Short answer: when a cheque is dishonoured, you must send a written demand notice to the drawer within 30 days of receiving the bank's return memo, wait 15 days for payment, and if the drawer still does not pay, file a complaint before the Magistrate within one month of the cause of action arising (Sections 138 and 142, Negotiable Instruments Act, 1881). Done correctly, the drawer faces imprisonment up to two years, a fine up to twice the cheque amount, or both.
Cheque dishonour is India's single largest category of pending criminal litigation: of about 2.31 crore criminal cases pending as on 31 December 2019, 35.16 lakh were Section 138 complaints — roughly one in seven — which is why the Supreme Court issued expedited-trial directions in In Re: Expeditious Trial of Cases under Section 138 of the NI Act, 1881 (16 April 2021) (judgment).
What Section 138 actually requires
Section 138 of the Negotiable Instruments Act, 1881 makes the dishonour of a cheque a criminal offence only when all of the following conditions are met:
| Requirement | Provision | Time limit |
|---|---|---|
| Cheque drawn on an account maintained by the drawer for discharge of a legally enforceable debt or liability | s.138 | — |
| Cheque presented to the bank | s.138 proviso (a) | Within 3 months of the date on the cheque (or its validity period, whichever is earlier) |
| Written demand notice to the drawer after dishonour | s.138 proviso (b) | Within 30 days of receipt of the bank's return memo |
| Drawer fails to pay | s.138 proviso (c) | Within 15 days of receiving the notice |
| Complaint filed before the Magistrate | s.142(1)(b) | Within 1 month of the cause of action arising (i.e. expiry of the 15-day notice period) |
Miss any of these windows and the criminal complaint becomes vulnerable — though the civil remedy of a summary suit for recovery survives.
Step-by-step procedure
1. Collect the return memo
When the cheque bounces, the bank issues a cheque return memo stating the reason — usually "insufficient funds" or "payment stopped by drawer". Both reasons can sustain a Section 138 prosecution. Preserve the original cheque and the memo; they are your primary documentary evidence.
2. Send the statutory demand notice (within 30 days)
The notice must be in writing, demand the cheque amount (a demand for a larger omnibus sum can defeat the notice), and be sent to the drawer — registered post with acknowledgement due is standard practice, and a copy by email or WhatsApp adds proof of service. The Supreme Court treats a notice returned as "unclaimed" or refused as validly served. For a step-by-step walkthrough of drafting the notice, counting the 30 days correctly and avoiding the defects that get cases dismissed, see our detailed guide on how to send a Section 138 cheque bounce demand notice.
3. Wait 15 days
If the drawer pays the full cheque amount within 15 days of receiving the notice, no offence is made out. If they pay partially or not at all, the cause of action arises on day 16.
4. File the complaint (within 1 month)
File a criminal complaint under Section 138 read with Section 142 before the Judicial Magistrate of the First Class where the payee's bank branch is located — Section 142(2), inserted by the 2015 Amendment, fixed jurisdiction at the place where the cheque was delivered for collection, legislatively overruling the earlier position in Dashrath Rupsingh Rathod v. State of Maharashtra, (2014) 9 SCC 129.
Attach: original cheque, return memo, copy of the demand notice, postal receipts/acknowledgement, and an affidavit of evidence. Delay beyond one month can be condoned under Section 142(1)(b) proviso only if you show sufficient cause.
5. Trial and interim compensation
Section 138 cases are tried summarily. Under Section 143A (inserted 2018), the court may direct the drawer to pay interim compensation up to 20% of the cheque amount during the trial itself. This deposit is discretionary, not automatic — for when a court can order it, how a drawer can oppose the application, and the refund-with-interest rule if you are acquitted, see our guide on Section 143A interim compensation in a cheque bounce case. On conviction, courts routinely order compensation up to twice the cheque amount under Section 357(3) CrPC / Section 395 BNSS.
Punishment and settlement
- Punishment: imprisonment up to two years, or fine up to twice the cheque amount, or both (Section 138).
- Compounding: the offence is compoundable under Section 147 NI Act — the parties can settle at any stage. In Damodar S. Prabhu v. Sayed Babalal H., (2010) 5 SCC 663, the Supreme Court laid down a graded costs framework to encourage early settlement.
- Presumptions in your favour: Sections 118 and 139 NI Act presume the cheque was issued for consideration and in discharge of a debt; the burden shifts to the drawer to rebut this — reaffirmed by the Constitution Bench-aligned line of cases including Rangappa v. Sri Mohan, (2010) 11 SCC 441.
Common defences (and why most fail)
- "It was a security cheque" — fails where the debt had crystallised by the date of presentation.
- "Blank cheque was misused" — a signed blank cheque voluntarily handed over still attracts the Section 139 presumption (Bir Singh v. Mukesh Kumar, (2019) 4 SCC 197).
- "No legally enforceable debt" — the only defence that regularly works, but the drawer must produce probable evidence, not bare denial.
Related guides on Urava: - Section 143A interim compensation — when a court orders the drawer to deposit up to 20% during trial, and how to oppose it - Appealing a Section 138 conviction — the Section 148 20% deposit, when it can be waived, and bail under BNSS 430 - Compounding a Section 138 cheque-bounce conviction — step-by-step procedure and the 2025 SC graded-cost scheme - How to reply to a Section 138 cheque bounce legal notice as the drawer — the 15-day window and valid defences - Filing a consumer complaint online on India's e-Jagriti portal
Frequently Asked Questions
What is the time limit for filing a cheque bounce case?
One month from the date the cause of action arises — i.e. one month after the 15-day notice period expires without payment (Section 142(1)(b)).
Can I file a case if the cheque bounced due to "stop payment"?
Yes. A stop-payment instruction does not save the drawer if the debt is legally enforceable and the account would not have honoured the cheque anyway.
Where do I file the complaint?
Before the Magistrate at the place where your bank branch (where you deposited the cheque) is situated — Section 142(2).
Can a cheque bounce case be settled after conviction?
Yes, Section 147 makes the offence compoundable even at the appellate stage, subject to the Damodar S. Prabhu graded-costs guidelines.
Is sending the notice by WhatsApp valid?
Use registered post as the primary mode; courts have accepted electronic service as corroboration, but do not rely on it alone.
What happens if I miss the 30-day notice window?
The criminal remedy under Section 138 for that presentation is lost, but you may re-present the cheque within its validity and issue notice on a fresh dishonour, and the civil recovery suit remains available. Once you obtain a money decree in that suit — or a compensation order in the criminal case — recovering the amount is a separate stage: see our guide on how to file an execution petition for a money decree under Order 21 CPC, including the 12-year limitation and attachment procedure.
How Urava helps
A Section 138 matter looks simple until the drawer raises a limitation or jurisdiction objection. Urava drafts a complete, citation-backed legal research memorandum on your exact facts — notice validity, limitation computation, jurisdiction, interim compensation strategy — in about ten minutes, in English, Hindi or Malayalam, from typed questions or scanned case files. Start with 3 free research memos.
This article is legal information, not legal advice. Consult a qualified advocate for advice on your specific matter.