Cheque Bounce Notice & Recovery Under NI Act Section 138
What you need to know
A cheque bounce (dishonour) under Section 138 of the Negotiable Instruments Act, 1881 is a criminal offence in India when a cheque is returned unpaid due to insufficient funds or account closure. The payee (person who received the cheque) has a legal right to demand payment and, if unpaid, file a criminal complaint in a Magistrate's court. Before filing the complaint, the payee must send a formal legal demand notice within 30 days of receiving the bank's dishonour memo, giving the drawer 15 days to pay. If the drawer fails to pay within those 15 days, the payee can file a complaint within 30 days of the expiry of that notice period.
Your rights
Right to send a legal demand notice within 30 days of receiving the bank's dishonour memo
Right to file a criminal complaint under Section 138 NI Act if payment is not made within 15 days of notice
Right to claim the cheque amount plus interest and legal costs through court
Right to seek summary trial for faster disposal under Section 143 NI Act
What you should do now
Action firstCollect documents immediately
- Obtain the original dishonoured cheque and the bank's dishonour memo (return memo) from your bank
- Note the date on the dishonour memo — your 30-day window to send notice starts from this date
Send a formal legal demand notice
- Draft and send a written demand notice to the drawer's last known address via speed post AND registered post (keep receipts)
- The notice must demand payment of the cheque amount within 15 days of receipt
- Keep a copy of the notice and all postal receipts/tracking proof
Wait for the 15-day reply window
- If the drawer pays within 15 days, the matter is settled — obtain a written acknowledgement of payment
- If no payment is received within 15 days of delivery (or deemed delivery), you may proceed to court
File complaint before Magistrate within 30 days
- File a complaint under Section 138 NI Act before the Judicial Magistrate (First Class) in the court having jurisdiction (where cheque was presented or the bank branch is located)
- Attach: original cheque, dishonour memo, copy of notice, postal receipts, and your affidavit
- Consider engaging a lawyer — NI Act cases follow summary trial procedure and can result in imprisonment up to 2 years and/or fine up to twice the cheque amount
Acts applicable
Negotiable Instruments Act, 1881
centralSection 138 — dishonour of cheque for insufficiency of funds
Negotiable Instruments Act, 1881
centralSection 142 — cognizance of offences, limitation for complaint
Code of Criminal Procedure, 1973
centralSection 200 — complaint before Magistrate