A dishonoured cheque runs on two tracks at once. Civilly, Cap. 262 makes the drawer engage to compensate the holder, notice of dishonour is the one duty that decides cases, and the claim is a clean candidate for summary judgment. Criminally, section 305A of Cap. 154 makes it an offence carrying up to three years or ten thousand euro once the cheque has stayed unpaid for fifteen days after presentation, and you may bring that prosecution yourself rather than wait for the state.
The cheque that comes back marked refer to drawer sits in a different legal position from an ordinary unpaid invoice, and mostly a better one. The debt is written on a negotiable instrument with statutory engagements attached, the defences are narrow, and the document itself is most of the trial bundle. What squanders that advantage is delay and informality in the days after the dishonour, which is exactly when the Law imposes its one demand on the holder.
The engagements written into the instrument
Under section 73, a cheque is a bill of exchange drawn on a banker, payable on demand, and the Law's bill provisions apply to it. That definition matters because it imports section 55: the drawer, by drawing the instrument, engages that on due presentment it will be paid according to its tenor, and that if it is dishonoured the drawer will compensate the holder, or any indorser compelled to pay, provided the requisite proceedings on dishonour are duly taken. An indorser gives the same engagement and cannot deny the genuineness of the drawer's signature or of the indorsements before their own.
In plain terms: the signature on the cheque is a statutory promise to make it good, and everyone who indorsed it down the line stands behind it too. The holder does not have to prove the underlying deal in the way an invoice claimant does; the instrument carries its own obligations.
The one duty that discharges the careless: notice of dishonour
Delay the notice and you are the one who discharges the person liable. Under section 48, when a cheque is dishonoured, notice of dishonour must be given to the drawer and to each indorser, and any drawer or indorser to whom notice is not given is discharged, subject to the Law's provisions. The strongest claim on paper dies quietly here more often than anywhere else.
The rules for the notice are in section 49, and for cheques the reasonable time is fixed by reference to the Cyprus Clearing House under section 82Ζ. The practice that never goes wrong is simple: the day the bank returns the cheque, written notice goes to the drawer, and to every indorser whose recourse you may need, stating that the cheque was presented and dishonoured. Then the letter before action can follow at leisure; the notice cannot.
Delay in presenting the cheque is treated more gently than delay in notifying. Under section 74, late presentment discharges the drawer only to the extent of actual damage suffered through the delay, in the narrow scenario where the drawer had the funds with the banker and the banker fails in the meantime, and the holder then stands as the banker's creditor to that extent. A stale cheque is a practical problem with the bank counter; it is rarely, by itself, the end of the claim.
What the claim is worth, by statute
The statute fixes what the claim is worth, without proof of loss. Section 57 sets the measure of damages against any party liable on a dishonoured instrument: the amount of the cheque, interest from the date of presentment for payment, since a cheque is payable on demand, and the expenses of noting or protest where protest was necessary. The interest point is worth noticing: it runs from presentment, not from judgment, which on a slow-moving dispute is a real difference.
The claim on the instrument is contractual in nature, and the six year period under section 7(1) of the Limitation of Actions Law 66(I)/2012 is the clock this site's limitation calculator applies to contract debts. Six years is long; the evidence's shelf life is shorter, which is the real deadline.
Why these claims move fast when run properly
A dishonoured cheque is the textbook candidate for summary judgment: the signature is on the instrument, the statutory engagements attach to it, the bank's return marking evidences the dishonour, and the room for a genuine defence is narrow. Where a real defence exists it usually concerns the underlying transaction between the immediate parties, fraud, or a signature dispute, and it declares itself early. The firm's guide to debt recovery in Cyprus covers the procedural road; what the cheque changes is how short that road can be.
Two situations deserve their own sentence. A cheque that is crossed, or marked in a way that restricts transfer, limits how it can be collected rather than what it is worth, and the markings are read before anything else is done. And where the drawer has issued a cheque without funds, any criminal process that may follow is a matter for the authorities and is separate from, and no substitute for, the civil claim: a prosecution does not pay the holder.
If you are the one who signed it
The engagements of section 55 are not the end of every story. Between the immediate parties, the underlying transaction can matter: a cheque given for a consideration that failed, obtained by fraud, or altered after signature raises real questions, and a drawer who disputes liability should say so early, in writing, and above all should not ignore the claim into a default judgment. What does not work is silence, or the assumption that stopping the cheque ended the matter: the stop instruction is a fact of the dishonour, not a defence to the engagement.
The same cheque is also a criminal offence
Most holders treat a bounced cheque as a debt, and stop there. Since Law 18(I)/2006 inserted section 305A into the Criminal Code, Cap. 154, it is also a crime, and the two tracks run independently: section 36 of the Criminal Procedure Law, Cap. 155, provides that a civil remedy is not suspended or in any way affected because the act or omission also amounts to a criminal offence.
Section 305A(1) defines the offence tightly. A person who issues a cheque which, on or after the date it became payable, is presented to the credit institution on which it was drawn and is not paid because of lack of available funds of the drawer, or because the drawer's account was closed at the time of presentation, and remains unpaid for fifteen days from its presentation, is guilty of a criminal offence. On conviction the penalty is imprisonment of up to three years, or a fine of up to ten thousand euro, or both.
The fifteen days matter. The offence is not complete on the bounce; it is complete when the cheque has stayed unpaid for fifteen days after presentation. A drawer who pays within that window has answered it.
Section 305A(2) covers the drawer who stops the cheque rather than lets it bounce. A person who, without reasonable cause, by any act causes the non-payment of a cheque he issued, at any time before or on the date it became payable, commits the same offence with the same penalties. The proviso then states how the defence is preserved: reasonable cause may be relied on by the accused if, on or before presentation of the cheque for payment, he stated in writing to the credit institution the reason or reasons for which the stop instruction was given. A stop with no written reason given to the bank at the time is a stop without that defence.
The bank's stamp is the evidence
Section 305A(3) puts the proof in the holder's hands rather than leaving it to be extracted. Where an unpaid cheque is returned, the credit institution on which it was drawn must, under signature, stamp or note on it the actual reason for non-payment, that is whether it was lack of available funds, a closed account or a stop instruction, and the date of presentation.
That stamp is not merely helpful. The subsection provides that it is accepted as evidence before a court, and that the stamp, the noted reason and the recorded date of presentation constitute a rebuttable presumption of the truth of their content. A further proviso settles the objection a bank might otherwise raise: compliance does not constitute, and cannot be construed as, a breach of the confidentiality of customer account information.
Section 305A(4) carries the same scheme into electronic presentment. The drawee institution must supply the actual reason and the date of presentation electronically to the presenting institution, which must then stamp or note them on the original cheque, with the same evidential status and the same rebuttable presumption.
Section 305A(5) backs those duties with an offence of their own: a bank officer or employee who authorised, or knowingly permitted or assisted in, a breach of the subsection (3) or (4) duties commits an offence punishable by up to three months' imprisonment or a fine of up to two thousand euro or both, unless the breach was a bona fide mistake.
The practical instruction that follows is short. Do not accept the cheque back without the stamp. The returned instrument, stamped with the reason and the date, is most of the criminal case and a good deal of the civil one.
Where section 305A does not reach
The criminal route does not cover everything, and the exclusion matters to both sides. Section 305A(6) contains an exclusion worth knowing on both sides of the file: the section does not apply where the cheque was issued in payment of a debt relating to a transaction or act contrary to good morals or to any law. A cheque given for an unlawful arrangement is outside the offence altogether, whatever the civil position may be.
Section 305A(7) defines the credit institution the section speaks of: a bank within the meaning of the Banking Business Law, or a co-operative credit institution within the meaning of the Co-operative Societies Law, or another institution the subsection names.
You do not have to wait for the state to prosecute
This is the part holders are most often unaware of. A criminal prosecution in Cyprus does not have to be brought by the Attorney General's office.
Section 37 of Cap. 155 states how a prosecution begins: subject to any other law, the criminal prosecution of a person begins with a charge laid against that person before a Court. Section 38 requires the charge to be in the prescribed form and signed by, or on behalf of, the person laying it, naming the court, the accused, the offence charged with a reference to the section creating it, and the witnesses the prosecution intends to call. Nothing in either section confines the person laying the charge to a public prosecutor.
The Law then recognises the private prosecution expressly, in two places that would make no sense otherwise. Section 7A is headed with the accused's right of access to the prosecutor's documents and evidence in a private criminal proceeding. And section 141(1)(b), on the fixing of an appeal hearing, requires the Chief Registrar to notify, in the case of a private prosecution, the private prosecutor or their advocate, and in every other case the Attorney General.
What it costs you to take it on. Section 7A puts the disclosure burden on the private prosecutor. On the accused's written request, the accused or their advocate is entitled, within twenty one days, to free access to all documents and evidential material the prosecutor holds, including a named list of prosecution witnesses, a signed written statement of each complainant recording their evidence on all the facts, and a summary of the evidence of any other prosecution witness. Where further material or a further witness comes in later, access and a summary must be given for that too. A private prosecution is therefore a file that has to be built to a prosecutor's standard before it is laid, not after.
The limit to state plainly. A private prosecution is not immune from the Attorney General. Section 3B(2)(a) of Cap. 155 expressly preserves the Attorney General's constitutional power to institute, conduct, take over and continue, or discontinue any proceedings, and to order a prosecution against any person for any offence. A private prosecution can be taken over, and it can be stopped. That possibility belongs in the advice before the charge is laid, not after it.
Why it is worth doing anyway. Section 36 means the civil claim continues in parallel: the debt action is not suspended or affected because the same facts are an offence. A drawer facing a summary judgment application and a criminal charge with a three year maximum has a materially different view of settlement from one facing only the first.
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The cheque itself, both sides, with the bank's return marking visible. The date it was presented and the date it came back. What the cheque was given for, in a sentence, and any document behind it. Whether anyone indorsed it. And whatever notice has already been sent, with dates, because the section 48 position is the first thing checked.
Questions we are asked
Is a bounced cheque a crime in Cyprus, or only a debt?
Both, and they run in parallel. Section 305A of the Criminal Code, Cap. 154, inserted by Law 18(I)/2006, makes it an offence to issue a cheque that is presented and not paid for lack of available funds or because the account was closed, and which then remains unpaid for fifteen days from presentation. The penalty on conviction is up to three years' imprisonment or a fine of up to ten thousand euro or both. Section 36 of Cap. 155 keeps the civil claim untouched: it is not suspended or affected because the same facts are also an offence.
Can I bring the criminal case myself, or must the police and the Attorney General do it?
You can bring it yourself. Under section 37 of Cap. 155 a prosecution begins with a charge laid before a Court, and under section 38 the charge is signed by or on behalf of the person laying it; neither section confines that person to a public prosecutor. The Law recognises private prosecutions expressly: section 7A is about the accused's access to the prosecutor's material in a private criminal proceeding, and section 141(1)(b) requires the Chief Registrar to notify the private prosecutor rather than the Attorney General where the case is a private one. The limit worth knowing before you start is section 3B(2)(a), which preserves the Attorney General's constitutional power to take over, continue or discontinue any proceedings.
What does taking on a private prosecution actually require of us?
A prosecutor's file, prepared before the charge is laid. Section 7A entitles the accused, on written request, to free access within twenty one days to all documents and evidential material the prosecutor holds, including a named list of prosecution witnesses, a signed written statement from each complainant covering the evidence on all the facts, and a summary of any other prosecution witness's evidence, with the same obligation for material or witnesses that arrive later. That is the standard to build to at the outset.
The drawer stopped the cheque rather than letting it bounce. Does that avoid the offence?
Not by itself. Section 305A(2) makes it the same offence, with the same penalties, to cause the non-payment of your own cheque by any act, without reasonable cause, at any time before or on the date it became payable. The proviso sets out how the defence is preserved: reasonable cause may be relied on where, on or before presentation, the drawer stated in writing to the credit institution the reason or reasons for the stop instruction. A stop given without written reasons to the bank at the time forfeits that.
Is there a case where section 305A does not apply at all?
Yes. Section 305A(6) disapplies the section where the cheque was issued in payment of a debt relating to a transaction or act contrary to good morals or to any law. A cheque given for an unlawful arrangement is outside the offence, whatever the civil position may be.
What must the bank write on the returned cheque?
The actual reason and the date. Section 305A(3) requires the drawee institution, under signature, to stamp or note on the returned cheque whether non-payment was for lack of available funds, a closed account or a stop instruction, together with the date of presentation. That stamp is accepted as evidence in court and is a rebuttable presumption of the truth of its content, and complying with the duty is expressly not a breach of customer confidentiality. Section 305A(4) applies the same scheme to electronic presentment, and section 305A(5) makes breach of those duties an offence by the bank officer responsible. Do not take the cheque back without the stamp.
The cheque bounced. Do I have to prove the whole underlying deal?
The instrument does most of that work. Under section 55 of Cap. 262 the drawer, by drawing the cheque, engages to compensate the holder if it is dishonoured, provided the proceedings on dishonour are duly taken. Between the immediate parties the underlying transaction can still be raised as a defence, but the starting position is the statutory engagement written into the signature, which is why these claims are strong candidates for summary judgment.
What must I do in the first days after the dishonour?
Give notice of dishonour, in writing, to the drawer and to every indorser you may need to pursue. Under section 48 a drawer or indorser who is not given notice is discharged, and for cheques the reasonable time is fixed by reference to the Cyprus Clearing House under section 82Ζ. Send the notice the day the cheque comes back and keep proof of sending; the letter before action can follow, the notice cannot wait for it.
How much can I recover beyond the face amount?
Section 57 gives the statutory measure: the amount of the cheque, interest from the date of presentment for payment, and the expenses of noting or protest where protest was necessary. Interest from presentment rather than from judgment is the part claimants routinely under-claim.
I sat on the cheque for months before presenting it. Have I lost the claim?
Usually not. Under section 74, delay in presentment discharges the drawer only to the extent of actual damage suffered through the delay, in the scenario where the drawer had the funds and the banker fails in the interval, and even then the holder becomes the banker's creditor for that amount. The practical problems of a stale cheque are at the bank counter; the claim on the instrument is measured by the six year contract period. Present it, record the dishonour, and give the notices.
The drawer says he stopped the cheque, so it was never going to be paid.
A stop instruction explains the dishonour; it is not by itself a defence to the drawer's engagement under section 55. What the drawer needs is a real defence on the instrument or the underlying transaction between you, and that is tested on the documents. From the holder's side, treat a stopped cheque exactly like any other dishonour: notice under section 48, then the claim.
Should I report it for prosecution instead of suing?
The two processes are separate and serve different ends. Whatever the authorities do about a cheque issued without funds, a prosecution does not pay you: the money comes from the civil claim on the instrument, which runs on its own timetable and its own rules. Deciding whether to report is your choice; deciding to preserve the civil claim, starting with the notice of dishonour, should not wait on it.
Related reading
This work sits within our litigation and debt recovery practice. The wider recovery road is in debt recovery in Cyprus, the first formal step in the letter before action, and the company-debtor lever in the statutory demand.
This article is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com.
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