Cheque Bounce Case Under NI Act Section 138
What you need to know
A cheque bounce (dishonour) occurs when a cheque is returned unpaid by the bank, typically due to insufficient funds or account closure. Under Section 138 of the Negotiable Instruments Act, 1881, this is a criminal offence in India and the payee has the right to initiate both criminal prosecution and civil recovery against the drawer. Before filing a complaint, the payee must send a statutory legal notice within 30 days of receiving the bank's dishonour memo, giving the drawer 15 days to make the payment. If payment is not made within those 15 days, the payee can file a complaint before a Magistrate within 30 days of the notice period expiry.
Your rights
Right to demand payment of the cheque amount plus legal costs via a statutory notice
Right to file a criminal complaint under Section 138 NI Act if payment is not made after notice
Right to claim compensation up to twice the cheque amount under Section 357 CrPC during trial
Right to file a civil suit simultaneously for cheque amount recovery with interest
What you should do now
Action firstObtain bank dishonour memo
- Collect the cheque return memo / dishonour slip from your bank immediately
- Note the date on the memo — all legal deadlines run from this date
Send statutory legal notice within 30 days of dishonour
- Send a written demand notice to the drawer by registered post (RPAD) within 30 days of receiving the dishonour memo
- Clearly state the cheque number, amount, date, reason for dishonour, and demand payment within 15 days
- Keep the postal receipt and the returned/delivered acknowledgment card safely
Wait 15 days for payment
- If the drawer pays within 15 days of receiving the notice, the matter is settled
- If no payment is made, you now have a cause of action to file a criminal complaint
File complaint before Magistrate within 30 days
- File a complaint under Section 138 NI Act before the Judicial Magistrate of First Class (JMFC) in the court having jurisdiction (where cheque was presented or where payee's bank is located)
- Attach: original dishonoured cheque, bank dishonour memo, copy of notice, postal receipt, and acknowledgment card
- Consider engaging a lawyer — conviction can result in imprisonment up to 2 years or fine up to twice the cheque amount, or both
Acts applicable
Negotiable Instruments Act, 1881
centralSection 138 — dishonour of cheque for insufficiency of funds
Negotiable Instruments Act, 1881
centralSection 142 — cognizance of offences, complaint procedure and limitation
Code of Criminal Procedure, 1973
centralSection 357 — compensation to victim from fine imposed on convict