In a case where the accused person in a cheque bouncing case under 138 NI Act dies, the case terminates and the only remedy left with the complainant is to file a civil case against the legal heirs of the accused person where it is in limitation, as criminal liability cannot be shifted to the legal heirs of the accused person and the nature of the case under Section 138 of the Negotiable Instruments Act, 1881 is criminal, the liability of the accused cannot be shifted to the legal heirs of the complainant.
However In case of death of the complainant, Section 256 of the Code of Criminal Procedure, 1973 in Chapter XX provides for:-
Non-appearance or death of complainant- (1) If the summons has been issued on complaint, and on the day appointed for the appearance of the accused, or any day subsequent thereto to which the hearing may be adjourned, the complainant does not appear, the Magistrate shall, notwithstanding anything hereinbefore contained, acquit the accused, unless for some reason he thinks it proper to adjourn the hearing of the case to some other day
Therefore, where there is a case for cheque bouncing under Section 138 of the Negotiable Instrument Act, 1881, and the complainant dies during the case is still pending in the court for adjudication, the LRs of the complainant can move an application under Section 302 Cr.P.C. for permission to prosecute in the case.
Following are the judgements which support both the aforestated views:-
In the recent judgement of the Supreme Court in M. Abbas Haji vs. t.n. channakeshava (2019), it was held that the "The legal heirs, in such a case, are neither liable to pay the fine or to undergo imprisonment. However, they have a right to challenge the conviction of their predecessor only for the purpose that he was not guilty of any offence. The application filed by the legal heirs to prosecute this appeal was hence allowed".
In Shankar Lal Vs. Sanyogita Devi (through LRs), The Supreme Court held that "There is no reason on principle to hold that a complaint filed by a legal heir of the original holder in due course of the cheque cannot be taken cognizance by the court. In our considered view, neither the cause of action nor the right conferred upon the holder in due course of the cheque to proceed and file complaint under Section 142 of the Act for the offence under Section 138 of the said Act comes to an end after the death of the holder in due course of the cheque".
Hope I was able to solve your query