A drawer of a dishonoured cheque shall be deemed to have committed an offence and shall, without prejudice to any other provision of the Negotiable Instruments Act, be punishable with imprisonment for a term which may extend to two years, or with a fine which may extend to twice the amount of the cheque, or with both. However, before the penal provisions can be invoked against the drawer of a cheque which has bounced, the following requirements should be satisfied:
1. The cheque should have been dishonoured due to insufficiency of funds standing to the credit of the account on which the cheque was drawn or for the reason that the amount of cheque drawn on the account exceeds the sanctioned limit of overdraft.
2. The cheque should have been issued by the drawer in favour of another person for the discharge of legally enforceable debt or other liability, in whole or in part.
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Therefore, when any cheque issued for meeting social obligations, such as charity, marriage presents, birthday gifts, etc., is dishonoured for want of funds, the drawer would not be deemed to have committed an offence. However, the court shall presume that the holder of a cheque received the cheque in the discharge of a liability, unless the contrary is proved by the accused drawer.
3. The cheque should have been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier.
In the case of dishonour of a post-dated cheque, the aforesaid period of six months has to be counted from the date mentioned in the cheque, because such a cheque becomes a cheque only when it becomes payable on demand (Anil Kumar Sawhney vs Gulshan Rai).
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4. The payee or the holder in due course of the cheque should have made a demand for the payment of the said amount of money by giving a notice in writing to the drawer of the cheque within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid/bounced.
5. The drawer of such cheque should have failed to make the payment of the said amount of money to the payee or the holder in due course of the cheque within 15 days of the receipt of the said notice of demand. If the drawer does not pay till the expiry of the 15 days time, the cause of action arises on the 16th day.
6. The payee or the holder in due course of the cheque dishonoured should have made a written complaint of the offence to a Court not inferior to that of a metropolitan magistrate or a first class judicial magistrate, within one month of the date on which the cause of action arose under the said provisions, i. e., within one month of the date of expiry of said period of 15 days within which the drawer was asked to pay the amount of the dishonoured cheque.
However, if the complainant satisfies the court that he had sufficient cause for not making a complaint within the prescribed period of one month, the court is empowered to condone the delay.