Cheque Bounce Case: Notice and Complaint Under Section 138

If a cheque bounces for insufficient funds or because the amount exceeds the arrangement with the bank, you have 30 days from the date you get the bank’s return memo to send a written demand notice. The drawer then has 15 days from receiving the notice to pay, and if he does not, you must file the criminal complaint within one month after those 15 days end. Missing any of these dates can end the case, so count carefully. Not legal advice: this guide is general information, and a lawyer should check your facts before you act.

When section 138 applies

Section 138 of the Negotiable Instruments Act, 1881 applies when a cheque drawn on a bank account for payment of a legally enforceable debt or liability is returned unpaid because of insufficient funds or because it exceeds the amount arranged to be paid. The conditions are:

• The cheque was presented to the bank within three months of its date (or within its validity, whichever is earlier).
• The payee gave written notice of dishonour demanding payment within 30 days of receiving information from the bank.
• The drawer failed to pay within 15 days of receiving the notice.

The offence is punishable with imprisonment up to two years, or fine up to twice the cheque amount, or both. Other return reasons, such as “account closed” or “payment stopped by drawer”, have been held to attract section 138 in many situations depending on the facts, so read the return memo carefully with a lawyer.

Step by step

1. Deposit within validity and keep the return memo. The memo gives the date and the reason. Your 30 days run from receiving this information.
2. Send the demand notice. Address it to the drawer (and to the company and its directors or persons in charge if it is a company cheque). State the cheque number, date, amount and bank, the debt it was given for, the dishonour, and a demand for payment within 15 days. Send it by speed post or registered post with acknowledgment and also by email, and keep the proofs. Courts treat a notice that is properly addressed and sent as served even if it is refused.
3. Wait 15 days from the date of receipt. If the drawer pays in full, the matter ends. If a part payment comes, record it in writing.
4. File the complaint within one month from the date on which the 15 day period expires (section 142(1)(b)). A court can condone a delay if you show sufficient cause, but do not plan on that.
5. Prepare the complaint. Include the cheque, the return memo, the notice, postal receipts and tracking, the acknowledgment or proof of refusal, proof of the underlying debt, and an affidavit in place of the complainant’s evidence. Since the Supreme Court’s 2025 directions, complaints are expected to carry a short synopsis of the case.
6. Jurisdiction. Under section 142(2), the court where the payee’s account is held (for a cheque delivered for collection through an account) has jurisdiction. For a bearer cheque presented in cash, it is the branch of the drawer’s bank. Check this before filing to avoid transfer later.

Procedure in court

After the complaint, the Magistrate considers whether to take cognizance. Under section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023, which replaced the CrPC, the accused is generally to be heard before cognizance is taken on a complaint, and the Supreme Court’s directions of September 2025 in Sanjabij Tari v. Kishore S. Borcar deal with how summons should be issued and served in these cases. Then summons issue, the accused appears and is released on bail, a notice of accusation is framed, and the trial normally proceeds as a summary trial. Evidence is given on affidavit and the complainant can be cross-examined. After the trial the court passes a judgment; if convicted, the accused can be sentenced and ordered to pay compensation.

Money during the case

• Interim compensation (section 143A): the court may order the accused to pay up to 20 per cent of the cheque amount while the case is pending.
• Appeal deposit (section 148): a convicted drawer who appeals must deposit at least 20 per cent of the fine or compensation awarded.
• Compounding (section 147): the offence can be compounded. As reported in coverage of the September 2025 judgment, the court set graded costs for compounding at later stages: no costs before the accused’s evidence is recorded, and increasing percentages of the cheque amount later in the case, including at the appellate stages. Read the judgment or ask the court registry for the current position.

Frequent problems

• Security cheques. If a cheque was given as security, section 138 applies only if the liability matured and the cheque was presented for it. Be ready to show that the debt was due.
• Post-dated cheques and multiple cheques. Each cheque can give a separate cause of action with its own timelines, so track them separately.
• Cash loans. Large cash loans raise questions about proof of the source of funds and the legal rules on cash dealings; keep records of the loan and how it was given.
• Companies. Under section 141, the company and the persons in charge of its conduct of business can be proceeded against; the complaint should say specifically how each director was responsible.
• Wrong notice details. A notice that demands an amount different from the cheque, or does not demand payment within 15 days, can be attacked.

For the drawer who has received a notice

Reply in writing within the 15 days, correct any error in the claim, and consider paying under protest where you accept the debt. If you dispute it, a reply should state your defence clearly, since the court will compare the reply and the evidence later.

A ready kit

Lexfolio’s Cheque Bounce Case Kit (Section 138 NI Act) is described on its product page as covering sections 138 to 148, a worked timeline, jurisdiction, the BNSS to CrPC section table, and eleven editable formats: demand notices, a reply notice, a complaint with synopsis, affidavits, a document list, interim compensation and exemption applications, a settlement deed, section 148 applications for both sides, and a board resolution and authority letter for company complainants. It states the law as of 18 October 2026 and is general guidance, not legal advice.

The safest habit is a calendar: note the date on which you received the return memo and set reminders for day 25 (notice deadline is day 30), then for the 15 day payment window after the drawer receives the notice, and finally for the one month filing limit after that.