Cheque Bounce is a condition in which a bank refuses to exchange the issued cheque to the receiver due to reasons such as:
- Insufficient fund or
- Overwriting on the cheque or
- Mismatch of signature or
- The signature is absent or
- Problem with the cheque’s date or
- Account differences in numbers and words
Legal Remedy for Check Bounce
There are two types of legal remedies for check bounce in Nepal:
a. Banking Offence and Punishment Act, 2064(2008) (Filling FIR before Police Authority)
b. Negotiable Instrument Act, 2034 (1977) (Filling the case before District Court)
Note: Parties can seek either of the remedies mentioned above for offenses related to cheque bounce.
Regulating Laws on Cheque Bounce
- Banking Offence and Punishment Act, 2064 B.S. (2008)
1.1 Definition
The Act prohibits anyone from drawing a cheque to knowingly make payment from an account where he/she has an apparent knowledge that the account does not have sufficient balance to cover the amount of the cheque drawn.
1.2 Party
Cheque bounce as a state party offense whereby a First Information Report (FIR/Jaaheri) must be lodged at the nearby police station. The state bears all procedural expenses incurred when proceeding with the case.
1.3 Time Limitation to initiate the case
Within 1 year from the date of knowledge of such offense.
1.4 Remedies to the affected party:
- Recovery of amount as mentioned in cheque with interest
- Imprisonment not exceeding 3 months
- Fine of the amount mentioned in the cheque
1.5 Punihsment for cheque bounce
In general cases, the punishment for cheque bounce includes imprisonment for 3 months and a fine of Rs 3,000. However, other forms of punishment prescribed by the Banking Offence and Punishment Act are as follows:
| S.N. | Disputed Amount | Imprisonment |
| 1. | Less than 1 million | Up to 1 year |
| 2. | More than 1 million but less than 5 millions | Up to 1 to 2 years |
| 3. | More than 5 million but less than 10 millions | Up to 2-3 years |
| 4. | More than 10 millions | Up to 3-5 years |
1.5 Procedure to file a case:
Banking Offence and Punishment Act, 2064
Complaint shall be filed within 1 year from the date of cause of action to file such a complaint.
Step 1: Submission of the first information report (FIR) at the concerned police station.
Step 2: Police will carry out an investigation, which they will submit to a government attorney.
Step 3: Filing of a charge sheet at the high court by the government attorney.
Step 4: Hearing for bail at the court.
Step 5: Examination of witness.
Step 6: Hearing when the high court will render its decision.
Step 7: Filing an appeal at appeal hearing court, if any of the parties is not satisfied.
2. Negotiable Instruments Act, 2034 B.S. (1977)
2.1 Definition
A cheque bounce is when a person deliberately transfers a cheque by drawing it to someone who does not bear a deposit in the Bank or bears an insufficient deposit.
2.2 Party
This Act identifies cheque bounce as an individual party offense wherein the aggrieved must file a complaint in the concerned district court.
2.3 Time to initiate case
Within 5 years from the date of cause of action to file such complaint.
2.4 Punishment
- Recovery of the amount with interest.
- Imprisonment not exceeding 3 months or a fine of up to 3000 Rupees or both.
2.5 Procedure to file a case
Step 1: File statement of claim in the concerned district court within 5 years from date of cause of action.
Step 2: Reply on statement of claim by defendant (statement of defense)
Step 3: Witness examination and evidence collection
Step 4:Final hearing and decision by district court
Frequently Asked Question (FAQ)
Is cheque bounce a civil matter or criminal matter in Nepal?
Under prevailing law, it is both civil as well as criminal matter. As per Negotiable Instrument Act, 2034 cheque bounce is treated as an individual party offense (civil matter) whereas under Banking Offence and Punishment Act, cheque bounce is treated as a state party offense (criminal case).
What will happen in cheque bounce case?
In cheque bounce cases, Negotiable Instruments Act and Banking Offence and Punishment Act is applicable through which a case is filed in the District Court or the High Court.
What is the remedy for cheque bounce as per the Negotiable Instruments Act, 2034 (1977) in Nepal?
If a cheque is bounced, the amount mentioned in the cheque, as well as interest, shall be recovered and the holder shall be punished with imprisonment up to 3 months or a fine up to Rs.3,000 or both.
What is the remedy for cheque bounce as per the Banking Offence and Punishment Act,2064 in Nepal?
There are other situations as well offering own imprisonment and fine(2). In sum, we can see fine ranges minimum of Rs. 10,000 and a maximum of Rs. 10,00,000, and imprisonment minimum of 1 year and a maximum of 5 years.