Cheque bounced? Your options under Section 138, with the deadlines
A bounced cheque can be a criminal offence under Section 138 of the Negotiable Instruments Act, 1881, but only if you follow strict deadlines: notice within 30 days, then a complaint within one month after the 15-day payment window.
When a bounced cheque is an offence
Section 138 applies when all of these are true:
- The cheque was given to pay a legally enforceable debt or liability (not a gift or a security deposit with no debt due).
- It was presented to the bank within its validity, which is three months from the date on the cheque.
- It was returned unpaid because of insufficient funds or because it exceeded the arranged limit. Returns such as “account closed” or “payment stopped by drawer” are also generally treated as covered.
- You sent a written demand notice and the drawer did not pay within 15 days of receiving it.
The deadlines
| Step | Deadline |
|---|---|
| Send a demand notice to the drawer | Within 30 days of receiving the bank’s return memo |
| Drawer’s time to pay | 15 days from receiving your notice |
| File a complaint before the Magistrate | Within one month after those 15 days end (Section 142) |
Miss the notice deadline and the case under Section 138 fails. A court can accept a late complaint only if you show sufficient cause for the delay.
Step 1: Send the demand notice
The notice should mention the cheque number, date, amount, bank, the return memo and its reason, and demand payment within 15 days. Send it by registered post with acknowledgement (and email or courier as well), and keep proof of delivery.
Step 2: File the complaint
If the drawer does not pay, file a complaint before the Magistrate’s court that has jurisdiction where your bank branch (where you deposited the cheque) is located (Section 142(2)). Attach the cheque, return memo, notice, postal receipts and proof of delivery.
What the court can order
- Punishment of up to two years’ imprisonment, or a fine of up to twice the cheque amount, or both.
- Interim compensation of up to 20% of the cheque amount while the case is pending (Section 143A).
- In an appeal by the convicted drawer, the appeal court can order a deposit of at least 20% of the fine or compensation (Section 148).
The offence can be settled (compounded) at any stage (Section 147), and many cases end with a settlement.
Other routes
You can also file a civil suit to recover the money, including a faster “summary suit” under Order XXXVII of the Code of Civil Procedure. A criminal complaint and a civil suit can run side by side.