important Development:

The Appellate Division in Criminal Appeal No. 63-66 of 2017 (19 ALR 2020 (AD) 56) clarified:

“Where the amount promised shall depend on some other complementary facts or fulfilment of another promise and if any cheque is issued on that basis, but that promise is not fulfilled, it will not create any obligation on the part of the drawer of the cheque.”

What This Means:

Complainant must prove consideration – valid reason for cheque issuance
Not enough to just show cheque was issued
Must establish debt, liability, or legal obligation
Important to have written agreement documenting transaction

How to File a Cheque Bounce Case in Bangladesh

Step-by-Step Procedure

Step 1: Present Cheque to Bank

Timeline: Within 6 months of cheque issue date or validity period

Process:

Submit cheque at drawer’s bank
Bank attempts to clear/honour cheque
If funds insufficient or other problem, bank returns cheque

Result: Bank issues dishonour slip stating:

Reason for dishonour
Date of dishonour
“Refer to drawer” or specific reason

Keep: Original dishonour slip – crucial evidence

Step 2: Send Legal Notice (Within 30 Days)

Timeline: Within 30 days from date of receiving dishonour information

Method: Registered post with acknowledgment due (AD)

Notice Must Include:

Reference to dishonoured cheque (number, date, amount)
Date of dishonour
Reason for dishonour
Demand for payment of cheque amount
Warning of legal action if not paid within 30 days
Sent to drawer’s address

How Many Notices? As per Ahsan Habib Chowdhury VS Multidive Ltd. [14 BLC (2009) 66]:

Cheque can be presented multiple times
But notice sent only once as per law
Repeated notices cannot be served

Important: Notice must be sent within 30 days – strict timeline!

Step 3: Wait 30 Days

Grace Period: Drawer has 30 days from receiving notice to pay

During This Period:

Drawer should pay cheque amount
Can negotiate settlement
Can arrange payment plan

If Drawer Pays: Matter resolved, no case filed

If Drawer Doesn’t Pay: Proceed to file case

Step 4: File Criminal Complaint (Within 1 Month)

Timeline: Within 1 month from expiry of 30-day notice period

Where to File:

Current Position (Per High Court Circular dated 08-03-2021):

Initially file before Metropolitan Magistrate or Judicial Magistrate Court
Case must be in jurisdiction where:
- Bank branch is located, OR
- Drawer resides, OR
- Payee resides, OR
- Cheque was issued, OR
- Notice was received
Once case is taken up, Magistrate transfers to Joint Sessions Judge
Trial conducted by Joint Sessions Judge (as per Section 141C, NI Act)

Required Documents for Filing

Essential Documents:

1. Original Dishonoured Cheque

Physical cheque returned by bank
With dishonour markings

2. Dishonour Slip/Memo

From bank stating reason
Date of dishonour

3. Legal Notice Copy

Notice sent to drawer
Postal receipts/acknowledgment

4. Proof of Service

Registered post receipt
Acknowledgment card (if returned)
Or affidavit of service

5. Written Complaint

Drafted complaint under Section 138
Signed by complainant/authorized person
Details of offense

6. Supporting Documents:

Agreement/contract showing debt
Loan documents
Invoice or bill
Any correspondence
Bank statement (if relevant)

Punishment and Penalties

Section 138(1) – Punishment

If accused found guilty:

Imprisonment:

Up to 1 year
Simple or rigorous imprisonment

Fine:

Up to three times the cheque amount
No maximum limit on fine

Both:

Imprisonment AND fine together

Example: If cheque amount is BDT 1,00,000:

Imprisonment: Up to 1 year
Fine: Up to BDT 3,00,000
Or both imprisonment + fine

Appeal Provisions

Important Condition:

No appeal against conviction/sentence shall lie unless:

Accused deposits 50% or more of dishonoured amount
Before filing appeal
In court that awarded sentence

This Means:

If convicted and want to appeal
Must pay 50%+ of cheque amount to court first
Then can file appeal to higher court

Interim Compensation (Section 143A)

New Provision:

During trial, if accused claims regular trial (not summary):

Court may order interim compensation
Up to 20% of cheque amount
Paid to complainant

Timeline:

Must pay within 60 days of order
Can be extended another 30 days

If Acquitted:

Court directs complainant to repay interim compensation
With bank interest rate
Within 60 days

Company Liability (Section 140)

If Offense Committed by Company:

Every person who was in charge of and responsible to the company at time of offense:

Deemed guilty of offense
Liable for punishment

“Company” Includes:

Body corporate
Firm
Association of individuals

Directors and Officers can be personally prosecuted.

Alternative Legal Remedies

If Section 138 Not Applicable

If for any reason Section 138 case cannot be filed (time-barred, procedural defect, etc.), alternative remedies exist:

1. Criminal Case Under Penal Code

Section 406 – Criminal Breach of Trust:

If cheque given in trust
Drawer misappropriated funds
Criminal liability

Section 420 – Cheating: As per Abdul Khair Chandu vs. State 65 DLR 230 (HCD):

If drawer fails to arrange payment
With dishonest intention
May constitute cheating
Punishment: Imprisonment up to 7 years + fine

2. Civil Suit for Money Recovery

Money Suit Under CPC, 1908:

File civil suit for debt recovery
Limitation period: 3 years
Claim principal amount + interest
Court decree for payment

Advantage:

Can be filed even if Section 138 timeline missed
Can claim interest and costs
Decree enforceable through execution

3. Summary Suit (Order 37, CPC)

For Negotiable Instruments:

Cheques are negotiable instruments
File summary suit before District Judge
Summarily disposed (faster process)
If defendant has no defense, quick judgment

Faster Than: Regular civil suit

4. Concurrent Remedies

Important: Criminal and civil remedies can be pursued simultaneously.

As per Khandokar Mahtabuddin Ahmed Vs. State 49 DLR AD 132:

Simultaneous criminal charges and civil claims permissible
On same matter
No bar to filing both

Strategy: File both:

Criminal case under Section 138 (for punishment)
Civil suit for recovery (for money)

Recent Legal Developments

1. Proof of Consideration Mandatory

Landmark Judgment: Criminal Appeal No. 63-66 of 2017 (19 ALR 2020 (AD) 56)

Appellate Division held:

Complainant must prove consideration
Not enough to show cheque issued
Must establish valid debt/liability existed
Onus on complainant to prove

Impact:

Reduces misuse of Section 138
Requires proper documentation
Written agreements now essential

Best Practice:

Always have written agreement
Document consideration clearly
Establish relationship between parties
Detail mode of transaction

2. Joint Sessions Judge Jurisdiction

High Court Circular (08-03-2021):

Cases under Section 138 tried by Joint Sessions Judge only
Not regular Magistrate courts
Initial filing before Magistrate, then transfer

Reason: Serious nature of offense, requires senior judicial officer

3. Interim Compensation

Section 143A Introduction:

Court can order interim compensation during trial
Up to 20% of cheque amount
Provides relief to complainant pending trial
Refundable if accused acquitted

Get Expert Legal Help from Advocacy Legal

Our Cheque Bounce Legal Services

Advocacy Legal, led by Advocate Md. Noushad Parvez, provides comprehensive legal services for cheque bounce matters.

For Payees (Cheque Holders):

Legal notice drafting and service
Filing criminal complaint under Section 138
Trial representation before Joint Sessions Judge
Civil suit for money recovery
Summary suit filing
Execution of decrees
Alternative dispute resolution

For Drawers (Accused Persons):

Criminal defense in Section 138 cases
Challenge false/fabricated cases
Prove lack of consideration
Negotiate settlements
Bail applications
Appeals to High Court

Why Choose Advocacy Legal?

Expert Team:

Specialized in cheque bounce litigation
100+ dishonoured cheque cases handled
High success rate in both prosecution and defense
Regular practice before Sessions Courts and High Court

Comprehensive Service:

Legal notice drafting
Court filing and representation
Trial management
Recovery execution
Settlement negotiations

Client Benefits:

Free initial consultation
Transparent fee structure
Regular case updates
Strategic legal advice
Quick response time

Contact Advocacy Legal:

Phone: +88 01677125595 | +88 01977125595
WhatsApp: +88 01795762000
Email: info@advocacylegalbd.com
Website: www.advocacylegalbd.com
Office: 3rd Floor, House-37, Road-7, Sector-3, Uttara, Dhaka-1230

Business Hours: Saturday – Thursday, 11:00 AM – 8:00 PM

Frequently Asked Questions

1. Is cheque bounce a criminal offense in Bangladesh?

Yes, under Section 138 of Negotiable Instruments Act, 1881, cheque bounce is a criminal offense if all conditions are met.

Punishment: Up to 1 year imprisonment and/or fine up to 3 times cheque amount.

2. How much time do I have to file a cheque bounce case?

Strict Timeline:

Present cheque within 6 months of issue
Send legal notice within 30 days of dishonour
Wait 30 days for payment
File case within 1 month after 30-day notice period expires

Miss any deadline = Case may be time-barred!

3. What if the drawer pays after I send notice?

Payment Settles Matter:

If drawer pays within 30 days of receiving notice
Offense condoned
No case can be filed
Matter resolved

Get: Written acknowledgment of payment and settlement.

4. Can I file both criminal and civil cases?

Yes, simultaneously. As per Supreme Court:

Criminal case under Section 138 (for punishment)
Civil suit for recovery (for money decree)
Both permissible on same cheque dishonour

Strategy: File both for maximum pressure and recovery.

5. What happens if cheque is from a company?

Company Officials Liable:

Directors and persons in charge at time of offense
Personally liable under Section 140
Can be prosecuted individually
Company AND individuals both liable

6. Can I file case if cheque is more than 6 months old?

For Section 138: No, cheque must be presented within 6 months.

Alternative Remedies:

File criminal case under Section 420 (Cheating)
File civil suit (3 years limitation)
Summary suit for recovery

Contact Advocacy Legal to explore options.

7. What if drawer stopped payment at bank?

Stop Payment = Dishonour:

If drawer instructs bank to stop payment
After issuing cheque
Amounts to dishonour
Section 138 applicable

Unless: Valid reason for stop payment exists.

8. In which court do I file the case?

Jurisdiction Options:

Where bank branch located (cheque presented), OR
Where drawer resides, OR
Where payee resides, OR
Where cheque issued, OR
Where notice received

Complainant can choose any one jurisdiction.

Current System:

File before Magistrate Court
Transferred to Joint Sessions Judge
Trial by Joint Sessions Judge

Conclusion

Cheque bounce is a serious criminal offense in Bangladesh with significant legal consequences. The Negotiable Instruments Act, 1881 provides strong remedies to protect the credibility of cheques and ensure payment security in commercial transactions.

Key Takeaways:

Section 138 criminalizes cheque dishonour for insufficient funds
Strict timelines must be followed (30 days, 1 month limits)
Punishment: Up to 1 year jail + 3x cheque amount fine
Consideration must be proved by complainant
Multiple remedies available – criminal and civil
Joint Sessions Judge has jurisdiction

Whether you need to:

File case for dishonoured cheque
Defend against false cheque bounce allegation
Recover money through civil suit
Negotiate settlement

Contact Advocacy Legal for expert legal assistance with cheque bounce matters in Bangladesh.

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Disclaimer: This article provides general information about cheque bounce law in Bangladesh. It should not be construed as legal advice. Every case is unique. For personalized legal counsel on cheque dishonour matters, contact Advocacy Legal.