Your cheque bounced. Or worse — someone gave you a cheque that the bank returned unpaid.
In India, a bounced cheque is not just a financial inconvenience. It is a criminal offence under Section 138 of the Negotiable Instruments Act, 1881 — punishable with up to two years’ imprisonment, a fine of up to twice the cheque amount, or both.
But the law gives you a very specific procedure to follow and very strict deadlines to meet. Miss a single deadline by even one day and your case can be dismissed — regardless of how valid your claim is.
This guide explains everything: what Section 138 covers, the three deadlines you cannot miss, how to send a legally valid notice, what happens in court, and what to do if you are on the receiving end of a cheque bounce notice.
What Is a Cheque Bounce Under Indian Law?
A cheque is said to have “bounced” or been “dishonoured” when a bank returns it unpaid. The most common reasons are:
- Insufficient funds — the drawer’s account does not have enough money to honour the cheque
- Stop payment instructions — the drawer instructed the bank to not honour the cheque
- Account closed — the account on which the cheque was drawn no longer exists
- Signature mismatch — the signature on the cheque does not match the bank’s records
- Overwriting or alteration — the cheque has been altered in a way that makes it non-negotiable
- Cheque presented after validity period — cheques in India are valid for three months from the date of issue
Only certain reasons attract criminal liability. Under Section 138 of the Negotiable Instruments Act, 1881, criminal proceedings can only be initiated when the cheque was dishonoured due to:
- Insufficient funds, or
- The amount exceeding the limit arranged with the bank
A cheque returned for technical reasons — signature mismatch, overwriting — may give rise to civil liability but does not by itself attract Section 138 proceedings. The underlying debt must also be a legally enforceable one.
Section 138 — What the Law Actually Says
Section 138 of the Negotiable Instruments Act, 1881 was inserted by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988. It criminalised cheque dishonour to enhance the credibility of cheques as a commercial instrument and protect payees from deliberate default.
The full text of Section 138 is available on Indian Kanoon.
Under Section 138, an offence is made out when:
1. A cheque drawn by a person on a bank account is returned unpaid because the account has insufficient funds or exceeds the overdraft limit arranged with the bank.
2. The cheque was issued for the discharge — in whole or in part — of a legally enforceable debt or other liability. This is critical. A cheque given as a gift, a donation, or for a future contingent liability that has not yet arisen does not attract Section 138.
3. The cheque was presented to the bank within six months from the date on which it was drawn, or within the period of its validity — whichever is earlier.
4. The payee sent a legal notice to the drawer within 30 days of receiving the bank’s return memo (dishonour slip), demanding payment.
5. The drawer failed to make payment within 15 days of receiving the notice.
All five conditions must be satisfied. If any one is missing, Section 138 does not apply.
Punishment under Section 138:
- Imprisonment for a term that may extend to two years, or
- Fine that may extend to twice the amount of the cheque, or
- Both
The Three Deadlines You Must Not Miss
This is where most cheque bounce cases are lost — not on merit, but on timing.
Deadline 1 — Present the Cheque Within Six Months
The cheque must be presented to the bank for payment within six months from the date written on it. Do not hold on to a cheque. Present it promptly. If you present it after six months, Section 138 does not apply regardless of whether it bounces.
Deadline 2 — Send the Legal Notice Within 30 Days of Dishonour
After receiving the bank’s return memo (the official document confirming the cheque was dishonoured), you have 30 days to send a formal legal notice to the drawer demanding payment.
This is an absolute deadline. The notice must be sent within 30 days of receiving the return memo — not 30 days from when you discovered the bounce, not 30 days from when you decided to act. The clock starts the day you receive the return memo from your bank.
If you miss this 30-day window, you lose your right to proceed under Section 138. No court will condone the delay.
Deadline 3 — File the Complaint Within 30 Days After the Notice Period Expires
After the drawer receives your legal notice, they have 15 days to make payment.
If they do not pay within 15 days, you have a further 30 days from the expiry of that 15-day period to file a criminal complaint in court.
Example of the complete timeline:
- Cheque bounced and return memo received: 1 January 2026
- Deadline to send legal notice: 30 January 2026
- Drawer receives notice: 5 February 2026
- Drawer’s 15-day window to pay: expires 20 February 2026
- Deadline to file complaint in court: 22 March 2026
Miss any one of these three deadlines and the case is dismissed.
How to Send a Valid Legal Notice for Cheque Bounce
The legal notice under Section 138 is the cornerstone of the entire proceedings. The Supreme Court in Shakti Travel & Tours v. State of Bihar (2002) held that a properly served legal notice is more than a procedural formality — it is the foundation on which any Section 138 complaint rests.
What the Notice Must Contain
A valid Section 138 legal notice must include:
- The name and address of the payee (you — the person sending the notice)
- The name and address of the drawer (the person who issued the cheque)
- Details of the cheque — cheque number, date, amount, and the bank on which it was drawn
- The date of presentation to the bank
- The date of dishonour and the reason given in the bank’s return memo
- A clear statement that the cheque was issued towards a legally enforceable debt or liability
- A demand for payment of the cheque amount within 15 days of receipt of the notice
- A statement that legal proceedings under Section 138 of the Negotiable Instruments Act, 1881 will be initiated if payment is not made within the 15-day period
- The date of the notice
How to Send the Notice
By registered post with acknowledgement due (RPAD) — this is the most important requirement. The notice must be sent by registered post so that the date of dispatch and delivery can be officially recorded. Keep the postal receipt and the acknowledgement slip (when returned) as evidence.
By courier or hand delivery — acceptable as supplementary proof but not sufficient on its own for establishing service in most courts.
By email or WhatsApp — while some courts have accepted electronic delivery as supplementary evidence, do not rely on this alone. Always send by RPAD.
Send the notice to the last known address of the drawer as it appears on official documents or the cheque itself. If the notice is returned undelivered because the drawer refused it or was unavailable, the notice is still deemed served — the law does not reward deliberate avoidance of service.
What Happens If the Drawer Pays After Receiving the Notice?
If the drawer makes full payment of the cheque amount within 15 days of receiving the notice, no offence is committed under Section 138.
The notice procedure is specifically designed to give the drawer one final opportunity to pay before criminal proceedings are initiated. Many cheque bounce cases are resolved at the notice stage — the formal notice from a legal professional often prompts prompt payment.
If only partial payment is made, the unpaid balance remains actionable under Section 138.
Filing the Complaint in Court
If the drawer does not pay within 15 days, you must file a written criminal complaint in the appropriate court within 30 days of the expiry of the 15-day notice period.
Which Court Has Jurisdiction?
Following the Negotiable Instruments (Amendment) Act, 2015, jurisdiction lies with the court within whose territorial jurisdiction the payee’s bank branch is located — i.e., the branch where you bank, not where the cheque was drawn.
This change was made following the Supreme Court’s ruling in Dashrath Rupsingh Rathod v. State of Maharashtra (2014), which had created practical difficulties for payees by requiring filing in the drawer’s jurisdiction.
The complaint is filed before the Judicial Magistrate of First Class (JMFC) in the relevant jurisdiction.
What Documents to Attach With the Complaint
- Original dishonoured cheque
- Bank’s return memo (dishonour slip)
- Copy of the legal notice sent
- Proof of dispatch — postal receipt (RPAD)
- Proof of delivery — acknowledgement slip, or evidence of attempted delivery
- Any agreement, invoice, or document establishing the underlying legally enforceable debt
What Happens in Court
Once the complaint is filed, the Magistrate examines it. If a prima facie case is made out, the court issues a summons to the accused (the drawer).
Under Section 143 of the Negotiable Instruments Act, cheque bounce cases are to be tried summarily — meaning the procedure is faster than regular criminal trials. Courts have been directed by the Supreme Court in Indian Bank Association v. Union of India (2014) to conduct day-to-day hearings and encourage early compounding.
Interim compensation under Section 143A: Once the court takes cognizance of the complaint, it may direct the accused to pay interim compensation of up to 20% of the cheque amount to the complainant at the trial stage. This provides partial relief even before the final verdict.
Compounding — settlement: Section 147 of the Negotiable Instruments Act makes cheque bounce a compoundable offence — meaning the parties can settle the matter at any stage of proceedings, including before and during trial. In practice, most cheque bounce cases are resolved through settlement, with the drawer paying the cheque amount plus interest and costs in exchange for withdrawal of the complaint.
Liability of Companies and Directors — Section 141
If the person who issued the bounced cheque is a company, Section 141 of the Negotiable Instruments Act extends liability to every person who was in charge of and responsible for the conduct of the company’s business at the time of the offence.
This means Directors, Managing Directors, and other officers who were responsible for the conduct of the business can be prosecuted — not just the company as an entity.
The defence available to such persons is to prove that the offence was committed without their knowledge or despite their due diligence to prevent it.
If You Received a Cheque Bounce Notice — What to Do
If you are the drawer and you have received a legal notice under Section 138, do not ignore it.
You have 15 days from receipt of the notice to make payment. If the debt is genuine and the cheque was validly issued, paying within the 15-day window extinguishes the criminal liability entirely. It is almost always cheaper and less disruptive than defending a criminal complaint.
If you believe the notice is legally defective — sent after the 30-day period, sent to the wrong address, or the underlying debt is disputed — consult a legal professional immediately. Valid defences under Section 138 are narrow but real:
- No legally enforceable debt — the cheque was a security cheque, a gift cheque, or issued against a future contingent liability that has not arisen
- Notice defect — the notice was sent after 30 days of dishonour, or sent by ordinary post without proper service
- Complaint beyond limitation — the complaint was filed more than 30 days after the 15-day payment window expired
- Pre-existing genuine dispute — a bona fide dispute about the underlying debt existed before the cheque was issued
- Forgery — the signature on the cheque is not yours
Frequently Asked Questions
Q: What is the punishment for cheque bounce under Section 138 in India?
A: Under Section 138 of the Negotiable Instruments Act, 1881, a cheque bounce offence is punishable with imprisonment for a term that may extend to two years, a fine that may extend to twice the amount of the cheque, or both. Additionally, courts may direct the accused to pay the complainant compensation under Section 357 of the Code of Criminal Procedure.
Q: What is the time limit for sending a cheque bounce legal notice?
A: The legal notice must be sent within 30 days of receiving the bank’s return memo confirming the cheque was dishonoured. This is an absolute deadline under Section 138 of the Negotiable Instruments Act, 1881. Missing this deadline extinguishes the right to proceed criminally under Section 138.
Q: How many days does the drawer have to pay after receiving the legal notice?
A: The drawer has 15 days from the date of receiving the Section 138 legal notice to make payment of the cheque amount. If payment is made in full within 15 days, no criminal offence is committed and no complaint can be filed.
Q: Where do I file a cheque bounce complaint in India?
A: Following the Negotiable Instruments (Amendment) Act, 2015, the complaint must be filed before the Judicial Magistrate of First Class (JMFC) within whose territorial jurisdiction the payee’s bank branch is located — i.e., where you bank, not where the cheque was issued.
Q: Can a cheque bounce case be settled out of court in India?
A: Yes. Section 147 of the Negotiable Instruments Act makes cheque bounce a compoundable offence, meaning the parties can settle at any stage — before filing, during trial, or even after conviction on appeal. Settlement typically involves the drawer paying the cheque amount plus interest and legal costs in exchange for withdrawal of the complaint.
Q: Can a company director be prosecuted for a cheque bounce?
A: Yes. Under Section 141 of the Negotiable Instruments Act, when a company commits an offence under Section 138, every person who was in charge of and responsible for the conduct of the company’s business at the time of the offence can be prosecuted — including directors and officers — unless they can prove the offence was committed without their knowledge.
Q: Is a security cheque covered under Section 138?
A: Indian courts have held that if a legally enforceable debt or liability existed on the date of the cheque, even a cheque given as security can attract Section 138 if dishonoured. The key question is whether the liability was legally enforceable at the time the cheque was presented — not at the time it was issued.
Act Quickly — Deadlines Are Absolute
Cheque bounce cases under Section 138 are unique in Indian law: the substantive offence is serious, but the procedural deadlines are unforgiving. Courts have no power to condone delay in sending the notice or filing the complaint — unlike most civil proceedings where courts have discretion to excuse delays for sufficient cause.
If your cheque has bounced, the first step is a formally drafted legal notice sent by registered post within 30 days. That notice is what creates the legal record, establishes the drawer’s liability, and triggers the 15-day payment window.
At TMZON, our cheque bounce notice service provides professionally drafted Section 138 legal notices ready for dispatch — with all required statutory elements — at a transparent fixed fee.
Get Your Cheque Bounce Notice → TMZON
For any other legal notice requirements:
This article is written for general informational purposes and does not constitute legal advice. For advice specific to your cheque bounce matter, please consult a qualified legal professional.
Written by Arya Sharma, Advocate, Bombay High Court
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