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Rucha Pawar (legal executive)     28 September 2022

Cheque bouncing - bank branch block

,Dear Sir(S)

My client is a builder and had taken a business loan in 2013  for day to day business, by securing  the property and also paid some Cheques of 2 banks against this loan. The Cheques were  recently deposited by the Drawee bank without information to us . Cheques from one of the banks were returned with the remark 'Bank Branch Block'.

The Cheques issuing bank was blocked by RBI somewhere in 2019 .  The bank  was active when we tendered the Cheques to the Drawee bank.

My query is that whether the case of "Bank Branch Block" falls under Section 138 of the Negotiable Instruments Act.

Kindly guide in the matter .


 5 Replies

Advocate Bhartesh goyal (advocate)     28 September 2022

Yes, cheque dishonoured due to any reason comes under the purview of sec 138 N.I.Act.

1 Like

Rucha Pawar   28 September 2022

Sir thank you for your valuable information.  But sir under the NI  act this reason of 'branch bank blocked' has not mentioned .

P. Venu (Advocate)     28 September 2022

in my understanding, the issue does not come within the purview of NI 138.

1 Like

Rucha Pawar (legal executive)     29 September 2022

Thank you Venu sir for your feed back, can we support any authenticated documents or udgement or any sections  to that effect.

Aadil (Student)     13 June 2024

Dear Rucha,

Thank you for your query! I am Aadil and I will try to answer your question.

The short answer to your question is NO. It will not come under section 138 of the Negotiable Instruments Act.

The laws pertaining to cases of cheque bounce are given in the Negotiable Instruments Act of 1881. It defines a case of cheque bounce to be when any cheque drawn by a person on an account maintained by them with a banker, for the purpose of fulfilling a debt or liability, is returned by the bank unpaid, either due to insufficient funds in the account or because it exceeded the amount that was agreed to be paid by the bank from the account as per any agreement made with the bank.

In this case the Reserve Bank of India has blocked that bank, which cannot be considered as a case of cheque bounce as for that the cheque should have been returned unpaid from the bank due to insufficient funds in the account or because it had exceeded the amount agreed to be paid by the bank from the account as per some agreement made with the bank. Therefore it is not the fault of the drawer but the fault of the bank. 

Thus the above case cannot constitute a cheque bounce, but the payee may send a legal notice to the drawer apprising them of the current situation.

I hope this helps. Thank you for your time and patience!



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