When a cheque given for a debt bounces, Section 138 of the Negotiable Instruments Act lets you start a criminal case if you follow three deadlines: send a written demand notice within 30 days of getting the bank's return memo, give the drawer 15 days from receiving the notice to pay, and file the complaint before the Magistrate within one month after those 15 days end. The punishment can be imprisonment up to two years, a fine up to twice the cheque amount, or both.
When Section 138 applies
- The cheque was given to discharge a legally enforceable debt or liability, such as an unpaid invoice.
- It was presented to the bank within its validity period (three months from the cheque date).
- The bank returned it unpaid, for example for insufficient funds or because it exceeded the arrangement with the bank.
- You sent a written demand in time and the drawer still did not pay within 15 days.
The timeline you must follow
| Step | Deadline |
|---|---|
| Present the cheque | Within 3 months of the date on the cheque |
| Send the demand notice | Within 30 days of receiving the bank's return memo |
| Drawer's time to pay | 15 days from receiving the notice |
| File the complaint | Within 1 month after the 15 days expire |
These limits are strict. If you miss the 30-day notice window you can present the cheque again while it is still valid and restart the process. A court can condone a late complaint only if you show good reason.
Where the case is filed
The complaint is filed before the Judicial Magistrate First Class or Metropolitan Magistrate. If you deposited the cheque in your bank account, the court with jurisdiction is the one where your bank branch is located, so you normally file in your own city.
Documents needed
- The original cheque and the bank's return memo
- Copy of the demand notice with postal receipt and delivery proof
- Invoices, ledger and other proof of the underlying debt
- Any reply received from the drawer
Penalties and what you can recover
- Imprisonment up to two years, or a fine up to twice the cheque amount, or both
- The court can direct compensation to the complainant out of the fine
- Interim compensation of up to 20% of the cheque amount can be ordered while the case is pending (Section 143A)
- If the drawer appeals after conviction, the appellate court can order a deposit of at least 20% of the fine or compensation (Section 148)
- The offence can be compounded (settled) at any stage, which is how many cases end
Where the cheque was issued by a company, the company and the persons in charge of its business at the time, such as the signing director, can be prosecuted (Section 141).
Section 138 and civil recovery together
A Section 138 case punishes the dishonour; it runs alongside your right to recover the money. You can also file a civil recovery suit or, if eligible, an MSME Samadhaan application for the same dues. In practice the pressure of a criminal case leads many drawers to settle.
FundRaksha Legal sends the statutory notice within the deadline and files the complaint if the drawer does not pay. No upfront fee; 30% only on the amount recovered. Talk to us.
Frequently asked questions
Within how many days must a cheque bounce notice be sent?
Within 30 days of receiving the bank's memo saying the cheque was returned unpaid.
How long does the drawer get to pay after the notice?
15 days from the date they receive the notice. If they pay the cheque amount within that time, no offence is made out.
What is the time limit to file a cheque bounce case?
One month from the day the 15-day payment period ends. A court may accept a later complaint only if there is sufficient cause for the delay.
What is the punishment for cheque bounce in India?
Imprisonment for up to two years, a fine of up to twice the cheque amount, or both.
Does Section 138 apply if the cheque was returned for "payment stopped" or "account closed"?
Courts have generally treated these reasons as covered where the cheque was issued for a real debt, because the result is the same: the cheque was not honoured.
Can I file a cheque bounce case in my own city?
Usually yes. For a cheque deposited in your account, the case lies in the court that has jurisdiction over your bank branch.
This guide is general information for Indian businesses, not legal advice for your specific case. Laws and rates change; check the current position or speak to an advocate before acting.
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