Cheque Bounce (Section 138, NI Act): Notice and Filing Steps

When a cheque is dishonoured by the bank — most commonly for insufficiency of funds — Section 138 of the Negotiable Instruments Act, 1881 makes it a criminal offence, punishable with imprisonment up to two years, or a fine up to twice the cheque amount, or both. But the offence is complete only after a fixed statutory sequence is followed.

Step 1 — Demand notice within 30 days

Within 30 days of receiving the bank's return memo, the payee must send a written demand notice to the drawer asking for payment of the cheque amount (Section 138(b)). Send it by registered post or speed post and keep the postal receipts and tracking — proof of service matters.

Step 2 — The 15-day window

The drawer then gets 15 days from receipt of the notice to make the payment (Section 138(c)). If payment is made within this window, no offence is committed. The offence arises only on failure to pay within these 15 days.

Step 3 — Complaint within one month

The complaint must be filed before the Magistrate within one month of the date the cause of action arises — i.e., after the 15-day period expires (Section 142(b)). Courts can condone delay if sufficient cause is shown.

Where to file

Under Section 142(2), the complaint is filed before the court within whose local jurisdiction the branch of the bank where the payee maintains the account is situated (where the cheque was delivered for collection through an account). This settled a long period of confusion over territorial jurisdiction in cheque cases.

Documents to preserve

Keep the original cheque (where available), the bank return memo, a copy of the legal notice, postal receipts and delivery tracking, and the account statement showing presentment and dishonour. These form the backbone of the complaint.

General information, not legal advice

This article is general legal information about the law as it stands. It is not legal advice for any specific matter — every case turns on its own facts. For advice about your own situation, please consult an advocate.

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