Cheque bounce Laws in Nepal
                     Cheque Bounce Laws in Nepal
A cheque is said to be bounced when a bank refuses to make payment in 
return for the cheque due to insufficient funds, overwriting in the cheque, 
mismatch of signature, expired cheque, etc. It is also considered a dishonor 
of cheques in Nepal. Or it is called Cheque bouncing is regarded as a 
condition in which the receiver will not be able to exchange the issued 
cheque due to various reasons such as insufficient funds, overwriting in the 
cheque, or mismatch of signature, among others. As per the law, cheque 
bouncing is regarded as one of the causes of dishonoring the cheque.
 
In the context of Nepal, remedies against cheque bounces have been 
addressed through two distinct laws i.e.
 
a)  Negotiable Instrument Act, 2034  (1977)
b) Banking Offence and Punishment Act, 2064 B.S. ( 2008)
Negotiable Instruments Act, 2034 
According to the Act, a cheque bounce is when a person deliberately 
transfers a cheque by drawing it to some who does not bear a deposit in 
the bank or bears an insufficient deposit. Following the commission of 
the such act, the amount mentioned in the cheque, as well as interest on 
it, shall be recovered from the drawer to the holder and he/she shall be 
punished with imprisonment of up to three months or a fine of up to 
three thousand rupees or both.  This Act identifies cheque bounce as an 
individual party offense wherein the aggrieved must file a complaint in 
the concerned District Court within five years from the date of cause of 
action to file such complaint.
Process and remedies of  Cheque 
dishonoring
Section 108 of the Negotiable Instrument Act, 1977, mentions that a 
complaint shall be filed within five years from the date of the cause of 
action to file such a complaint. The process for filing the case at 
the concerned district court is listed below:
Step 1: Filing of a statement of claim (phiradpatra) by the party
Step 2: Reply by another party on the statement of claim, which is 
regarded as pratyuttarpatra.
Step 3: Collection of evidence and examination of witnesses
Step 4: Hearing and final decision by the district court
Step 5: Filing an appeal at a high court, if any of the parties is not 
satisfied with the decision rendered by the district court
Remedies of Cheque Dishonor  according to 
Negotiable Instrument Act 1977
Section 107 (A) of the Negotiable Instrument Act, 1977, provides the 
following remedy to the affected party.
a)    Recovery of the amount mentioned in the Cheque with interest
b)    Imprisonment not exceeding three  months or fine up to Rs. 3000 
or both
  Banking Offence and Punishment Act, 
2064 B.S.
The Act prohibits anyone from drawing a cheque to knowingly make 
payment from an account where he/she has apparent knowledge that 
the account does not have sufficient balance to cover the amount of the 
cheque drawn.  If a person commits such an offense, he/she shall be 
liable to pay the principal amount along with a fine depending on the 
amount of transaction involved and imprisonment of up to 3 months. 
 The Act mentions FIR must be lodged within 1 year from the date the 
offense occurs. This Act identifies cheque bounce as a state-party 
offense.
Procedure to file a case
Section 17(1) of the Banking Offence and Punishment Act, 2064, mentions a 
complaint shall be filed within one year from the date of cause of action to 
file such a complaint. The process for filing the case in the concerned high 
court is listed below:
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 high court: It is the first hearing in that 
particular case
Step 5: Examination of witnesses
Step 6: Hearing when the high court will render its decision
Step 7: Filing an appeal at the Supreme Court, if any of the parties is not 
satisfied with the decision rendered by the high court
The Banking Offence and Punishment Act, 2008, provides 
the following remedy to the affected party
a)    Recovery of the amount mentioned in the cheque with interest
b)     Imprisonment not exceeding three months
c)    Fine of the amount mentioned in the cheque
The legal Option depends upon the 
Aggrieved party
Regarding the protection of the rights of the aggrieved, pursuing the case 
under the Negotiable Instruments Act allows the aggrieved to recover 
the interest on the drawn amount while the Banking Offence and 
Punishment Act, 2064 do not provide the same. Further, when initiating 
the case as a state party offense, the court preliminary focuses on fining 
the defendant and upon the obtaining of a fine, a separate process 
commences for recovering the amount involved in the amount 
irrespective of the fine.
                                                     Contact us 
Prime Law Associates Advocates & Legal Consultants
Anamnagar, Kathmandu, Nepal
Postal Code 44600 
Mobile : +977-9851059026
Tel : + 977-1- 4102849
Fax : +977- 1- 4912776
Email : [email protected]