Quick answer: When a cheque bounces for insufficient funds, the payee must send a legal notice to the drawer within 30 days of receiving the bank's return memo. The drawer then has 15 days to pay. If they don't, the payee can file a criminal complaint under Section 138 of the Negotiable Instruments Act, 1881 within one month after those 15 days end. The offence carries up to two years' imprisonment, a fine up to twice the cheque amount, or both.
Section 138 is one of the most used provisions in Indian criminal law, and also one of the most unforgiving on deadlines. Miss the 30-day notice window by a day and the criminal remedy is gone for that presentation. File the complaint a day before the 15-day payment period ends and it's premature. The law is short. The calendar is everything.
The cheque bounce timeline at a glance
Step
Deadline
ProvisionPresent the cheque | Within its validity, three months from the date on the cheque | Section 138(a); RBI rules on cheque validity
Bank returns it unpaid | Return memo states the reason ("funds insufficient", "exceeds arrangement") | Section 138
Send legal notice to the drawer | Within 30 days of receiving the bank's information | Section 138(b)
Drawer's time to pay | 15 days from receipt of the notice | Section 138(c)
File the complaint | Within one month after the 15 days expire | Section 142(1)(b)
Court where you file | Where the payee's bank branch (where the cheque was presented) is located | Section 142(2)
Late filing isn't always fatal. The court can condone delay in filing the complaint for sufficient cause. The 30-day notice period is far less forgiving, so treat it as absolute.
Which bounces count under Section 138?
The offence covers cheques returned for insufficient funds or because the amount exceeds the arrangement with the bank. Courts have extended it to "account closed", "payment stopped by drawer" and "signature mismatch" where the drawer's conduct shows an intent to avoid payment, though these are argued case by case.
The cheque must have been issued for the discharge of a legally enforceable debt or liability. A cheque given as a gift or for an illegal purpose doesn't qualify. Once the cheque and signature are admitted, Section 139 presumes it was issued for a debt; the drawer has to rebut that.
Cheque bounce legal notice format
The notice is the foundation of the case. It must demand the cheque amount specifically. Adding interest and costs is common, but the cheque amount should be stated separately so the demand is clear.
LEGAL NOTICE UNDER SECTION 138 OF THE NEGOTIABLE INSTRUMENTS ACT, 1881
Date: [DD/MM/YYYY]
By Registered Post A.D. / Speed Post / Email
To,
[Drawer's full name / company name through its director]
[Address]
Subject: Dishonour of cheque no. [____] dated [____] for ₹[amount] drawn on [bank, branch]
1. That you issued cheque no. [____] dated [____] for ₹[amount] drawn on [bank and branch] in favour of my client, [Payee's name], towards [nature of debt, e.g., repayment of loan given on ____ / payment for goods supplied under invoice no. ____].
2. That my client presented the cheque through [payee's bank and branch] on [date], and it was returned unpaid with the remark "[reason]" by return memo dated [date], received by my client on [date].
3. That the dishonour of the said cheque constitutes an offence under Section 138 of the Negotiable Instruments Act, 1881.
I hereby call upon you to pay the said cheque amount of ₹[amount] to my client within 15 days of receipt of this notice, failing which my client shall file a criminal complaint against you under Sections 138 and 142 of the Negotiable Instruments Act, 1881, besides civil proceedings for recovery, at your risk as to costs and consequences.
[Advocate's name, enrolment no., address, phone, email]
Send it by registered post or speed post to every known address, and by email or WhatsApp as well. Keep the receipts, tracking and acknowledgement. If you'd rather have an advocate draft and dispatch it within the deadline, Law At Ease can send the cheque bounce notice for you. For legal notices in general, see how to draft a legal notice.
How to file a cheque bounce case
- Wait for the 15 days to pass after the drawer receives the notice. Calculate from the date of delivery on the tracking record.
- Prepare the complaint under Sections 138 and 142, with an affidavit of evidence. Attach the original cheque, return memo, notice, postal receipts, tracking or acknowledgement, and proof of the underlying debt.
- File before the Magistrate with jurisdiction over the payee's bank branch where the cheque was presented, within one month of the cause of action.
- Cognizance and summons. If the court is satisfied, it issues summons to the accused.
- Interim compensation. Under Section 143A, introduced in 2018, the court may order the accused to pay up to 20% of the cheque amount as interim compensation during the trial. It's discretionary and the order must give reasons.
- Summary trial and evidence. Section 143 contemplates summary trial. The accused can try to rebut the presumption of debt.
- Settlement at any stage. The offence is compoundable under Section 147. Courts encourage settlement, and the Supreme Court's guidelines in Damodar S. Prabhu v. Sayed Babalal H. (2010) set graded costs for compounding at later stages.
- Judgment and appeal. On conviction, the accused can appeal; under Section 148 the appellate court may require deposit of at least 20% of the fine or compensation.
Company cheques and directors
If the cheque was issued by a company, Section 141 makes every person in charge of and responsible for the company's business at the time liable too. Name the company and the directors who were actually responsible, and plead their role specifically. A bare list of all directors invites a quashing petition. Create Now!
"New rules for cheque bounce": what's actually changed
Posts about "new cheque bounce rules" usually mix real changes with rumours. The changes that matter:
- Section 143A (2018): interim compensation up to 20% during trial.
- Section 148 (2018): deposit of at least 20% on appeal.
- BNSS, 2023: from 1 July 2024, the Bharatiya Nagarik Suraksha Sanhita replaced the Code of Criminal Procedure for procedure in criminal cases, including summons and trial in Section 138 complaints. The Section 138 offence itself is unchanged.
Claims that cheque bounce has been "decriminalised" or that complaints now go to a civil court aren't correct as of the date this article was verified. Banks' own return charges, which vary from bank to bank and are levied on both the drawer and sometimes the payee, are a separate matter and have nothing to do with the criminal case.
Common defences, and how to pre-empt them
- "No legally enforceable debt." Keep the loan agreement, invoices, ledger or messages proving the liability.
- "It was only a security cheque." The Supreme Court has held that a security cheque can still attract Section 138 if the debt had become due when it was presented. Document when the liability crystallised.
- "I never received the notice." Proof of dispatch to the correct address raises a presumption of service. Send to every address and keep the records.
- "The complaint is time-barred." Calculate every date from the documents, not memory.
If you've received a cheque bounce notice
Being on the other side is stressful, but the law gives you a clear window. You have 15 days from receiving the notice to pay the cheque amount. Pay within that window and the offence under Section 138 isn't made out, even though the cheque bounced.
What to do in those 15 days:
- Note the date you received the notice. Your 15 days run from receipt, not from the date printed on the notice.
- Check the facts. Was the cheque yours, was it issued for a real debt, and is the amount due? If it was a security cheque for a debt that hadn't fallen due, or the debt was already paid, gather the proof.
- If the amount is genuinely owed, pay it by a traceable method within 15 days and get a written acknowledgement. This ends the criminal exposure for that cheque.
- If you dispute it, reply in writing within the period, setting out why the cheque wasn't for a legally enforceable debt. The reply becomes your early defence on record.
- Don't ignore it. Ignoring the notice doesn't stop the complaint; it just means the court hears only the payee's side at the start.
If a complaint is filed and you're summoned, appear on the date and get an advocate. Settlement remains possible at every stage, and costs are lower the earlier you settle. Law At Ease advocates can draft a reply or you can talk to an advocate about your options.
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Frequently asked questions
Marked up with FAQPage schema so answers can appear directly in search results.
What is the time limit to send a cheque bounce notice?
Within 30 days of receiving the bank's return memo or other information that the cheque was dishonoured, under Section 138(b) of the NI Act.
How many days does the drawer get to pay after the notice?
Fifteen days from the date the drawer receives the notice. The complaint can be filed only after these 15 days expire.
When should a cheque bounce complaint be filed?
Within one month after the 15-day payment period ends. The court may condone delay for sufficient cause.
Where is a cheque bounce case filed?
Before the Magistrate where the payee's bank branch, in which the cheque was presented for collection, is located, under Section 142(2).
What is the punishment for cheque bounce?
Imprisonment of up to two years, a fine of up to twice the cheque amount, or both, under Section 138.
Is cheque bounce a criminal offence?
Yes. Dishonour for insufficient funds, followed by non-payment after notice, is a criminal offence under Section 138. It is also compoundable, so it can be settled.
What is interim compensation under Section 143A?
The court may order the accused to pay up to 20% of the cheque amount to the complainant during the trial. It's discretionary and requires a reasoned order.
Can a security cheque lead to a Section 138 case?
Yes, if the underlying debt had become due when the cheque was presented. Whether that's so depends on the facts.
Can a cheque bounce case be settled?
Yes. Section 147 makes the offence compoundable at any stage, and courts encourage settlement, with graded costs at later stages.
Is a legal notice mandatory for a cheque bounce case?
Yes. Without a valid notice within 30 days and expiry of the 15-day payment period, the offence under Section 138 isn't complete.
This article is general information, not legal advice on your specific matter. For advice on your own facts, talk to an advocate on Law At Ease.
