Cheque Bounce Case in India: Section 138 Complete Guide
Section 138 of the Negotiable Instruments Act, 1881 makes it a criminal offence for a cheque to bounce due to insufficient funds or account closure — but only if the person who received it follows a strict notice-and-wait procedure first. Skip a step or miss a deadline, and even a genuinely dishonoured cheque may not support a criminal complaint. This guide walks through the process in order: what has to happen, in what window, and what happens if the drawer still doesn't pay.
Legal Notice GeneratorOpen →When does a bounced cheque become a Section 138 offence?
Not every dishonoured cheque is a crime. Section 138 applies only when the cheque was issued to discharge a legally enforceable debt or liability — not, for example, as a gift or a blank security cheque handed over without a real debt behind it. The cheque must be presented to the bank within its validity period (currently 3 months from the date on the cheque) and returned unpaid for reasons like 'insufficient funds' or 'account closed'. If the bank returns it for a technical reason like a mismatched signature or an overwritten date, courts have generally held Section 138 still applies as long as the underlying cause is a genuine failure to honour a real debt.
Step 1: The demand notice — a mandatory 30-day window
Once the bank returns the cheque, you must send a written demand notice to the drawer within 30 days of receiving the bank's dishonour memo, demanding payment of the cheque amount. This notice is not optional paperwork — the Supreme Court has repeatedly held that a complaint filed without a valid prior notice is liable to be dismissed outright. The notice should state the cheque number, date, amount, the reason for dishonour, and give the drawer 15 days to pay. Sending it by registered post or speed post (not just WhatsApp or email) creates the strongest proof of service if the case is later contested.
Step 2: The drawer's 15-day payment window
After receiving the notice, the drawer gets 15 days to pay the cheque amount in full. If they pay within this window, the matter ends there — no offence is made out under Section 138 at all, since the section only criminalises a failure to pay after notice, not the dishonour itself. If the 15 days pass with no payment (or only partial payment), the cause of action to file a criminal complaint arises on day 16.
Step 3: Filing the complaint — where and how fast
The complaint must be filed within one month of the cause of action arising (i.e., within 30 days of the 15-day window lapsing), before a Magistrate having jurisdiction — typically where the payee's bank branch is located, following the 2015 amendment that clarified jurisdiction after years of conflicting rulings. Courts can condone a short delay for sufficient cause, but it isn't guaranteed, so filing promptly matters. Under Section 143 of the NI Act, these cases are meant to be tried summarily for faster disposal, though in practice many still take years due to caseload.
Punishment, settlement, and what the accused can do
A Section 138 conviction can mean imprisonment of up to 2 years, a fine of up to twice the cheque amount, or both. Importantly, the offence is compoundable — the complainant and accused can settle at any stage, including after conviction, and courts actively encourage settlement given the civil-debt character of the dispute. An accused person isn't without defences either: showing the cheque wasn't for a legally enforceable debt, that the notice was defective or never actually served, or that payment was in fact made within the 15-day window are all recognised grounds courts have accepted.
Frequently asked
- Can I file a cheque bounce case without sending a legal notice first?
- No. A valid demand notice sent within 30 days of the dishonour memo, followed by 15 days for the drawer to pay, is a mandatory precondition under Section 138. A complaint filed without it is liable to be dismissed.
- What if the drawer's address has changed and the notice is returned undelivered?
- Courts have generally held that notice sent to the correct last-known address by registered post is deemed served even if it comes back undelivered or unclaimed, as long as it was properly addressed and posted in time. Keep the postal receipt and any returned envelope as proof.
- Can a company or its directors both be prosecuted under Section 138?
- Yes — Section 141 extends liability to a company and every person in charge of and responsible for its business at the time of the offence, but the complaint must specifically state their role; a director not shown to be responsible for day-to-day conduct of the business generally cannot be held liable.
- Is a cheque given as security (not for an actual debt) covered by Section 138?
- It depends on the facts. Courts have held that even a security cheque can attract Section 138 once the underlying liability it secures actually becomes due and payable — the key question is always whether a real, legally enforceable debt existed when the cheque was presented.
Reference only — not legal advice. Verify with the official bare act and consult an advocate.
Need to talk to a lawyer about this?
Leave your number and a lawyer will get in touch — no obligation.
Share your matter and city — an advocate on our network may reach out. Purely informational; not a solicitation.
Lawyers on DharaSetu
Self-listed profiles, reviewed by our team. Not an endorsement — verify credentials yourself before engaging.
Kanpur · District Court, Kanpur
14+ years experience
DharaSetu Pro
Everything a working lawyer needs, one plan
Bail drafts, notices, case tracking, IPC/BNS lookups — all in DharaSetu Pro.
See plans & pricing