Section 138 Cheque Bounce Legal Notice
What you need to know
A Section 138 notice under the Negotiable Instruments Act, 1881 is a mandatory legal demand sent to a person whose cheque has bounced due to insufficient funds or other reasons. Under Indian law, cheque dishonour is a criminal offence, and the payee must send a written notice to the drawer within 30 days of receiving the bank's dishonour memo. The drawer then has 15 days to make the payment; if they fail, the payee can file a criminal complaint in the Magistrate's court. This process protects creditors and enforces financial accountability across India.
Your rights
You have the right to demand full cheque amount plus interest within 15 days of serving the notice
You can file a criminal complaint if payment is not made within 15 days of the notice
You are entitled to compensation up to twice the cheque amount as directed by the court
The offence is cognisable and the drawer can face imprisonment up to 2 years or fine or both
What you should do now
Action firstCollect and preserve all documents
- Keep the original bounced cheque and the bank's dishonour memo (bank return memo)
- Note the date on the dishonour memo — your 30-day notice window starts from this date
- Gather any loan agreement, invoice, or written understanding under which the cheque was issued
Send the Section 138 legal notice within 30 days
- Draft and send the demand notice to the drawer's last known address by Speed Post AND Registered Post AD
- Keep proof of dispatch (postal receipts) and the signed delivery acknowledgement
- The notice must demand the cheque amount and state that criminal action will follow if payment is not made within 15 days
Wait for the 15-day reply period
- If the drawer pays the full amount within 15 days of receiving the notice, the matter is settled
- If the drawer refuses, ignores, or only partly pays, you are entitled to file a criminal complaint
File complaint before the Magistrate within 30 days of expiry of notice period
- File a complaint under Section 138/142 NI Act before the Judicial Magistrate First Class in the city where the cheque was presented
- Attach originals of: cheque, dishonour memo, notice copy, postal receipts, and delivery acknowledgement
- Consider engaging a lawyer; the court may also award interim compensation up to 20% of cheque amount at the first hearing
Acts applicable
Negotiable Instruments Act, 1881
centralSection 138 — dishonour of cheque for insufficiency of funds
Negotiable Instruments Act, 1881
centralSection 142 — procedure for filing complaint
Code of Criminal Procedure, 1973
centralSection 200 — complaint before Magistrate