Bounced Cheque

A bounced cheque — also called a dishonoured cheque or returned cheque — is a cheque that a bank declines to honour and returns unpaid, typically because the account on which it is drawn has insufficient funds, the account has been closed, the cheque has expired, or there is a signature mismatch or stop payment instruction. In India, the dishonour of a cheque is not merely a civil matter but also a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, which prescribes penalties including imprisonment of up to two years and/or a fine of up to twice the cheque amount for the issuer, subject to proper legal notice and procedure. A high frequency of bounced cheques in a company — particularly visible in BSE/NSE disclosures for listed entities — can signal serious liquidity or cash flow difficulties. For investors and financial market participants on Ventura Securities, understanding the legal and financial consequences of cheque dishonour is important for business risk assessment and personal financial management.