The Main Rule: Closing an Account is Still a Crime

The 2025 "Insolvency Exception"

When is "Account Closed" NOT a Crime?

• Government Action: The account was frozen by the Income Tax or GST department before the cheque was given to the bank.
• Bankruptcy: A court-appointed officer has taken over the business and the owners no longer have the right to move money.
• Bank Decision: The bank closed the account on its own (for example, if the loan turned bad) without the owner asking them to do so.

What This Means for You

• For the Person Owed Money: You need to find out why the account was closed before spending money on a long court case.
• For the Person Who Wrote the Cheque: You are only protected if the closure was forced on you by law. If you closed it yourself to avoid paying, you can still be arrested.

The Penalties

• Jail Time: Up to 2 years.
• Heavy Fines: You may have to pay back double the amount written on the cheque.
• Early Payment: You might be ordered to pay 20% of the cheque amount to the other person immediately while the trial is still going on.