Negotiable Instruments Act: Cheque Bounce & Rights
What you need to know
The Negotiable Instruments Act, 1881 (NI Act) governs cheques, promissory notes, and bills of exchange in India. The most commonly invoked provision is Section 138, which makes dishonour of a cheque due to insufficient funds or account closure a criminal offence punishable with imprisonment up to 2 years or fine up to twice the cheque amount, or both. If you have received a bounced cheque, you must first send a legal demand notice within 30 days of receiving the bank's dishonour memo, and if the drawer fails to pay within 15 days, you can file a complaint in the Magistrate's Court within 30 days thereafter. Acting within these strict deadlines is essential — missing them can extinguish your legal remedy entirely.
Your rights
Right to send a legal demand notice and recover cheque amount under Section 138 NI Act
Right to file a criminal complaint before the Magistrate if payment is not made within 15 days of notice
Right to claim the full cheque amount plus interest and legal costs as compensation
Right to file a civil suit simultaneously for recovery of money independently of the criminal case
What you should do now
Action firstCollect and preserve documents
- Obtain the cheque return memo (dishonour slip) from your bank immediately
- Keep the original bounced cheque, any agreement/invoice it was issued against, and proof of delivery of the cheque
Send a legal demand notice within 30 days of dishonour memo
- Send a written demand notice to the cheque drawer via Registered Post AD and email, demanding payment within 15 days
- Retain the postal receipt and track delivery — proof of sending is legally sufficient even if refused
File complaint in Magistrate's Court if unpaid after 15 days
- If the drawer does not pay within 15 days of receiving/deemed-receiving the notice, file a Section 138 NI Act complaint in the Magistrate's Court having jurisdiction
- Attach: original cheque, dishonour memo, demand notice copy, postal receipt, and affidavit — consult a local advocate for drafting
Consider parallel civil recovery
- Simultaneously file a civil suit or summary suit (Order 37 CPC) in civil court for recovery of the cheque amount with interest
- This is independent of the criminal case and can result in a decree for money recovery
Acts applicable
Negotiable Instruments Act, 1881
centralSection 138 – Dishonour of cheque for insufficiency of funds
Negotiable Instruments Act, 1881
centralSection 142 – Cognizance of offences (court complaint procedure)
Code of Criminal Procedure, 1973
centralSection 200 – Complaint to Magistrate