When Section 138 applies
Section 138 of the Negotiable Instruments Act, 1881 makes it an offence to issue a cheque that bounces, if all of these are true:
- The cheque was given to pay a legally enforceable debt or liability.
- It was drawn on the drawer's own bank account.
- It was presented within three months of its date. Banks do not honour older cheques.
- It came back unpaid, for example for "funds insufficient" or "exceeds arrangement". Courts have also applied Section 138 to returns for "account closed", "payment stopped" and "signature mismatch".
The court presumes the cheque was given for a debt (Section 139). The drawer has to prove otherwise.
The three deadlines
| Step | Time limit | Law |
|---|---|---|
| Send the demand notice | Within 30 days of getting the return memo from your bank | Section 138, proviso (b) |
| Drawer may pay | 15 days from the day the drawer receives the notice | Section 138, proviso (c) |
| File the complaint | Within one month after those 15 days end | Section 142(1)(b) |
Count each period carefully. A complaint filed before the 15 days end is premature. A complaint filed late needs a strong reason, and the court may refuse to condone the delay.
What the notice must contain
- The exact cheque amount. In Kaveri Plastics v. Mahdoom Bawa Bahrudeen Noorul (2025), the Supreme Court held that a notice demanding any amount other than the cheque amount is invalid, even if the difference is a typing mistake.
- The cheque details. Cheque number, date, amount, bank and branch.
- The dishonour. The date the cheque was returned and the reason on the return memo.
- The debt. A short account of why the cheque was given.
- The demand. A clear demand to pay the cheque amount within 15 days of receiving the notice.
- The parties. Your name and address, and the drawer's correct name and address. For a company, address the company and the people in charge of it (Section 141).
Keep the notice simple. Extra claims, threats or a wrong figure only give the drawer a defence.
How to send it
Send it by registered post or speed post with acknowledgement due, to the drawer's last known address. Keep the postal receipt and the tracking printout. They are your proof of the date of service.
You can also send a copy by email or WhatsApp. Treat that as an extra, not a replacement for post.
What happens after
If the drawer pays within 15 days, the matter ends. If not, you can file a written complaint before the Magistrate.
The complaint is filed in the court for the area where your bank branch is, if you deposited the cheque in your account (Section 142(2)).
On conviction, the drawer can get up to two years in prison, a fine up to twice the cheque amount, or both. The case can be settled at any stage (Section 147).